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I wanna highlight that you should take the reality into consideration! The marketing poliacy may be useful and effective in the developed countries. However it's impossible and impractical in the poor countries whose citizens are still sufferring from starvation. If the water-trading policy is implemented ,the poor will get less water and the rich will abuse and waste water, which may cause the tragedies happened in indian recently.

Long Long

The problems lies NOT and let this be heard emphatically to everyone, especially those living in capitalist, individualist societies, in the Technology. The Problem lies in OUR CONSCIOUSNESS, in OUR WAY OF TREATING NATURE, of TREATING LIFE, of TREATING OURSELVES. When humans start behaving more piously, humbly towards Mother Nature with a more reserved attitude, as opposed to arrogant, self-aggrandizing attidue, could one really DO something out of our crisis. The over reliance on so-called Science is a superstition that is not even substantiated by facts - in the case of GM Crops, the amount of rampant bugs conditioned to be stronger after we humans decided that they should be poisoned e.g. Bollgard Cotton. The yields are actually lower than that forecasted. The disadvantages clearly outweigh the advantages, but why can't we see this? why can't we drop our chutzpa of nerves and start understanding what our ancestors have sought to tell us from the start? One can learn amazing things when one is humble! One can learn so much from the Buddha, Confucius and Lao Tse.


One of the earlier posters made mention of the value of ownership as an argument in favor of subjecting water to the full forces of the market. Cows are not scarce but ocean fisheries are, presumably due to cows being owned and fisheries not. This line of thinking neatly sidesteps the fundamental differences in the natures of these goods. A cow can be fenced in and, therefore, meets one of the basic requirements for being able to be owned. A school of fish in the North Atlantic goes where it wishes and needs to go, irrespective of abstract international boundaries or theoretical ownership, which makes it effectively impossible (given current technology) for any of us to enforce ownership, even if such ownership were legally decreed by one human authority or another.

That lapse in understanding of theory carries over into a failure to acknowledge the fundamental nature of water as a commodity. Water delivery through a networked pipeline system has the nature of a natural monopoly. Once any given entity has a leg up on its competition, having developed a water treatment and delivery system, it can charge whatever it wants to potential customers. Because of the expense, difficulty, and waste of installing rival systems (all water rights issues aside), once a system is in place, it is not likely to face competition. Without competition, the market fails via abuse of power by the monopoly. For this reason, municipal water systems in the U.S. are generally publicly owned and operated or, at the very least, publicly regulated.

Moving to a less-developed rural setting, water wells have historically been collectively owned by communities for very specific reasons: without water, one dies. To prevent community members from being subjected to abuse (in the form of threat of death) by a privately-owned monopoly, wells are usually owned by--and operated for the well-being of--the community as a whole.

Another point: Once a water treatment and delivery system is in place, the marginal cost of supplying water via the pipeline system is nearly zero. Without the monopoly and regulated utility aspects of water delivery, the rational price for water would be equal to nearly zero. A market price of zero would hardly help the situation of excess demand for clean water.

From my perspective, however, the problem we have in developed nations isn't genuinely a problem of either excess demand or scarcity of water. It's a problem of operating on the premise that the system, absent a market price mechanism, is fully responsible for supplying whatever quantity of water is demanded by its customers. There are very few commodities for which it is assumed that the supply must always be universally and perfectly equal to existing demand. Without the will to make judicious decisions about how much water is reasonable to supply to the "market", and with an array of motives to sell as much water as possible, water system managers and government officials scramble to meet demand, regardless of how unreasonable or irrational (given current resource limitations) such demand might be, and nearly regardless of how many natural resource sacrifices must be made in order to do so.


The Economist misses the essential economic point: Water will be made subject to market discipline when and only when it actually becomes scarce. Those who write comments expressing horror at the supposed negative impact of markets on water are imagining a world that cannot exist, namely one where water is owned and sold without such discipline being needed.

The real danger is that if water does indeed become scarce, people will believe that the best way to allocate it will be through government control. With all their faults, markets are always better at ensuring the availability of scarce resources than any government.

Belay Zeleke

SIR- You went right describing that fresh water is finite, scarce and that the managing it well could alleviate its shortage (Opinion, May 20th 2010)! Fresh water cannot be free as land is not free. It is not uncontrollable like air that everyone can get it easily and everywhere. Therefore, the solution for managing fresh water to keep the balance of supply and demand is to let the market and price mechanism regulate it.
However, the management of fresh water would be effective with the application of modern international legislative framework which provides the right to rivers sources countries to charge rental fees per cubic metre of water flow from users outside the rivers source countries. There is no free lunch! Like countries which have diamonds and oils, fresh (river) water is also even more precious resource to the rivers source countries and these countries have natural and potential legal rights to charge for their resources as the diamond and oil countries can.
In this way, both the rivers source and outside rivers source countries can conserve and economically utilize the world’s most precious and scarce stuff, fresh water!


Pricing water is all well and good, but what about the fact that it is things like this that drive some developing countries to sell water, despite needing it to feed their own thirst (see debate around the bottled water industry)? Plus whilst India is used as an example here - is it not the case that water consumption and waste in the west is much much higher?


