Posted on: January 26, 2019 Posted by: Felicia S. C. Gooden Comments: 0
clean water global

Government regulation of the water supply has proven to be detrimental not only to the water industry and wealth of nations but also the poor and most vulnerable citizens of humanity. Policies such as agriculture subsidies with restrictive regulations and price controls decrease the overall wealth of a nation, make water scarcer, and discourage companies from starting new projects and developing innovative technologies. Appropriate policies that can provide actionable and measurable solutions over the long term include reallocating agriculture subsidy funds to environmental programs and organizations that provide water R&D grants for water technology development, such as desalination plants, as well as decreasing regulation to set basic standards for clean water.

Why Protectionist Trade Policies Don’t Work

The global water crisis is a polarizing one, for one side focuses on the basic human right to life by way of providing basic needs including water, but the other side views water as an economic good – a commodity if you will – and takes into consideration the costs of time, labor, and technology needed to provide and distribute clean drinking water to the entire planet, which is a tall order at best. Government intervention including subsidies and price controls are intended to serve as policy solutions to the water crisis; however, these policies do more harm than good. Subsidies to agriculture actually encourage farmers to hoard the water supply away from the environment and the public who could benefit from excess reserves, and price controls discourage private firms from launching water purification and distribution projects. The preferred solution to these detrimental policies is to encourage technological development that takes advantage of massive amounts of rain water accumulated over the oceans, cleans the water, and distributes it to consumers around the globe. This can be achieved by changing agriculture subsidies to R&D grants as well as minimal regulation that ensures water quality is conducive to the overall health of the population.

Water Subsidies and Price Controls

Around the world, governments attempt to develop policy solutions to the water crisis to ensure that global citizens have ample access to clean water for drinking, cleaning, and bathing. Unfortunately, some of the policies have failed to achieve their end goal. For example, in the United States, the agriculture industry is heavily subsidized, and farmers pay just $10 to $20 for about 325,000 gallons of water.[1] This is a steal for farmers, allowing them to build and maintain their wealth, but it decreases the overall wealth of the nation.[2] Another problem with agriculture subsidies is that regulation requires farmers to “use it or lose it” instead of allowing them to lease or sell their excess water reserves to the public or other organizations.[3] If the water is not used on the crops, then the farmers lose the rights to the water, which creates the opportunity cost of streams being unable to support other downstream environmental life, such as trout or salmon.[4]
When it comes to price controls, water becomes scarcer than it would be if the market were allowed to reach a point of equilibrium due to companies being discouraged from finishing old projects or starting new ones.[5] For example, Brazil, China, and India have all imposed regulations that turned water treatment and distributions companies away. Brazil’s price controls caused a water project company to cease operations, China’s price controls discouraged water utility companies from developing new supplies and updating old ones, and India’s demand to provide water without cost halted efforts to improve water distribution.[6] While these policies were well intentioned and attempted to serve a greater good, the reality ended up being that the impoverished citizens of these nations faced further scarcity of clean water being distributed because companies investing resources to provide water were unable to have a war to recoup their costs and make a profit to pay the salaries of their employees and reinvest in new tech development.

New Technologies and Effective Distribution

The salination of the oceans is a valid concern, but it’s not a problem that can’t be overcome. When it comes to providing water to the world’s population, tapping into the unlimited renewable resource provided by oceans is a logical solution. For example, California has suffered from droughts for years and typical regulatory responses have included water advisories that limit individual use of the water supply. However, in order to combat the drought and provide water to citizens on a continuous basis, locales have turned to desalination to fulfill their water distribution needs. The City of Santa Barbara receives about 30% of its water supply from desalination plants at about 3 million gallons of water per day or 3,125 acre-feet per year.[7] In San Diego County, desalinated water has been in use for over two years and costs homeowners only $5 per month in addition to the standard water authority’s rates.[8] Desalination not only provides a renewable source of water that is drought proof, but also provides such abundance that water is affordable to residents.
If government wants to introduce policy that will effectively help solve the global water crisis, then it should consider taking a direct investment approach that will encourage innovation and technological development such as desalination. According to the 2016 Budget Overview published by the American Association for the Advancement of Science, about $2.9 billion was allocated to agricultural research and development, but only $528 million was allocated to the Environmental Protection Agency (EPA), which provides grants for water treatment R&D.[9] If the budget reallocated 20% of the agricultural R&D budget to the EPA, then the EPA would have $1.1 billion to work with while the agriculture R&D budget would still have $2.3 billion. More funding for the development of new water treatment technologies in conjunction with minimal regulation standards to ensure water quality would incentivize water project companies to begin new projects and update old ones.

