In an article for TechCentralStation.Com Dr. Roger Bate offers a persuasive argument that government misallocation of water resources is a major reason for the water problems that much of the developing world suffers from.
Bate argues that governments have a role in creating initial water allocations and setting up a framework for allowing water quotas to be traded, but then make the mistake of getting involved in the day-to-day end use of water which has the effect of promoting inefficient water usage.
A prime example of that is South Africa where, Bate explains, water quotas are allocated to farmers who are unable to sell them to anyone else. Combined with subsidies on farming, this means large chunks of water are destined for agricultural use even if that is not the most efficient usage of water. The end result is that the poor get shortchanged on their water needs.
Contrast this with Chile which largely ended subsidies for water and allow for the trading of water quotas (farmers who did not need all of the water they were allotted could turn around and sell the excess). According to Bate,
In 1970 only 27% of rural and 63% of urban dwellers [in Chile] received potable water. By the mid-90s the respective percentages were 94% and 99%. These figures are better than any other mid-income developing country in the world.
Having the state involved in deciding end water usage is a pointless exercise in futility. Other states should do more to emulate Chile’s model of tradeable quotas and let market forces determine the most efficient use of water.
Source:
Pipe Dreams for the Poor. Roger Bate, TechCentralStation.Com, March 4, 2002.