Priceless Water Costs a Fortune

How do we handle something that is absolutely vital to us but also seems endless and ever-flowing? Traditional approaches to water conservation and management have had limited success in addressing the growing demand for this precious resource. So, what would happen if we treated water like any other commodity and allowed its price to increase?

A handful of principles govern our economic behavior. When prices go up, demand usually goes down. When we pay for something, we take better care of it. When we cannot afford something in abundance, we prioritize, conserve, and invest in new solutions.

Applying these principles to water reveals how our belief that water is not a commodity as much as a right has led to overuse, waste, and inefficiency. Like any commodity, water demand responds to price changes. Higher prices lead to reduced consumption, as users become more conscious of their usage and seek ways to cut back. By rethinking the economic value of water and allowing prices to reflect its true scarcity, we can start tackling water shortages for real.

Still Water

Higher prices can slow water consumption, allowing supplies to replenish. It also stimulates innovation and businesses to invest in water efficiency, as the economic benefits of conservation become more apparent. Slowing down the flow at one end can accelerate movement at the other. Farmers might switch to more efficient irrigation methods and less water-intensive crops. And water-intensive industries are given stronger incentives to invest in water recycling technologies.

Additionally, higher water prices can generate revenue for maintaining and protecting water sources. Increased revenue could be invested in advanced water metering and recycling technologies, as well as public education campaigns, enhancing the overall efficiency of water use.

Expensive Water

Am I suggesting that a fundamental human right should now be unequally distributed and benefit only the wealthiest? Quite the opposite. Proper pricing ensures a smarter allocation of water to where it creates the most societal good, so it will be available to us when and where we need it for generations to come.

The price of water could be set annually by government bodies based on estimates of water availability for the coming year. A maximum monthly water withdrawal per water basin should be established, creating a transparent supply. A fixed amount should be allocated for society’s needs, with the remaining amount allocated for commercial use.

Commercial water withdrawal would be auctioned to the highest bidders, with prices determined by market forces. During times of short supply and drought, water prices would rise, and fall during abundance. It is crucial to ensure that higher water prices do not disproportionately impact low-margin industry sectors critical to society. Governments could provide subsidies or financial assistance to these sectors.

Demanding Water

Allowing the price of water to increase offers a powerful tool to mitigate water scarcity by enabling businesses to justify the investments needed to reduce water waste. As we all know, very few businesses make investments solely because it is the right thing to do. Investments intended to save costs however is another matter. It is time to start treating water like any other commodity, and to regulate its extraction. If we don’t, the true cost will be a price beyond our imagination.

Jonas Wamstad,

Water innovator & Co-founder of Drupps