Trickle-Down Economics

There’s a free-market solution to the world’s water crisis. Make people pay by the drop.

BY CHARLES KENNY | DECEMBER 5, 2011

As the U.N. climate change meetings meander on in Durban, South Africa, with little sign of major breakthrough -- and soon after news that the last year saw the largest rise in carbon emissions in history -- it is a good time to think about how to deal with some of the impacts of a global warming that appear increasingly inevitable. One big impact involves water -- both that there's soon going to be too much of the salty stuff subsuming low lying areas as the ice caps melt, and too little elsewhere. A warmer world will be wetter overall, but current models predict that climate change will make some dry parts of the planet -- Northern Africa, for one -- even drier. Many of the places are already the very regions suffering from the greatest shortages. Even without climate change, global patterns of water usage are unsustainable, but global warming is a big reason to start using the stuff with greater care. The simplest way to encourage that? Make people pay for it.

Water is essential stuff, and sometimes we're willing to price it accordingly. How else to explain why U.S. consumers spend $7 billion on bottled water a year when they can't tell the difference with what comes out of the tap in taste tests -- and despite the fact it often costs more than three times as much per gallon than gas. But at other times we demand, like air, that it should be free -- or at least significantly subsidized. Farmers in California alone received about $236 million per year in effective subsidies from access to cheap water in the 1990s, for example. But California is far from the worst example of subsidizing unsustainable water use worldwide. And unless we start charging consumers what it costs to deliver piped water, many parts of the planet are simply going to run out -- even absent the impacts of climate change. Meanwhile, the world's poor consumers, mostly unconnected to piped delivery, will continue to pay considerably more for their water than the connected rich -- adding inequity to unsustainability as a cost of mispricing the stuff.

One-third of the world's population already faces water shortages. A recent McKinsey report estimates that based on current trends, by 2030, a third of the world will live in areas where the gap between water needs and accessible, reliable supply is greater than 50 percent -- so they'll have to be planting and drinking on borrowed time by that point. Agriculture is the big problem -- irrigation of cropland is responsible for 71 percent of freshwater needs worldwide, and accounts for over 93 percent of the freshwater we take out of rivers, lakes, and the ground and cannot then clean and re-use, according to the World Bank. By 2030, without efficiency improvements, global water requirements will climb from 4,500 cubic kilometers (about the volume of Lake Michigan) to 6,900 cubic kilometers each year -- largely thanks to the growing demand for food. That is some 40 percent above current accessible, reliable supply.

The picture is not that grim, however. For a start, we have seen a 1 percent improvement in efficiency in water use in agriculture per year in the period 1990-2004, alongside irrigation network growth that has occurred at a similar pace. If these trends continue, between them, these may address 40 percent of the gap between supply and demand in 2030, according to McKinsey.

Second, there are a number of methods to dramatically, and very cheaply, increase water efficiency at a considerably more aggressive rate than 1 percent a year. No-till farming, irrigation scheduling, reduced over-irrigation, and irrigated drainage all can have a dramatic impact. And a number of water-saving investments are very cheap -- including proper maintenance and repair as well as  the use of drip irrigation. McKinsey estimates the total global cost to close the 2030 water gap to be $50-$60 billion a year -- around 0.06 percent of the world's predicted gross domestic product that year.

INDRANIL MUKHERJEE/AFP/Getty Images

 SUBJECTS: DEVELOPMENT
 

Charles Kenny is a senior fellow at the Center for Global Development, a Schwartz fellow at the New America Foundation, and author, most recently, of Getting Better: Why Global Development Is Succeeding and How We Can Improve the World Even More. "The Optimist," his column for ForeignPolicy.com, runs weekly.

KERRQSEZFI

3:36 AM ET

December 6, 2011

Global warming

Now a days on earth "Global Warming" is the very big issue,How should we protect our earth: I have decided to Sell my car and opt for a bicycle, By doing this activity I can save a little part of earth, and it can make other person aware from global warming.

 

BIRCH2

6:49 AM ET

December 7, 2011

Air what we breathe in

Water is very essential to our existence and healthy lifestyle. I won't be suprised if we should pay for an air what we breathe in

 

LIFELINE

2:23 PM ET

December 6, 2011

What are with these cookie

What are with these cookie cutter responses? First one is just odd rather then cookie cutter as it vaguely links with the article, second one is text book cookie cutter agreement and the third one is literally just copy and paste from the article with some random code at the end.

FP web comments have always been sketchy at best.

I guess the irony is that im just as bad.

