Can we put a price on water?

Mon, 03/04/2013 - 14:23

The price of water?

These days there is much ado about water, not only the NGO’s of this world are interested in water. Wall Street is coming to the realization that water is valuable, but how does it work? Can it become a commodity to trade?

According to traditional economics we would think that the scarcer the water the higher the price and this would then temper demand. However, water is no ordinary commodity, there are many factors that influence how we value water, of which politics is one. In developing countries, projects are in place to keep the price of water at an acceptable level even though bottled water is being sold for ridiculous prices.

In the US, the price of water is the cheapest in areas where water is the least abundant, like Utah, Nevada & California. If states are willing to invest in good infrastructure the price of water does not need to rise, but if states include the cost of infrastructure to bring water to its constituents then the price of water will rise. The same can be said for developing countries, where investing in a good solid infrastructural water system is still not high on the priority list, let alone all the remote rural areas. However it can be done, and not only in an NGO minded fashion but more from an aid in the form of know how and setting up micro economic hubs.

 

It remains to be seen as to how we value water and whether it will one day be a commodity traded like oil and gas.

The question remains can we really put a price on water? When it flows in a stream or river it is free, however when it is not available it is priceless.