Water Scarcity, Marketing, and Privatization

Abstract:     
Most Americans take water for granted. Turn on the tap and a limitless quantity of high quality water flows for less money than it costs for cable television or a cell phone. The current drought has raised awareness of water scarcity, but most proposals for dealing with drought involve quick fixes-short-term palliatives, such as bans on washing cars or watering lawns except on alternate days. It is assumed that things will return to normal, and we will be able to wash our cars whenever we wish. But the nation's water supply is not inexhaustible. A just-released report of a White House subcommittee ominously begins: "Does the United States have enough water? We do not know." In a survey of states conducted by the U.S. General Accounting Office, only 14 states reported that they did not expect to suffer water shortages in the next 10 years.

Is the sky falling? Not yet, but the United States is heading toward a water scarcity crisis: our current water use practices are unsustainable, and environmental factors threaten a water supply heavily burdened by increased demand. As the demand for water outstrips the supply, the stage is set for what Jared Diamond would call a collapse. How will we respond? When we needed more water in the past, we built a dam, dug a canal, or drilled a well. With some exceptions, these options are no longer viable due to a paucity of sites, dwindling supplies, escalating costs, and environmental objections. Instead, we are entering an era in which demand for new water will be satisfied by reallocating and conserving existing sources. The current water rights structure is the outcome of historical forces that conferred great wealth and power along with the water. The solution to tomorrow's water shortages will require creative answers to challenging issues of equity, community, and economics.

Keywords: water law, natural resources, privatization, water marketing

JEL Classifications: Q25, D23, D40, D62, D63, H40, K32, Q00, Q30

Accepted Paper Series