TCS Daily

Thirst Quenchers

By Roger Bate - October 28, 2002 12:00 AM

It's often said that water shortages are leading to conflict and may lead to wars in the future. The United Nations is so concerned with global water issues that it has designated next year as the year of Freshwater. Even the symposium of the World Food Prize, held in Des Moines, Iowa last week, concentrated on the coming water shortage. Despite the attention paid to water, there is very little understanding about what prompts water shortages and other water-related problems. The main reason water is in such short supply is that it is subsidised, supplied and sold by governments in nearly every country of the world. Markets are rarely to be seen; and when they are, they are never free.

Every presentation at the World Food Prize discussed the problem of water allocation. While 85% of freshwater in the developing world and 62% of freshwater in the richer world is used in agriculture, only 1% of irrigation agriculture around the world uses efficient drip irrigation. And only really arid places like Israel employ other technologies, such as reusing part-cleaned effluent (since plants don't need the purist water), and comprehensive water metering and accurate pricing. All the WFP speakers discussed how these technologies - and many others including increased desalinisation for human consumption - should be employed to increase water use efficiency.

But there was very little discussion of water markets, and to the extent there was, the discussion was flawed. Peter Gleick of the Pacific Institute for Studies in Development, Environment and Security thinks that markets can improve efficiency. But he is worried about the equity of them. Sandra Postel, Director of the Global Water Policy Project and Margaret Catley-Carlson, Chairman of the Global Water Partnership, echoed his views, with the former saying that in many places, like Bolivia, the poor were affected far more severely than the rich by price increases that followed private sector involvement in water management.

Now, it's certainly true that in many places the poor pay many times more for occasionally unclean water sold by street vendors, than, say, middle class suburbanites who receive piped potable supplies. So opponents of markets tend to think of these problems and the poorly designed and managed privatisations in the developed world as market failures. But these are rarely the real market failures that Postel and the rest claim. Instead, it is a failure of governments to allow the market to work properly.

The influential Peruvian economist Hernando De Soto has demonstrated that without title to land and other forms of property it is impossible for poor countries to develop. And he has been helping governments around the world to improve title. But when I spoke with De Soto a few weeks ago he wished that his team had been able to improve the 'often non-existent' title to water, which he was sure was causing huge inefficiencies.

Following De Soto's approach, recent work by Indur Goklany of the United States Department of the Interior has shown that because land owners have more secure title to their land than they do for their water, they have used the land more efficiently than the water.

Between 1900 and 1995 the world's population increased 251%, its use of cropland increased 93% (and has declined since 1930). But its use of water has increased 388%. Goklany explains that because the land was relatively more valuable than the water (since land title was established and therefore land could be mortgaged), changes in farming practice were designed around getting the greatest value out of land. And efficiency gains have meant that far more food can be grown on an acre of land than 50 years ago.

As an indirect result of secure land tenure, and a direct result of non-existent water title, water use efficiency was a low priority for farmers, since its value could not be captured independently in a market. If institutions and policies are modified in order to price water, and private entities are assigned transferable property rights to water, then 'it might be possible to replicate for water the almost universal historical experience with land' says Goklany.

And it can't happen a moment too soon. Water - far more than land - has been the limiting factor in agriculture development worldwide for decades. But increasing water scarcity has only attracted greater government involvement in water allocation, when the opposite needs to occur. Government has failed. It's time to try the market. A market in water could lead to increased food production as well as reduced water use. And for many parts of the world it would reduce conflict, too.

And I was hoping to hear at least one of the 25 speakers at the World Food Prize meeting make this point. But where anyone discussed water provision at all the continuing refrain was that 'water is a public good' and government must provide it. Sadly, it's this current mindset that got us into much of the water mess we're witnessing today.

Dr Roger Bate is the Director of the International Policy Network, a London and Washington-based research organisation.

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