Economics - General

Should Water be Free?

No matter the price, John Keesecker of Food and Water Watch argues that selling water for profit is a bad idea.

Keesecker: “I think when folks see water being privatized, they see a price being put on something that’s essential.” – Marketplace.

Should water be free?  Water is a necessity.  Without it, you cannot live.  In an egalitarian society, is giving away water for free the best way to ensure that poor people receive the water they need to survive?

No.  Free water is a horrible idea.  Water is a scarce resource.  When water is free, individuals will not have an incentive to invest in water saving technologies.  For instance, if fixing a leaky pipe in your house costs $1000, you’re much more likely to pay to fix the leak if you also have to pay for the wasted water.  When water is free, you may put off fixing the pipe perhaps indefinitely.

If price of water rises and becomes unaffordable for some poor people, do we just leave them ‘out to dry’?  

If we want to redistribute money to the poor, giving cash transfers would be preferable to selling water at a 0 price.  With cash transfers, the poor could choose whether they wanted to spend their money on water or other necessities such as food and shelter.  If cash transfers are not feasible, a voucher program could be instituted.  Poor individuals already receive vouchers for food and a “water stamps” program could be similarly successful.  

A significant, positive price on water combined with some form of redistribution system should please most parties.  Environmentalists will be happy that a positive price on water will compel individuals and businesses to conserve water; social liberals will be happy that the poor will be able to purchase the water they need; and fiscal conservatives will be happy that the “water stamps” program will have a fixed budget as opposed to an open-ended program of handing out water for free.


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