EclectEcon

This past summer I spent three months in southeast England, where there were water "shortages" and concerns about the effects of two summers of drought conditions. I wrote about these conditions here and here. In the second of those two postings (which is longer and more detailed than usual for me), I wrote,

My neoclassical inner being tells me that the reason for the water shortages is that the price of water is too low.

This is the same explanation for water shortages in the western United States, provided by Robert Glennon in Perc Reports.

In his article, Glennon systematically shows that attempts to increase the supply of water will meet with little success and will have very high costs. He then turns to schemes to limit the growth in demand for water. He concludes,

States should avoid conservation standards that require elaborate monitoring because they may be neither cost-effective nor successful. ...

Even though water is a valuable resource, many Americans pay more each month for their cell phones and cable television than they do for water. Indeed, residents in some cities pay nothing for water. In Fresno, California, a controversy erupted in 2003 over whether meters should be installed in people’s homes so that actual water use could be measured and paid for. Until now, city residents have been able to use as much water as they wish without any charge for it. Meters enable a city to insist that residents be responsible in their water use or pay financial consequences. The absence of meters has significance for water use. Fresno residents use about 300 gallons per capita per day but in neighboring Clovis, which has meters, water use is about 200 gallons per day. Sensible water pricing would encourage all water users to carefully examine how they use water, for what purposes, and in what quantity.

Exactly. As I wrote this summer, installing meters and pricing water at a reasonably high price would work wonders toward avoiding water future crises.