Cape Town, in South Africa, looks like being the first modern city to actually run out of water. Not to get short of it, not to just need to economise a bit, but to actually run out. This is, of course, something of a problem. But what makes it all vastly worse is that we know what the solution is. If something needs to be rationed then change the price of it. It’s that very change in price which produces the rationing, achieves the actual aim. The point being that those first two pages of the Econ 101 books, the little charts about supply and demand, they’re right, correct, an accurate description of reality. Which means that when we’ve got something that needs to be rationed it should be rationed by price:
Cape Town residents have drastically lowered their water use, allowing their drought-plagued city to push back the dreaded “Day Zero,” when the system is expected to run dry, by more than 10 weeks.
Just three weeks ago, officials were predicting that Cape Town would reach Day Zero — a first for a major city in modern times — in late April, forcing its 4 million residents to line up at collection points to receive water rations from trucks. Now, after three postponements, the city predicts that it will reach that crisis point on July 9.
That’s excellent of course and clearly public exhortations have some effect. But what we’re looking for is the best method of getting people to conserve that precious resource, water, not one that simply works a bit:
Government has allocated R6 billion in the 2018/19 financial year for drought relief, Finance Minister Malusi Gigaba announced in his budget speech on Wednesday
“Severe drought conditions are affecting large parts of the country, and it is placing extreme strain on the supply of water no nearly 4 million people in the City of Cape Town,” Finance Minister Malusi Gigaba said after tabling the budget in Parliament.
It’s entirely true that sometimes the rains don’t come, that there is therefore drought. But that’s only a reason that we’ve got to find that best method, not a reason to throw our hands up and stop thinking:
Cape Town, which attracts about two million visitors each year, wants to become more resilient as the effects of climate change are felt, similar to other dry cities including Melbourne and California.
Well, so, how do we do it? We change the price of that water.
No, this is not some Randist Rant insisting that if the poor can’t afford water they can just dry up and blow away with the dust on the wind. Rather, a call for the intelligent application of what we know about the world. Contrary to all experience just before closing time on a Friday night there are in fact some few of our fellow humans who can think. And this idea of what to do with a scarce resource is one of those things which they have thought about. Yea, even with something as controversial as the very water needed to maintain life.
The answer is a system exactly the same as the one your humble author lives under. The more water you use the more you pay for each unit of water. This means water meters, variable water bills, but it does have the wondrous property of actually working.
To set the scene, Editorial Towers is in Southern Portugal, one of the few places in the world with a similar climate to that Western Cape currently suffering (the others being a part of Chile, California and a bit of Australia). Rains do come but water supply is something that does need to be thought about. Dams, reservoirs, limitations upon usage, they’re all necessary at least at times. The usage management system which actually works – it produces both equity and efficiency – is as follows.
Some minimal, possibly even nominal, charge is made for basic connection to the system, both fresh water in and sewage out. This isn’t because we want to make sure that even the poor gain water, not at all, it’s the other end of the human we’re interested in here. Raw sewage floating around is a public health hazard, it’s worth it to all around to make sure that even the poorest member of society is, to be indelicate for a moment, having their s**t managed.
Along with that minimal fee comes the basic amount of water needed to manage a household in a reasonably abstemious manner. Washing – showers for all on demand amounts – but not swimming pools full – clothes washing and so on. Again, basic public health desires mean we’d like the poor as well as the rich to be washed and in at least cleanish clothes. Typhoid isn’t a fun disease and the absence of lice kills transmission of that stone dead. The monthly charge for this, at Portuguese prices, is about €6 a month. Or two hours work at the local minimum wage. Something of a bargain for all concerned really.
But once water usage rises then the cost per unit of water does too. You can, if you so wish, go out and use the municipal supply to water the garden. It’ll cost though. To try and keep a green and verdant lawn and flower beds would cost hundreds of € per month (from painful memory a leaky faucet cost hundreds before it was identified and fixed). And there will always be those tempted to put free at the point of use water to use in agriculture, something under this scheme which would costs thousands. So, people don’t do it.
And that’s the way to ration water. To provide the minimum necessary for civilised life at low, low, prices, then to keep raising the unit cost as usage moves off to nice to haves and then things we simply don’t want people using treated water to do in the slightest. We ration by price not so that the poor can’t have it but so that the rich don’t waste it.
Which is what should be done in Cape Town of course. If you’ve a shortage of something ration usage. Rationing by price is the best way to do it. So, to solve Cape Town’s water problems start charging the heck out of those who spray it over their lawns or fields so there’s enough for everyone else to drink and wash.
Water shortages are best solved by rationing water by price.