Market Power

Water Usage (i.e. Potty Flushes) in Edmonton During the Hockey Gold Medal Game

Via the Freakonomics blog comes this picture of water usage in Edmonton during the Gold Medal game in the 2010 Winter Olympics.

Or, as the newser website quipped "Canada Peed in Unison During Hockey Final". Edmonton, actually.

I've seen such a picture before but I can't remember where.

HT John Chilton.

The Economics of Water Meets the Politics of Water

Do people have an inalienable right to have water?  A related question is "do people have an inalienable right to clean water?"  Preparing water to drink takes resources, resources that have alternative uses and, thus, costs.  In short, clean water is subject to the scarcity problem, a problem that needs solving. So, it is not so much that people have a right to clean water, it's that they want and need clean water.  And while politicians and activists do what they do, people obtain drinkable water despite them.

Violent protests have driven away corporate investment in desperately needed municipal water systems in developing nations. So the world's poor buy bottled water from Coke, Pepsi and other multinational companies.    

And that's not a bad thing at all.

 

Argentinian Water Privatization

Last November, Alex at Marginal Revolution wrote this post on the effects of water privatization in Argentina during the 1990's.  The abstract from the paper Alex wrote about is:

While most countries are committed to increasing access to safe water and thereby reducing child mortality, there is little consensus on how to actually improve water services. One important proposal under discussion is whether to privatize water provision. In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas.  We check the robustness of these estimates using cause-specific mortality. While privatization is associated with significant reductions in deaths from infectious and parasitic diseases, it is uncorrelated with deaths from causes unrelated to water conditions.

Seems as though Argentinian officials have had, as it were, a change of heart:

Argentina has terminated its contract with Aguas Argentinas, a company partly owned by French utility group Suez, to supply drinking water to Buenos Aires.

The government said Aguas had failed to meet its contractual obligations and had reneged on its pledge to improve the quality of the water it supplied.

Seems as all this started with a change in government policy to control exchange rates:

Aguas Argentinas' troubles began during the economic turmoil of 2001-2002, when the government was forced to abandon its policy of holding the Argentine peso at parity with the US dollar.

The utility's charges were forcibly converted from dollars into devalued pesos and frozen by law.

Might, perhaps, an unintended consequence of the exchange rate policy change be that child mortality in Argentina would rise?