Results for “water”

1041 found

While most countries are committed to increasing access
to safe water and thereby reducing child mortality, there is little consensus
on how to actually improve water services. One important proposal under discussion
is whether to privatize water provision. In the 1990s Argentina embarked
on one of the largest privatization campaigns in the world, including the privatization of local water
companies covering approximately 30 percent of the country’s municipalities.
Using the variation in ownership of water provision across time and space generated
by the privatization process, we find that child mortality fell 8 percent in
the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas.  We check the robustness of these estimates using cause-specific mortality.
While privatization is associated with significant reductions in deaths from
infectious and parasitic diseases, it is uncorrelated with deaths from causes
unrelated to water conditions.

That is the abstract to a very important paper, Water for Life: The Impact of the Privatization of Water Services on Child Mortality, by Sebastian Galiani, Paul Gertler and Ernesto Schargrodsky in the February 2005 issue of the JPE.  (free working paper version).

In theory, water services are not an easy thing to privatize well because of natural monopoly problems and because some of the benefits of clean water are externalities.  In practice, however, governments in developing countries do such a poor job at providing water that there are large potential gains to privatization even given such problems.

See also Tyler’s post Will the Middle East run out of water? for more on where water privatization may have benefits.

Here is a general listing, with photos, and sometimes prices.  Here is the most advanced "tourist submarine" available.  You can buy this "acrylic viewport globe" — modeled by an Italian designer — for only a few million.  Nor should you ignore this aquatic home, which remains unpriced and perhaps does not yet exist.  Here is evidence that the company is for real; see here also.  The film industry is one of their customers.  Here is their rationale for price discrimination.

Many thanks to Catherine for the pointer.

Farmers, who account for 70 percent of the world’s water consumption, are often hugely uneconomical about it.  For example, in growing water-intensive crops they derive a less-than-optimal nutrition content from a given quantity of water.  Agriculture, in fact, is one of the real villains in the global water drama…Half the water used by the world’s farmers generates no food…A 10 percent improvement in the distribution of water to agriculture would double the world’s potable water supply.

Middle Eastern countries could solve many of their water problems with free trade, economic diversification, and better agricultural incentives, and yes that means don’t grow bananas in the desert.  Yemen needs to stop growing qat; this addictive drug accounts for over seventy percent of their water use.

Ideally the relatively water-rich Syria, Lebanon, and Turkey could be selling water to the rest of the region but for political reasons don’t expect much of that anytime soon.  Sometimes the easiest way to trade water is inside a tomato.

As for desalination, the costs have fallen dramatically over the last decade, and may continue to fall.  The real problem is not producing the water but rather transporting it uphill.  Desalination won’t solve your problems if you live in the mountains.

The above passage is from Fredrik Segerfeldt’s excellent Water for Sale: How Business and the Market Can Resolve the World’s Water Crisis, published by Cato, and thanks to Alex for the pointer.

My post on hot water (and followup here) is drawing more hot air than I expected. Daniel Davies over at Crooked Timber is often very good so I am frankly surprised that he gets this one very wrong. Davies thinks the argument falters if you assume the landlord has monopoly power.

Even if there is a slight oversupply of rental units for sale, time is almost always on the landlord’s side, because waiting is typically much more inconvenient for the party that has to wait without a house to do wait in [sic]. In general, when tenants and landlords are negotiating over the potential Pareto gain that could be made from renting the house, the landlord ends up capturing most or all of the surplus. The hot water and habitability laws are simply aimed at skewing things a bit in favour of the tenant and putting a floor on how bad a deal the tenant can end up accepting.

Wrong. Assume that a rapacious landlord owns the only apartment in the entire universe and you want it. The landlord is therefore going to extract all of your consumer surplus. Without the hot water the apartment is worth $500 a month to you – so that’s the rent. With the hot water it’s worth $550 – so that’s the rent. There is no skewing in favor of the tenant because the law doesn’t change the landlord’s bargaining power one iota. All it does is raise the landlord’s costs so that he may, in fact, quit the business making you worse off.

Daniel has not absorbed the lesson of my post, the rent will go up. He would have an argument if we added rent controls thereby squeezing the landlord from both ends. [Addendum: Glen Whitman gets the analysis exactly right.]

On a different note, many people have focused undue attention on hot water, something that most of us (in this country) really do want in an apartment. The principles involved, however, don’t change much with the good. If you like, think air conditioning instead. Eric Kilby kindly sends me an editorial from a few years ago in the Philadelphia Inquirer (registration required). Here’s what it says:

The zoning board under Thomas Kelly, president of Sheet Metal Workers Local 19, has required some developers of subsidized housing to install central air conditioning – a pricey, discouraging requirement for what are supposed to be low-cost projects. AC, in case you haven’t guessed, is installed by sheet-metal workers.