I argue for the free market in a letter to the editor, posted here: http://www.economicthought.net/2010/05/solutions-that-hold-water/

Far from being irrational and inhumane, the free market (and its price mechanism) is the most efficient method by which to distribute water. Rising costs are the only way entrepreneurs are provided an incentive to think of ways of conserving water as a means of conserving potential profits (by cutting costs). This is why drip lines are popular in Israel, and why my family (farmers) in Spain have adopted the drip line for their vineyards (since it cuts costs). It is also why engineers have developed more resistant plants, which require less water.

When the water market is regulated, or worse nationalized, what has historically (empirically) occurred are water shortages. For example, in Zimbabwe a heavily regulated water industry caused massive water shortages, despite the fact that Zimbabwe has the largest reserve of water for agriculture on the African continent.

There is a stigma against free markets, because they are seen as inhumane. But, this couldn't be farther from the truth. The truth is that capitalism is the only method by which standards of living can be steadily and sustainably increased, and by which shortages of scarce commodities can be alleviated.


Four solutions of varying feasibility outlined, but not one mention of population reduction/control?


Some people will always say that problems like this can be solved via more social equity. That's delusional. We can always out-reproduce any technological solution.

And today the net total numbers of the human race are increasing at the rate of--if I recall the UN figures correctly--around 140 people per minute.

So no country on Earth has a shortage of water. There was plenty of water in every country before, say, 1900, before the world's population quadrupled. So since the supply of water is the same, it's far more accurate to say that we have an excess of people.

But because The Economist mis-framed the issue as one of water supply and management, it failed to address what would actually alleviate the perceived water supply problem: fewer people.

China's One Child policy helped. Granted, China still has a looong way to go. But it would be so much worse if it hadn't adopted this.

Of course the poor nations will claim this is genocide if rich nations propose it for them and not us--so it should be adopted by all nations until the world's population is back down to a billion or so, and no foreign aid go to countries who fail to do so.

And of course that's not going to happen. But believe it or not that's the humane approach. The other approach is what Nature will impose on the human race if we don't fix this ourselves.

I promise you won't like it--and that it will make the brutality of China's One Child policy look like we'd all died and gone to heaven in comparison.

blogzu dot blogspot dot com


Israel is a leader in drip irrigation, recycling water for agriculture, and has the world's largest desalinization plant with an even larger one due to come on line soon. In the next few years Israel plans to have one-third of its fresh water needs provided by desalinated water.


"Unleash the market on water-users" the self-evident stupidity of this statement must be apparent to all ethical human beings. So does the author of this piece mean to let people die if they cannot pay? I presume not, but should be more careful in how he illustrates the points of his arguments.

The commentator who indicated that in his view that people should just be left to starve, I cannot believe he is serious. However, if he is serious I suggest that we stop his food and water supply and reduce the overpopulation of the Earth by one whole person. This would be a quite darwinian solution given that his arguments do not seem to benefit the collective ethical progress and intelligence of humanity.

On a more serious note, if countries would look at how serious water-deficient countries such as Namibia and other similarly water-constrainted countries deal with extreme water shortages this should illustrate some possible solutions that can be advocated for other countries. Countries have many possible solutions to water shortages. These can link together many solutions like fog-harvesting, efficient water management, opportunity cost of water, virtual water and many other concepts involving use of efficient crop management(unlikely rationally to be GM)using traditionally bred landraces that are highly drought resistant (Hopi Blue Corn to mention an ancient OP maize variety that is incredibly drought resistant).
Solutions just require some creative thinking and targeted money, not wastage of money and the deux ex machina of the "unleashing of the market" which is a bizarre fantasy. "Unleashing the market" as we have all seen can result in world economic collapse, this is not desirable.

As EmersonFlint wrote there are many knowledgeable people out there who know lot about water and its management (one I can think of is Chris Riej of the Centre for International Cooperation at the VU University fo Amsterdam), but I would also recommend as well those local people who have lived under conditions of water scarcity for a long time and have managed their crops and livestock to survive under such conditions (proof of economic fitness). They are experts in water management, and together with suitable and appropriate hi-tech and low-tech solutions, progress towards adequate potable water for most people, their crops and livestock may be possible.
Efficient and effective use of water is essential, and needs to involve all stakeholders if this is to be done successfully, including those that are poor and whose ability to access water is limited.


Your four actions are accurate, but they will NOT happen without a fifth -- reform of water governance. That often means tacking political over-reach, incompetence and corruption, but political reform is both necessary and sufficient for good water management.

Note that this government failure takes place in ALL countries, and it affects us all because of water delivery is often a natural monopoly and water ownership is always a government monopoly.

