Two recent articles in The Economist – Water: Sin aqua non and Water rights: Awash in waste – suggest that the solution to world’s water problem is to improve efficiency. The articles explain, rightly, that “there is, globally, no shortage of water” and point at wasteful practices, especially in the agricultural sector, as a chief culprit in global problems related to water scarcity. The authors, however, tread on sacred grounds by pooh-poohing the treatment of water as a basic human right (“Treating it as a right makes the scarcity worse”) and argue for a system of tradable water-usage rights. “Any economist knows what to do: price water to reflect its value.”
While the ideal of pricing water resources at their true value may have a ring of sanity in the abstract, in reality it threatens a fundamental human notion that water is so elemental to life that it deserves a unique status in our societal system. Many of the world’s religions, for example, regard water as a gift from God that cannot be bought or sold lest the gift be dishonored. Moreover, by taking a purely economic approach to a component of life relegates life itself to the market.
Yet, there may be a viable middle ground, one that strikes a balance between the absolute needs of individual people for survival and growth, and those of society to ensure efficiency and, hence, the overall and long-term supply of fresh water resources. While actual uses vary around the world, agriculture accounts for 70-80% of global water withdrawals, while industry takes less than a fifth. That leaves less than 10% as the amount actually used for domestic purposes and sanitation by a population pushing seven billion. What would happen if people were afforded a human right to access some minimal amount of water and then subject amounts used in commercial enterprise to the market?
According to the World Health Organization, the average person requires 20 L per day for basic subsistence and up to 70 L per day for maintaining a minimum quality of life. Obviously, such minimum will vary depending on the climate of the individual’s environment. Yet, on a global scale, this would be a proverbial drop in the buckets of global water withdrawals and consumption. Certainly, some nations may have difficulty meeting even this minimal guarantee due to local scarcity of fresh water resources. And in such cases, the global community should step forward and help their fellow human beings. Yet, the vast majority of countries should have little difficulty in providing and assuring access to such quantities.
As for the amounts used by agriculture and industry, water could be managed using market mechanisms that allow it to be traded as either a commodity or in the context of tradable usage rights. As The Economist notes, “Water is rarely priced in ways that reflect supply and demand … Because most water use is not measured, let alone priced, trade rarely reflects water scarcities.” The result is a highly inefficient system that justly could be accused of waste. Again, The Economist: “Because water is usually free, thirsty crops like alfalfa are grown in arid California. Wheat in India and Brazil uses twice as much water as wheat in America and China. Dry countries like Pakistan export textiles though a 1kg bolt of cloth requires 11,000 litres of water.”
Even amounts used by people beyond a guaranteed allotment could be subject to pricing mechanisms and regulated market forces. A tiered pricing system, for example, would allow for personal use beyond a minimum lifestyle (e.g., swimming pool) to those who can afford it while maintaining a minimum standard for all people. It could also be used to subsidize the minimum guarantee for the rest of the population, at least for those who cannot afford even the basic cost.
Of course, the natural environment has yet to be addressed in this system. And clearly, water for ecosystems, habitats, and species must be ensured through regulations that protect minimum instream flows, aquifer integrity, water quality, and other aspects of the environment. Nonetheless, while we certainly have much more to do to on this front, ensuring water for the environment should not have to conflict with either recognizing access to water as a basic human right, or subjecting amounts used in commercial enterprise to the market. Currently, when we total the percentages of water used by people, agriculture, and industry as 100%, we are simply identifying the amount withdrawn and used for human endeavor. It in no way reflects the quantities of water left in rivers and aquifers, whether intentionally or not. Certainly, in many parts of the world, that amount is inadequate for the needs of the environment, but that is, in part, a product of our current inefficiencies. Yet, it is also a function of our priorities. By enhancing efficiency and at the same time securing minimal guarantees for people everywhere, the reduced water stress would likely allow the raising of environmental priorities.
