Regulations Compatible with Privatization

Abstract

Given the dynamics of population growth, the continuous expansion of urban concentrations, the accelerated pace of technological change, and obsolete, often wasteful patterns of water use in agriculture, questions of water scarcity and of water’s efficient allocation are becoming increasingly acute. As we have pointed out, in analyzing water resource management, one can no longer cut off the issue of water quantity from that of water quality and attempt to deal with them separately. These are interrelated dimensions of a common problem. In addressing the complex problems of water demand one must simultaneously take into consideration the other side of the equation, namely that of the quantity, quality and diversity of the water supply, along with the possibility of water recycling and reuse. The problem of efficiency in water resource management can no longer be treated as a matter of engineering efficiency. It is necessary instead to focus on economic efficiency in the management of both the demand and the supply of water of various grades. Moreover, water can no longer be considered a public and free commodity, and its allocation cannot be made by administrative and judicial fiat using a supply-oriented approach. We must look at water from an economic perspective as a multi-product commodity, with its price representing not only the cost of the water supply, but also its value to the user.