Around 2,500 years ago the Greek philosopher Plato stated that “only what is rare is valuable, and water, which is the best of all things…is also the cheapest”.
In 1779, Adam Smith coined a famous paradox between value and utility, comparing diamonds, valuable but useless, with water, useful but worthless. but in the last few decades, something happened.
As we approached the new millennium, the world realised that water is a finite resource and that our activities, including the economic ones, demand increasing volumes of water. Hence, at the 1992 International Conference on Water and the Environment, in Dublin, it was agreed that “Water has an economic value in all its competing uses and should be recognised as an economic good”.
But there was another part of the principle agreed in Dublin that received more attention, stating that access to water at an affordable price is a basic right of all human beings. At the time, there were several instances of private companies buying municipal water utilities and sometimes initiating significant price hikes on water services. This led to a situation where most of the attention on water pricing evolved around pricing of water for domestic uses. In 2010, the UN General Assemblyrecognised the human right to access to safe drinking water and sanitation, which seems to have contributed to loosening some of the knots of the pricing debate.
The human right to water stipulates that states have an obligation to ensure that their citizens have access to water for their basic needs. This does not necessarily mean that water for direct human use, such as for drinking or cleaning, shall be free of charge..Nor does it mean that water use for other purposes, for example for producing food, electricity or industrial goods, shall be free.
When discussing a potential price on water, it is important to keep in mind that the water resource and the use of it have some characteristics that make it different from many other types of traded resources and goods.
The liquid freshwater on our planet is in constant movement; it falls and flows and seeps. This makes the establishment and enforcement of ownership of water difficult, which has led to a discussion of a right to access rather than a property right over water. This in turn means that the right to access can be limited; e.g. in volume, in time or in the type of usage.
When we use water it is not consumed. Instead we rather change its quality or its phase, i.e. we convert it to vapour. In many cases, nature cleans and condenses the water back to its original state, albeit often in another location and at another time.
Freshwater is unevenly distributed across the world and there is great intra- and inter-annual variability in rainfall, leading to a vast variation in supply in addition to a very variable demand. As market prices are generally set by supply and demand, the significant and unrelated changes in both would mean that market prices would vary a lot over time.
water is local:
Liquid water is uncompressible, heavy and often needed in large volumes. In addition, the biggest user, agriculture, would not be able to pay much per volume. With high transportation costs, the price for the water per se would have to be very low to allow for its conveyance. This means that water to a large extent is and will continue to be a local resource. water is essential: For most uses of water, there is no substitute. For all biological needs, of humans, animals and plants, water is vital. Hence, the only alternative to using a lot of water is to improve the water efficiency in order to use less.
With demand for water expected to increase by 55 per cent by 2050, there is an urgent need to find effective incentives for managing demand. While there are several measures in addition to pricing that can contribute to moderating the global demand for freshwater, it is likely that economic incentives will play an increasingly important role. The discussion about how, and how not to translate the elusive values of our precious water to monetary measures for managing demand is becoming more important than ever. As for Plato and Smith, water is still the best and most useful of things, but we may have to price it to start recognising its value.
Human Right to Water
Access to safe drinking water is not explicitly recognised as a self-standing human right, but is derived from the right to an adequate standard of living, which is contained in several international human rights treaties and therefore legally binding. It requires States to ensure universal access to safe water for drinking, personal sanitation, washing of clothes, food preparation, and personal and household hygiene. According to the right, the price of water services must be affordable for all without compromising the ability to pay for other necessities guaranteed by human rights, such as food, housing and health care.
Source : Water Front .http://www.siwi.org/Resources/Water_Front_Articles/WF-4-2013_Water-Pricing-web.pdf