In many places water is becoming scarcer. Treating it as a right makes the scarcity worse. Ideally, efficient water use would be encouraged by charging for it, but attempts to do so have mostly proved politically impossible. A more practicable alternative is a system of tradable waterusage rights.
As our explains, many water problems have global causes: population growth, climate change, ization and, especially, changing diets. It takes 2,000 liters of water to grow a kilo of vegetables but 15,000 liters to produce a kilo of beef—and people are eating more meat. The problems also have global implications. Without a new green revolution, farmers will need 60% more water to feed the 2 billion extra people who will be born between now and 2025.
Yet there is, globally, no shortage of water. Unlike other natural resources (such as oil), water cannot be used up. It is recycled endlessly, as rain, snow or evaporation. On average, people are extracting for their own uses less than a tenth of what falls as rain and snow each year.
The central problem is that so much water is wasted, mainly by farmers. Agri-culture uses three-quarters of the world’s water. Because water is usually free, thirsty crops like alfalfa (苜蓿) are grown in arid California. Wheat in India and Brazil uses twice as much water as wheat in America. Dry countries like Pakistan export textiles though a 1 kg bolt of cloth requires 11,000 liters of water.
Any economist knows what to do: price water to reflect its value. But decades of trying to do that for agriculture have run into powerful resistance from farmers. They reject scarcity pricing for the reason that water falls from the skies. No government owns it, so no government should charge for it.
There is a way out. Australian farmers have the right to use a certain amount of water free. They can sell that right to others. But if they want more water themselves, they must buy it from a neighbor. The result of this trading is a market that has done what markets do: allocate resources to more productive use. Australia has endured its worst drought in modern history in the past ten years. Water supplies in some farming areas have fallen by half. Yet farmers have responded to the new market signals by switching to less thirsty crops and kept the value of farm output stable. Water productivity has doubled. Australia’s system overcomes the usual objections because it confirms farmers’ rights to water and lets them have much of it for nothing.
What causes the central problem that so much water is wasted mainly by farmers