David at aguanomics

Terry Spragg

A significant solution to the problem of easily and inexpensively moving large volumes of water from place to place using the oceans of the world can be seen on YouTube at: http://www.youtube.com/watch?v=4TEJp6UZaDI, and at www.waterbag.com. Waterbag technology is simply a fabric pipeline connecting large waterbags into trains using the world's strongest zipper. A worldwide demonstration of this technology is currently being planned. We would welcome an ECONOMIST reporter on board. Terry Spragg


The relatively limited amount of water required for personal consumption must not become subject to a profit maximizing scheme, this would be simply inhumane as outlined by several comments. However there are much larger amounts used commercially, as in farming and manufacturing as well as non-essential private consumption - such as water used to sprinkle lawns, wash cars and replenish swimming pools. This kind of consumption should have a (flexible) price tag related to the scarcity of the resource in areas without abundant and sustainable supply.

So water management needs both, government regulation (including the quality aspects) to ensure supply for basic needs and some market elements for those who use water for profit or pleasure.


The First Four paragraphs of this article, had me Nodding in TOTAL Agreement with what was being said!

I Chose to Overlook the Fact, that this was ALL Old News (over a Quarter Century too-late). But I Can/Will NOT Ignore these FOOLISH Words like these:

"...unleash the market on water-users and let the price mechanism bring supply and demand into balance. And once water is properly priced....."

When Will the Wise Wake UP?

WATER is not a "Commodity", that can be left up to this So-Called Market to Manipulate & Profit off of!!


The Best thing this "Unfetterd Market" can do, is to STAY as FAR AWAY from this WATER as they possibly can. Or else, the ONLY thing being "UNLEASHED" will be the People's............

Peace, Love & Respect.


Perhaps The Economist might care to do some research into agronomic practices before issuing recommendations on agricultural water management? (I can recommend some very knowledgeable researchers at UC Davis, CSU Fresno and CP SLO if you couldn't find any.) By way of example: Agricultural water conveyance systems are often left unlined intentionally - to provide percolating recharge to underlying aquifers, which as is stated in the article are often over-taxed.

Kenda Swartz Pepper

I envision that one day agrochemical companies will have to invent genetically modified water when farmers realize their GM drought tolerant crops actually need more water than did their original conventional crops. The agrochemical masters who have many believing their overriding goal is to feed the hungry while simultaneously helping the environment will then patent the rain rendering all of us (not just the poverty-stricken farmers in developing communities) helpless to the oppressive powers of distorted ethics and confused social justice values. They will one day likely own our food. It only makes sense they own the water too.

And for those who think that allowing the poverty-stricken to starve because they are the responsible parties for over-population and are contributing to the problem of the 1+ billion hungry people in this world, these folks seem clearly unaware of: the oppression and inequities of those living in dire poverty; how in developing countries a family’s need for more hands on deck may be their only hope for survival; how too many women in this world are still oppressed by men and therefore have children to satisfy cultural needs in lieu of their own; the fact that for some families, children are the only form of security. This list goes on. I think this world – especially Westerners – could benefit from having a good dose of nonGMO compassion to share with others.

Yet sometimes it’s easier to tell someone else to change rather than to eat locally, reduce or eliminate meat consumption, grow an organic drought tolerant garden, educate a woman in a developing community; simply decrease consumption, or take a stand and start a revolution against the wasteful abuses of industrial agriculture. I suppose for some, it’s easier to point the finger than to take action.


As you state, a severe water crisis in China would create profound instability. Yet many large Chinese cities, including Beijing, along with several rural areas, already perch on the brink of catastrophe. Draining aquifers has postponed the crisis for a few more years, and Beijing's leaders still hope to pluck a miracle from the debacle of the "South-North-Water-Diversion-Project (SNWDP)," a grandiose engineering gambit on the scale of the Three Gorges Dam beset by cost overruns and the seemingly intractable problem of transforming the slurry of human and industrial waste into safe drinking water. Originally planned to bring copious amounts of water from the "wet" south's Yangtze River to the arid north in time for the 2008 Olympics, the project has repeatedly been delayed by the need to build ever more treatment stations along the route.

Keeping water fit for human consumption and watershed ecologies in tact has far too long been an afterthought in China, a distant second to the imperative of rapid economic growth. Thus it's been routine to "externalize" agricultural run-off, human sewage and industrial effluent to cut costs. Even cities surrounded by rivers, such as Chongqing (pop.20M) in the southwest and Tianjin (pop.15M) in the northeast suffer water shortages because of severe pollution. Tianjin, a port city, recently opted out of the SNWDP in favor costly desalinization.

Meanwhile, as it waits for the diversion project's completion, Beijing has become a regional "water bully," using its political clout to commander the scarce liquid from surrounding townships--which are then forced to rely on their aquifers until they run dry. It is of course, the nation's capital, and as such feels compelled to offer "first world" abundance in its hotels, restaurants and myriad corporate headquarter buildings. Experts predict Beijing's principal aquifer will run dry by 2015.

China's arid north had sparse water before industrial and agricultural pollution, compounded by massive urbanization, squeezed the supply to the crisis point. Castastrophe, in the shape of mass migration and agricultural shortfalls, looms in the not so distant future. The water crisis threatens China's economic growth and its political/social stability. It also threatens global food supplies, as China possesses the deep pockets to empty the world's granaries, and its harvests have already been impacted by loss of agricultural land to industrialization, water shortages and acid rain. China's water problem is destined to become everyone's problem before the end of this decade.


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