“All the water that will ever be is, right now” – National Geographic. Due to the continuous growing population, water has become scarce. This issue stems from water being essential to the life of humans. As head of the Water Commission, I believe having a private water system will benefit the public in the distributing of goods and services. A significant amount of water has been used for industries including irrigation, agriculture and thermoelectric. Water privatization would limit the waste of water and discourage excessive use.
In addition, this system will bring forth profit. Consequently, these actions come with externalities that affects the public, the workers and the stakeholders.
Private market based decision making results in the most efficient outcome from a social welfare perspective. For instance, private water system’s main goal is to maximize profit, which incentivizes them to achieve cleaner and better water for the public. By reason of maximizing profit, private water system’s will hire specialized employees that will be able to allocate water efficiently and effectively.
They could help solve the problem of water waste.
The cause of water scarcity is due to the fact that water is constantly wasted. In Hardin’s article “Tragedy of the Commons,” he proposes how the absence of ownership over a specific natural resource will result in overuse of that resource. To give an example, China’s growing population has resulted in abundant fishing, especially in the waters of other countries. Consequently this has lead to the scarcity of fish.
Similarly, there are major industries that use a highly significant amount of water to the point of depleted resources. In order to resolve this issue, water privatization will charge rates that cover costs and discourage industries extensive use. Additionally, it will also encourage investment which can result in new technological advancement. Not only can this improve quality and service, but also provides economies to scale which leads to a decrease in costs for the public.
Although this system provides the economy with many positives, there are many externalities that should be accounted for. Private water systems have no set rates which means costs could increase at any time for the public. This affects consumers because they will have disincentives in the purchasing of those products. As a result, this may lead to a decrease in profit for both the workers and stakeholders. Along with the potential decrease in profit, water could also be limited to many people, such as low income individuals and large families. In response to supply and demand, shareholders will have the incentive to increase profit by creating new technologies which will positively impact the public.
As head of the Water Commission, I believe water privatization will ensure water to be safe and clean for the public. The private water system will encourage and incentivize innovation that will result in not only better quality and services, but also accessible water for everyone. Since private water systems are profit based, they will help ensure that water is not wasted.