Time for a Serious Policy on Water PricingChris Farrell
Do you know the price of your monthly cell phone bill? I bet you do. How about your water bill? What’s the cost difference between taking a shower for 5 minutes or 30 minutes? Most Americans consume plenty of clean water without worrying much, if at all, about its price. Yet which is more valuable, water or a smartphone? (Just in case you hesitated, water is essential to life.)
To be sure, water awareness is high in those parts of the country suffering from a prolonged drought, such as California. Golden State residents are coping with water restrictions, and a majority of California’s water agencies have imposed higher prices on discretionary use to conserve water. Still, that’s California’s problem, right? Wrong.
Water is a threatened resource. In the high plains of Kansas, farmers realize that over the past seven decades they’ve drained too much water from the Ogallala Aquifer, the nation’s largest underground reservoir of fresh water. Last summer residents of Toledo, Ohio, couldn’t drink their tap water, which was contaminated by toxic algae growing in Lake Erie. Photos of the Santa Cruz River south of Tucson, Ariz., show trees growing along the riverbank in the 1940s. The trees have largely disappeared, and the river is a dry sand bar in parts. The U.S. Geological Survey reports that aquifers are diminishing, with the rate of depletion running at almost three times the historic average from 2000 to 2008 compared with 1900 to 2000.
No solutions are easy with water management. The pace of technological investment and innovation is picking up, especially on the water conservation and usage side of the business. More infrastructure investment is needed. Still, a good place to start is with better pricing. “What has not been done with water policy in the United States is to consider market-based solutions, price signals, and incentives,” says Robert Glennon, law professor at the University of Arizona Rogers College of Law and author of Water Follies: Ground Water Pumping and the Fate of America’s Fresh Waters.
Water should be more expensive overall, and heavy users should pay much more. The impact of realistic pricing will be on water’s major consumers, agriculture and industry. More accurate pricing will allow the creation of a market in water rights, too. Basic everyday use, especially among the poor, is easily shielded. After all, notes Glennon, treating water as a basic human right in the world’s richest country would add up to some 12 to 15 gallons per capita per day, or 1 percent of total water use in the U. S. “That leaves the other 99 percent to be accounted for,” he writes in Tales of French Fries and Bottled Water: The Environmental Consequences of Groundwater Pumping. “That’s where market forces can play a role, with voluntary transfers between willing sellers and willing buyers.”
Water reformers may find an unexpected ally in the cause: multinational corporations. Water is a critical resource for many global businesses, such as hotels, beverage makers, and chemical, power, and oil and gas producers. Fresh-water scarcity ranks among the top four risks to society, according to the World Economic Forum Global Risk Survey. The worldwide fresh water inventory is only 2.5 percent of all the water on the planet. The remaining 97.5 percent is salt water. (Remember the haunting lines from the Rime of the Ancient Mariner: “Water, water every where, / Nor any drop to drink.”) Largely because of the growth of the global middle class (the good news), the World Bank predicts that by 2025, fresh-water demand will exceed supply by 50 percent (the bad news).
Certainly, increasing numbers of multinational chief executives are embracing both capitalism and water conservation. Molson Coors Brewing is a major player in a collective effort to promote sustainable watershed management and water quality in Colorado’s Clear Creek Watershed. Coca-Cola has a goal, by 2020, of safely returning to communities and nature an amount of water equal to what is used in finished beverages and their production. The beverage behemoth established a global partnership with the World Wildlife Federation in 2007 to work on water improvement projects in Asia, Africa, and the Americas, including a battery of sustainability initiatives around Guatemala’s Mesoamerican Reef Catchments (pdf). Coca-Cola also made public its comprehensive global data package on water inventory around the world through the World Resources Institute in Washington, D.C.
Private industry can’t come close to solving the water problem on its own. Nevertheless, mounting appreciation that water is a threatened resource for multinationals may well lead to greater support for change in water policy. A good place to start reform in the U.S. is with the better pricing of scarce and valuable water.