This part of Laudato si’ has been on my mind recently, since a friend posted it on Facebook:
Even as the quality of available water is constantly diminishing, in some places there is a growing tendency, despite its scarcity, to privatize this resource, turning it into a commodity subject to the laws of the market. Yet access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights. Our world has a grave social debt towards the poor who lack access to drinking water, because they are denied the right to a life consistent with their inalienable dignity. This debt can be paid partly by an increase in funding to provide clean water and sanitary services among the poor. But water continues to be wasted, not only in the developed world but also in developing countries which possess it in abundance. This shows that the problem of water is partly an educational and cultural issue, since there is little awareness of the seriousness of such behaviour within a context of great inequality.
I thought this was a great illustration of how unintuitive economics is; the many learned minds in and around the Vatican make the same kinds of mistakes that the ordinary person makes. The Econtalk podcast of March 2, 2015 covered this exact topic very well. Two brief points:
1. How much water is everybody entitled to? For what uses? When can people bathe? Should the water in the shower cut off after two minutes? Is it some kind of moral law that families should all share the same bathwater? Saying “water is a right” is fine but gives us few clues about practical implementation.
Farmers need to use more water than the rest of us, and in general the rest of us are happy about that because we value the produce. What about marijuana growers? Are they entitled to more water in the same way that spinach farmers are? Some of us value the produce of marijuana farms and some of us do not. I believe the Pope opposes marijuana farming, but he has now set up a situation in which differing beliefs about rights conflict with essentially no resolution unless we all buy into the whole package. (We don’t.)
2. Is the public funding of the provision of water the most reliable way to ensure that water is available for everybody? There’s a decent argument that municipal-level provision of water is usually the most efficient way to do it, which I will assume here to make things easier. In this situation, should the water be priced at zero? This encourages overconsumption and makes infrastructure maintenance and expansion less likely. Why economize on the use of water when there’s no difference to you in running the tap for 10 minutes or an hour? Where do the funds come from when maintenance or expansion are needed? Should the water authorities attempt to mimic market pricing to encourage better conservation and better infrastructure? That’s remarkably like making water a commodity, isn’t it? You could compromise between the two positions and price water below market but above zero. You can’t be half pregnant, but can something be a half commodity?
Many areas that have zero-price water have said water in the city center and little or none in the outlying areas where the poor live. They still need water to survive, and water trucks supply them with it but at many times the cost that people with access to a working tap pay. Pricing water above zero/closer to market price would help them, not hurt them, since it would allow for better (or any) infrastructure to reach them. This infrastructure funding could come from other sources, sure, but which, and what would they give up instead? How much infrastructure should be built, and to where? Ceteris paribus it is costlier to live in barren desert than in well-watered areas; who should bear these costs?
I began by saying the Pope makes the same errors ordinary folks do when it comes to economic topics. Thinking in moral terms is valuable, I agree, but only thinking in moral terms is a poor guide to how to organize the world, especially for large, complicated, impersonal systems. In this case it’s even worse. It’s counterproductive. In the long term treating water like a commodity leads to better outcomes—from the Pope’s perspective and from mine—than otherwise.
I leave with my favorite Rothbard quote:
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”