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Water must not only satisfy domestic use, but also industry and agriculture. Water can be an important political issue in the developed world, with arguments about privatization, water metering and effective regulation in Britain, over the allocation of scarce water resources in Australia and California, about foreign ownership and pricing in Argentina, or about the use of desalinated water for agriculture in Saudi Arabia. Water is even more crucial to the developing world. Over a billion people still have no decent water supply and 2.4 billion do not have proper sanitation; over 60% of global ill health can be linked to water. Without tackling these problems, little progress can be made on other development issues.
Water is a resource subject to supply and demand and so, should be treated as an economic good. It may fall freely from the skies, but it has to be collected, managed, processed and supplied through an expensive system of reservoirs, channels, processing plants and pipes. Dirty water and human waste also have to be removed and treated in sanitation systems. When water is not treated as an economic good, it is wasted. Pricing water according to its true cost would promote more efficient and environmental-friendly practices, e.g. the use of drip-irrigation or dry farming in agriculture.
Problems of water supply need to be addressed with huge investment, particularly in the developing world where many people have no access to decent fresh water. Even in the developed world, much water, up to 50% in Canada, is wasted through leaks in pipes and ageing infrastructure. The public sector has failed to provide the money for this investment so, private involvement is essential. For this investment to be attractive to the private sector, water companies must be allowed to make a profit through realistic water charges that reflect the costs of supply. Issues of quality, equity and environmental standards can be handled through effective...