With drought conditions firmly in place, a number of localities are instituting mandatory water restrictions.
But rather than writing piddling fines for violating what are rather lax restrictions, how about using prices to address the problem? Over at the Economist blog, that’s exactly what they propose:
…water utilities are not equipped to respond to similar supply shocks to water reserves with demand-limiting measures. As such, all that stands between a homeowner and his green lawn is a sense of civic duty. Powerful stuff, on occasion, but not powerful enough to keep those reservoirs full.
Allowing water prices to vary with supply would encourage consumers to make their own decisions about how much water they really need. If adopted on a long-term basis, and not just in response to crises, water pricing would allow communities to avoid future price spikes by investing the increased water revenues in additional supply capacity. Pricing in a region’s particular susceptibility to drought might also slow growth in areas of the country ill-equipped to provide for massive populations.
Hmm. Maybe there really is a market for everything.
