In Defense of Water Markets

Water Markets WorldWideThe Williams Lake Tribune just carried this letter on water privatization. The letter is a pretty good summary of what most people find ‘horrible’ about the idea of water privatization. Granted most water privatization attempts especially in Latin America have gone terribly wrong but to turn that into a feature of water privatization is almost like attributing incorrect causation. Sample some arguments from this letter- it goes like this;

Surveys have indicated that 88 per cent of Canadians want a national water policy that recognizes clean drinking water as a basic human right, and ban bulk water exports”

I’m not sure what such a statement means. One could have a national water policy that encourages investment in water or the operation of water utilities by private entities. If private provision could provide for clean drinking water would that make it less of a human right? Does a human right to a commodity mean that the humans have no right to a choice in the provider of essential services?

One more interesting tidbit that popped out at me while I read was this:

Recognizing water as a human right is a vital first step toward ensuring equal and adequate access to water for all people. Water privatization and commodification are imminent dangers to our public control over water. Water scarcity is a reality in Canada. And who’s poised to make obscene profits from water shortages? Giant transnational corporations.”

How does one legislate over human rights? India (a common law country for a very long time) is still grappling with a rights-based approach to law. Also it is a good thing if public services quality rises in fear of losing out to privatization, this is one of the key benefits of competition- and indeed an increasing trend in publicly operated water utilities in North America. More and more public operators and owners are deciding to go the ‘management reform’ way, if the threat of competition could yield such results – what wonders could complete privatization do if implemented correctly with safeguards, regulatory frameworks and a competitive basis. Water scarcity is a reality in most places, which is why it is a great investment opportunity for everyone not just ‘giant’ corporations!

Finally, water is a commodity. A ‘commodity’ is not a bad thing, for god sake- it provides value, utility, pleasure- what have you, how could it be a bad thing? A commodity has a price because it is valued highly, and it earns rents because of that too. There would be a big problem if something as important as ‘water’ was not a commodity, because it would mean it had (in a non-economist philosophical way) no value- or that people do not value it enough. Incentives would be terribly distorted, all over the world we pay for other essential infrastructure and don’t complain about these being ‘human rights’!

We are told “but people can live without infrastructure, not water”, but what about food? Can people live without food? But wait! Haven’t we priced food as a principal commodity for millenia? Besides nobody is saying people should live without water- water privatization is only the suggestion that adopting a particular model of ownership and operation of water utilities can actually bring better quality water to more people.

Sometimes I wonder what is actually being opposed? Private monopolies or the free market? They are two different things, and I am definitely on one side.