While we all know that there is no free lunch, reality is that very soon there might be no free water either. As both an industrial input and a prerequisite of life, water has become extremely scarce for roughly a billion people who do not have a constant supply of clean and safe water, so the issue is of extreme importance.
On September 30th, The Economist started a two-week long Oxford-style online debate on the value of water.
The proposition: “This house believes that water, as a scarce resource, should be priced according to its market value.”
Some of the issues the debate will cover include:
- Would water supplies be better managed if it were treated as a commodity, and priced accordingly?
- Or is water a basic human right that governments should secure for their citizens?
Stephen J. Hoffmann, Managing Director, WaterTech Capital & co-founder, Palisades Water Index Associates outlined the pros for pricing water in his opening statement. Among other things, he talked about sustainability in his support for the issue:
“Sustainability is the mantra behind many emerging regulations, water-policy initiatives and technological advances. And nowhere is the market price of water more critical than in the concept of sustainability. Efficiency is critical in achieving sustainability and a market-driven price is paramount to the efficient allocation of water resources. The sustainability criterion suggests that, at a minimum, an allocation must leave future generations no worse off than current generations. Economics has much to say about the
efficiency of the allocation.”
Dr. Vandana Shiva, Director, Research Foundation for Science, Technology & Natural Resource Policy had an opposing view about the commodification of water in her opening statement citing the recent financial crisis as an example in the failure of reliable market pricing:
“Between last year and this the market value of Lehman Brothers dropped from $38.4 billion to $5 billion, Merrill Lynch from $71.9 billion to $33.1 billion, and Morgan Stanley from $70.2 to $43 billion. Since then Lehman Brothers has collapsed. There is clearly no reliable “market price” in a volatile world driven by greed and profits, with no social regulation. The idea that the management and distribution of and access to a scarce and vital resource like water can be left to the market-and that the market can assign a reliable price reflecting the real value of water-is both absurd and irresponsible.”
Complete details of the debate can be found on The Economist Website. It’s a great opportunity to engage in a discourse on this timely topic. If you are interested in submitting your vote and comment, you can do so for free, you simply need to register for a pen name first.
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