 

RADIMAN

11:32 AM ET

December 7, 2011

Piped Water Cost Unilkely To Ensure Users Avoid Wastage

I thought this article was good to provoke thought but as a water engineer myself I know that the cost of delivering water to the tap, and the charges made will seldom affect consumption as dramatically as may be needed when the supply is limited, even when domestic water supplies are metered.

The only thing which can really work when demand exceeds the water resource available is regulation, and in truth this has to be applied by governments rigorously in order to preserve many underground water supplies, and for surface water/ reservoirs when over-extraction of water would dry up some rivers completely if unregulated.

As a UK resident I know that even without any negative effects of climate change on our water regime, we have very little surplus for our main cities, and the south east. As the first industrial nation we have already significantly damaged close to 1/3 of our groundwater supply aquifers, and no water company would ever extract water from beneath any of our cities because it would cost far too much to clean it up to make it drinkable.

Now that is within a reasonably civilized nation with good government, where all new domestic water supply installations are normally required to be paid on a metered basis, and have been for more than 20 years.

All water extraction in the UK has been regulated such that any commercial user from boreholes or wells, and surface watercourses must have a licence in order to extract at all for more than 40 years.

So, yes once you have good regulation and the water engineering community has studied (and agreed) what is the maximum sustainable water yield which can be delivered from the environmental resource and the local infrastructure available, regulation must enforce a limit on the use of those resources.

Once that is done, I agree wholeheartedly that the rest has to come from better efficiency in water use. I am interested in the many advantages of composting and anaerobic-digestion-technology, and one is the use of compost to replace chemical fertilizers. One of the biggest advantages of compost is the way it improves soil structure to allow rain from summer showers to sink into the ground and not run off a "hard pan", and also hold more water longer, after rain. This may not sound like a big-deal but it can make an enormous difference to water use in irrigation.

 

VIPPY

3:35 PM ET

December 7, 2011

Water

Seems to me to do the obvious, enforce population control. Sooner or later we will run out of resources as we keep breeding like rabbits.

 

ATRAIN2007

3:49 PM ET

December 7, 2011

It's not just global warming

While I still am not convinced that "Global Warming" is anything real, let alone man made, there are still definite potential water problems, even in the United States.

Cities like Las Vegas Nevada and Phoenix Arizona are built in the heart of deserts! The are completely reliant from the water that comes from Lake Mead and the Hoover Dam. While the water supply doesn't increase, the population, and the demand for water does. It's scary to think of what would happen to those cities if that dam ever broke.

 

ROBATT

7:27 PM ET

December 7, 2011

Regulating or commercializing water supply?

Charging more for water is risky without serious government regulation. You risk transferring money to water entrepreneurs rather than providing clean water to people in need or to the environment. And "public-private partnerships" between the government and the private sector to manage the process is often just another name for the same game.
Check out what has happened here in Australia in the Murray-Darling Basin. For decades, supine politicians pandered to rural vested interests diverting ever more water to ultimately unsustainable but temporarily very profitable agriculture while water quality and quantity declined down stream. Reversing this now requires many times the courage and effort it would have needed to do the right thing from the beginning.
Politicians know there are almost always more votes to be got from pandering than from good policy. So first find politicians with integrity and courage (then expect to see a seriously well-funded campaign to get them voted out at the next election).

 

ALAN SMITHEE

9:15 PM ET

December 7, 2011

Water

I live in Phoenix, we plan ahead here. Admittedly not as much as we should, and we charge a lot for our water (not as much as it costs but more than most American cities)

Personally I'm not especially worried. We in these United States will be able to afford water and afford to move our cities inland.
If the rest of the planet can't , well then they should begin making plans now.
If, due to chronic civil instability or inability to provide goods or services that anyone will pay for they are too poor well, that is a self correcting problem when the water runs out, isn't it?

 

CRISTHOMAS1063

8:21 AM ET

December 9, 2011

I Don't Think Water Should Be Paid Much Higher

Well, I believe that water is one of the main needs of every individual. You consume water everyday and it will just be more difficult for everyone if they will increase the price of water given the fact that every commodities prices are rising. It's like getting a free tennis serve training that suddently needs to be paid. I think they should work on conveying more information to the public on how to save water.

 

FERNANDORE

3:29 PM ET

December 13, 2011

What we breathe in

Yea ! I won't be suprised if we should pay for an air what we breathe in...Thanks for Sharing!

 

YARINSIZ

6:31 PM ET

December 31, 2011

The only thing which can

The only thing which can really work when demand exceeds the water resource available is regulation, and in truth this has to be applied by governments rigorously in order to seslichat preserve many underground water supplies, and for surface water/ reservoirs when over-extraction of water would dry up some rivers completely if unregulated.