Final Analysis

Water is the most precious and simultaneously abundant resource on the planet. It is the most basic, vital resource for the survival of global ecosystems and humanity as a collective. The dire importance of mankind having access to clean water for drinking, cleaning, and bathing is not something trivial or something to be ignored, which is why it is understandable that governments around the world have attempted to act by passing policies that are intended to ensure that water is either used to the maximum purpose or provided to citizens at little or no cost. The major challenge facing the global water crisis is that it’s not economically feasible to provide free, clean water to every person and business around the world for little to no cost.
Nature does not provide a ready and unlimited supply of fresh water for consumption, so people have to find solutions that will ensure water is distributed to businesses and families all over the globe. This means that research has to be done, technologies developed, people employed to implement plans and build technology, utilities used to run operations, and so on. All of these elements cost, which means that the company taking on the task of purifying and distributing water needs to have incoming cash flow in order to operate. This reality is why market forces are best to incentivize companies to provide solutions to the water crisis, and with increased funding for research and development of new technologies instead of government restrictions on how to use technologies developed or water accumulated, more companies will be encouraged to find solutions and provide water at competitive rates, which will bring costs to an affordable equilibrium. The only regulation from government should be basic business operations standards and basic requirements on the quality of water.
Due to the reality of human nature and man’s predilection toward taking short cuts or trying to overprice and underserve, it is reasonable to have a basic standard of legitimate business operations and production quality. After all, no one wants to accept blame for a mass water crisis such as what was witnessed in Flint, Michigan. However, it is imperative that governments realize they, too, are populated by fallible human beings, and restrictive measures that force a desired outcome are too idealistic and potentially short-sighted to provide long-term solutions to global problems. Practical solutions that encourage innovation and reasonable resource allocation in the context of global economic realities will always prevail in taking on the big issues. At best, public and private partnership with experienced advisors should be the norm so policy solutions make sense and focus on the public good over special interests.


City of Santa Barbara Desalination FAQs. Santa Barbara: City of Santa Barabara, May 2017.
Hourihan, Matt, and David Parkes. “Federal R&D in the FY 2016 Budget: An Overview.” AAAS – The World’s Largest General Scientific Society. March 18, 2015. Accessed October 17, 2017.
Miller, Roger LeRoy., Daniel K. Benjamin, and Douglass Cecil. North. The economics of public issues. Boston: Pearson, 2016.
“Seawater Desalination.” San Diego County Water Authority. 2017. Accessed October 17, 2017.
[1] Miller, Roger LeRoy., Daniel K. Benjamin, and Douglass Cecil. North. The economics of public issues. Boston: Pearson, 2016. p. 70
[2] Ibid. p. 70
[3] Ibid. p. 70
[4] Ibid. p. 70
[5] Ibid. p. 71
[6] Ibid. p. 71
[7] City of Santa Barbara Desalination FAQs. Santa Barbara: City of Santa Barabara, May 2017.
[8] “Seawater Desalination.” San Diego County Water Authority. 2017. Accessed October 17, 2017.
[9] Hourihan, Matt, and David Parkes. “Federal R&D in the FY 2016 Budget: An Overview.” AAAS – The World’s Largest General Scientific Society. March 18, 2015.

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