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Grant McDermott

Data. Economics. Environment.

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Supplies, supplies. (See what I did there?)

So back home, more and more people are cottoning on to the fact that the local water situation ain't looking too hot:
The Environment and Conservation Association said in a statement on Tuesday that it was estimated that in five years, almost 80% of the country's fresh water resources would be so badly polluted that no process of purification available in the country would be able to clean it sufficiently to make it fit for human or animal consumption.

[snip]

The impending disaster that would be created by acid mine drainage as well as sewerage and industrial pollution had on many occasions been brought to the attention of the government, with no positive results however, the association said.

[snip]

"We will need approximately R1m for [an extensive water monitoring project aimed at fully ascertaining the status of the country's freshwater reserves]. It is time that big businesses, especially those that rely on water for the production of their products like Coca Cola, SAB Miller, Windhoek Beer, all soft drink manufacturers and food producers, get involved and make a substantial contribution towards organisations like ours so we can save South Africa's water."
While I certainly appreciate efforts to create more awareness of SA's freshwater problem, the general stance as regards treatment still leaves much to be desired. I don't know much about The Environment and Conservation Association, but from their website it seems a pretty small outfit with no formal economics influence. (I'm also just a little dubious about the severity of their claim - 80% by 2015?? - but I'll leave those details aside for the moment.) Some brief thoughts:

1) Marginal Cost ≠ 0?, Marginal Benefit ≠ 0?
How about coming around to the fact that ascribing zero value to a resource inevitably leads to people treating it such (i.e. worthless)? We need to start charging water rates commensurate to the (marginal) costs of providing it. Before anyone complains that "water is a human right!"; yes, I agree.[*] That's why I want to make sure we manage it properly. There a number of available pricing structures to achieve this, while still protecting the poor and ensuring that everyone has access to some basic, "human rights" level of water. Two of my preferred candidates: (increasing) block-rate pricing and two-part tariffs (a la cellphones).

2) Property rights anyone?
If mines and industry are polluting your water, then call up your lawyer. Or, if you are worried about the protracted inefficiencies of the legal/tort system, you can try to minimise transaction costs by pressuring government into regulation. Okay, it's hardly that simple in the real world - the article makes this very clear - but don't shoot the messenger. I'm trying to make the point that there is more than one option available to prevent corporations from enjoying a free lunch at our expense. I also don't think that the public vs privatisation argument should be a barrier to agreeing about basic property rights in this context... I'm less concerned with who owns a water source, than the fact that they (Govt, business, whoever) are within their rights to prevent an external party from ruining it for the purpose for which it was intended.

3) I'm glad that the ECA is looking to get some of the big beverage companies on board in its campaign. However, you don't need to appeal to their sense of civic duty if you manage to get the first two points right (pricing and property rights). In other words, you're better off appealing to their own self interest. The same goes for residential consumers. Individuals aren't going to conserve water until it starts hurting their pocket, or runs them into trouble with the law.

THOUGHT FOR THE DAY: South Africa has vulnerable freshwater supplies that require careful management. Public awareness is the first step, but it's ultimately economic incentives that will ensure the sustainable use of the country's water resources. I'm happy to see steps in the right direction, but big problems require big actions. Until I stop seeing studies and articles like this, I'm going to remain of the opinion that there's a lot more that can and needs to be done.

[UPDATE: Apparently officials aren't particularly impressed by the report.]


[*] At least up until a point. As Peter Braebeck puts it:
" The 25 liters of water that we need as a minimum, as a person, in order to live decently[...]. Yes, this is a human right. But I don't think it's a human right to fill up my swimming pool, to wash my cars, to water the golf course, or even to water the garden."