The tragedy of the commons strikes again.
I spend my summers in North Vancouver, British Columbia, Canada. Due to limited water availability, the municipality limits lawn watering to once per week between the ungodly hours of 6 and 9 A.M. But many other liquids are in limited supply, and no such rule applies to any of them. We do not have unlimited reserves of orange juice, milk, wine, gasoline, oil, soft drinks, or apple juice, either. Yet, the government of North Vancouver, happily, has not seen fit to restrict consumption or purchase of any of these other fluids—at least not so far.
Why not? Why shouldn’t these central planners extend their insights about limiting consumption to other scarce liquids?
One reason might be that water is more important than any of these other commodities; indubitably, all of them put together. Without good old H2O, all of human life would end in a matter of just a few days. By contrast, we could go without these other products for much longer—not to mention that fruit juices are mostly water, anyway.
But this vacillates in the exact opposite direction. Given that water is so precious, it is more in need of a pricing mechanism that can automatically preserve it. In times of great need, its price would rise, leading us to economize on it more thoroughly. At other times, the price would fall, allowing us to use it to a greater degree. Markets adjust; bureaucratic regulations do not.
Another argument against this modest proposal is that it costs money to meter water use. But charging a price for cars, couches, catapults, cranberries, and carts also carries a cost, which is factored into the sale. So, what were those bureaucrats thinking? Further, if it is prohibitively costly to measure water use for lawns, the water supplier could charge a fixed fee based upon the size of the consumer’s lot. Rock gardens could be exempt.
Then there is the claim that water is a common good. You can bet your boots that this is precisely correct. But that is precisely the problem, not a reason to support the present system. The difficulty is something economists call “the tragedy of the commons.” The best illustration of this phenomenon is the cow and the buffalo. The former was privately owned, and never came within a million miles of going extinct. Its owner protected it. It was very costly to slaughter, since the opportunity cost was high: no bovine on the morrow. The latter was an entirely different story. For many years, the buffalo could not be legally owned. It roamed freely. The cost of killing one was merely that of the bullet used. If you did not do so, you would not have it tomorrow. It would then be miles away. People would indiscriminately kill this beast just for the skin, all too often. When something is unowned, or owned in the commons by all, it is used all too quickly, water included.
Yet another argument for the present system is that it is important to keep many acre-feet of water on reserve in case of forest fires. One problem here is that timberlands, too, are owned by governments. They, too, should be privatized. If they were, fewer fires would destroy this resource. At present, there is literally no one responsible for saving endangered trees who loses anything from their destruction. Under private ownership, good caretakers would earn profits and expand their operation. Poor ones would go bankrupt.
According to that brilliant economist, Thomas Sowell: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
Back to water. Of course it is necessary to keep water reserves to meet future contingencies. But who is likely to do a better job in this regard: private owners who can lose via failure, or government bureaucrats who cannot? Go to the head of the class if you chose the former.
Additional Reading
Walter E. Block and Peter Lothian Nelson, Water Capitalism: The Case for Privatizing Oceans, Rivers, Lakes, and Aquifers (New York: Lexington Books, 2015).