I think my law students understood my first-class example about contracts, incentives and hot water. But Kevin Drum, Matt Yglesias and others are having some difficulties. No problem. I will make it simpler. Suppose we have a law that says that at the end of every year landlords must rebate their tenants $50 for every month of rent paid. Good for tenants, right? Perhaps in the very short run but in the near future we can expect to see rents rise by $50 per month and the old equilibrium will be restored in all essentials. Now suppose that instead of being required to rebate the $50 the landlords are required to spend the money on shoes for the tenants. Now both tenants and landlords are almost certainly worse off since the tenants would almost certainly have used the rebate to buy something other than shoes. The hot water example hardly differs.

Of course, we could add in some other features that might make the law a good idea. Suppose, for example, that hot water encourages bathing which reduces the transmission of disease. Tenants won’t take the external benefit of hot water into account and thus hot water will be underprovided – a hot water requirement or better yet a subsidy might be justified in this situation.

An alternative explanation for laws like this is that they are supported by people who want to keep the poor out of their neighborhood – this is an externality argument also but one quite different from that above. Whatever the explanation, note that these arguments are quite different than the naive one which assumes that the requirement transfers wealth from the landlord to the tenant. Contracts are multi-dimensional, force one part to change and the others will adjust. More bonus points: What implications does this have for the study of price controls?

As I told my students, understanding the basic analysis is the first-step on the path to wisdom, it is not the end of the path. But you have to understand the first step if you are going to reach the final destination.

Efforts to conserve water – from low-flush toilets to more efficient power plants and crop irrigation – are working so well that Americans use less of it than they did 30 years ago, a report issued Thursday by the federal government says.

The flat trend in consumption came even as the USA’s population grew and electricity production, the largest user of water, increased.

The study from the U.S. Geological Survey says consumption is largely unchanged since 1985 and is 25% less than the 1970s, when it peaked.

Here is some more evidence:

The biggest savings have been by industry. And that is a result of water-saving technology driven by energy-saving and environmental protection laws passed in the 1970s. Utilities that once needed huge amounts of water to cool electrical generating plants in “once-through” fashion now conserve water by recirculating it in a closed loop.

The report says the USA consumes 408 billion gallons a day. Homes and most businesses use 11% of that. Nearly half, 48%, goes to power plants. Watering crops takes 34%. The remaining 7% includes mining, livestock and individual domestic wells.

Here is the full story, which also ranks states by water use. Here is the original report. On a global scale, agriculture accounts for 70 percent of water use, which indicates further room for conservation. It is indeed a problem that rich nations use ten time more water per capita than poor ones. But in a time when people are talking seriously of nanotechnology, can cheap desalinization be so far on the horizon? Read here on a recent Israeli effort.

Lynne Kiesling offers a lengthy discussion of water privatization, with useful links. I have long thought that water is one of the tough cases for market economics. It is hard to imagine having two sets of pipes built to your home and thus it is difficult to see how competition would operate. Even Milton Friedman, to the best of my knowledge, never came out for laissez-faire for water. An obvious option is to have the pipes regulated, but allow competing carriers within a single piping network. You then have to regulate access to the piping network, and regulate the pricing of that access. Furthermore you must make sure that some institution has sufficient incentive to maintain the value of the piping network, comparable issues have proven problematic in the case of electricity. Managed competition may prove a better form of regulation than municipal ownership, or a vertically integrated natural monopoly, but it is regulation nonetheless. And unlike with electricity, it is hard to see decentralized provision of water becoming the norm anytime in the near future. Electricity offers options such as batteries, solar power, and private generators. Water without pipes is simply hard to live with, get ready to carry buckets on your head.

Nonetheless a good case can be made for the private provision of water, with unregulated pricing, in very poor developing countries, such as much of Africa. Let any private supplier sell water at any price the market will bear. Yes this sounds drastic, but the harsh reality is that otherwise many Africans have no access to piped water in the first place. Even a monopoly price is better than carrying that bucket on your head, and don’t forget that well water can cost ten or twenty times the price of piped water. I recall once reading that if the cure for AIDS were a simple glass of clean water, many Africans still would have no chance.

The problem remains that charging for water is problematic in many developing countries. Property rights are poorly defined and people are not used to paying for municipal services. If you set up water piping to the very poor and tried to collect fees in return, many people simply would not pay and legal recourse would be unclear. What can you do, report them to a credit bureau? Attach their wages? You can see the problems. Right now we know that progress in the water sector will be slow at best.