ECON 152 Principles of Economics

Humans can survive a matter of days without clean fresh water to drink (henceforth “water” refers to clean, drinkable fresh water). The United Nations has recognised access to clean drinking water as a human right. However, the United Nations also recognises that climate change is a threat to water supplies, and consequently a threat to countries’ stability.

The intersection of climate change and economic development affects many countries. In Mexico, underground aquifers are being drained to supply water to those living in cities, which is undermining the stability of the ground on which the cities are built. In the western United States of America, the prolonged dry conditions have been described as a “megadrought”, affecting the livelihoods of the area’s cities and farms. In the Horn of Africa region, prolonged and increasing droughts have been linked to increased conflict and reduced government stability in those areas.

That being said, many countries charge only for the service of providing the water, rather than the water itself. This means the price per litre of this water is very low in many areas, including those with stressed water supplies. Consequently, water is not always used efficiently. Some suggest that privatisation of water markets could resolve this issue: because the price mechanism sends the appropriate signal of the cost of this precious resource to all participants in the market.

Based on your discussion of ownership and intergenerational equity, what do you suggest would be an appropriate method for providing fresh water? Justify your suggestion.