The Price is Wrong : Economics


The price is right for the majority of the nation in water pricing. Water isn’t priced by market forces because it is inelastic. The environmental campaigns trying to convince people that water is scarce because their toilets use too many gallons and they leave the water running while brushing their teeth are completely ridiculous and wrong.Water is priced directly from the cost of providing it. People don’t hoard water at all. It isn’t subject to speculation. There is no investing (gambling on futures) of water. Governments are generally regulated in most states in such a way that they can’t overprice public utilities. I’ve worked for a city before where the head water manager lamented a very wet year because water use would go down as people watered their lawns less. He either had the choice to raise water prices or tighten his budget and do less work to maintain and improve the system he managed. What market theory states that prices go up as supply goes up? Not econ 101 there.Making water more expensive doesn’t create incentive to provide more water. Making water cheaper doesn’t create incentive to use more water. It’s simply too inelastic for the vast majority of the nation.Because water supply is generally inelastic, all large users of water is based on shares of available water. A person is allowed to use a share of water that is available. A water share does not guarantee any specific amount of water. Agriculture doesn’t trade water directly, they buy and sell shares of the water that exists not knowing exactly how much water those shares actually represent. Making shares more expensive likewise doesn’t result in more water being made available. Making them cheaper doesn’t do the reverse.There’s no way to create a market around water that works without centralized management determining who gets what. Canal companies are essentially government bureaucracy when it comes to water.Imagine how stupid it is for someone to tell me to reduce my shower times to save the environment. I pay 70 cents to a dollar for 1000 gallons of water. If my show head is restricted to 2 GPM, going from a 5 minute shower to a 10 minute shower costs me a couple of pennies. That’s right, PENNIES. The water is not destroyed upon using it either. It goes right back into the water cycle.Bottled water is a luxury and not at all the same thing as utility water. People who buy bottled water would do better to invest in a good filtration system like a reverse osmosis system. That creates cleaner water than the stuff you buy at the store for significantly less money.


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