Waste and optimality
By: Faisal Bari
being a water-abundant country some decades back, we are
well on the way to becoming a water-deficient country.
Given the way we waste and
misuse water it might appear that we have an abundance of
the resource; however, there are now constraints on its
It is not only in
agriculture that we are starting to see the problems; the
latter are also evident when it comes to drinking water.
And yet, the fact that we
need to change the way we use the resource has not fully
Not making optimal use of a resource is tantamount to
wastage. Economists argue that where property rights are
well assigned and markets work, the relative prices of goods
and services can enforce optimal use or at the very least
move us towards that goal. If a good or service becomes
relatively scarce, its price will rise.
As the price rises, people
will start using it more carefully and frugally and they
will also look for alternatives. The net effect, other
things remaining the same, of a rise in price should be a
reduction in demand for a good or service.
The fact that we need to change the way we use water has not
fully sunk in.But prices only work when certain prior
conditions are met.
Property rights over the good
or service in question have to be clearly established so
that we can know who has the right to sell or buy the good
Markets have to have some desirable properties. These
include the presence of a large number of buyers or sellers
and good information flows between the players.
In the case of water, where
there is legislation on who should have access to river or
canal water and when, and where there is even a tax system,
there does not seem to be any jurisprudence on basic rights
Who does the water under the
land I live on belong to? Does the water belong to the owner
of the land? But aquifers are usually connected and under
land that might belong to many different people.
Does groundwater belong to whoever can pump it? But if that
is the case, and water is a scarce commodity, there will be
a tendency for people to over-pump it to make as much money
as possible, before others can, and this individual
over-mining will lead to collective over-mining (tragedy of
Ronald Coase, the Nobel laureate, had argued that we should
assign property rights unambiguously in all cases so that we
can then have the development of the relevant market.
Without the assignment of
rights we will not be able to price such a product or
We do see over-pumping of water in many localities across
the country. Companies pump water and sell it in bottled
form for profit. Individuals pump it excessively at times
and waste large portions of it.
Who should water belong to? In most other jurisdictions,
there is wisdom in assigning the right to the local people,
with the right for trade being vested in local governments.
Locals have the most to lose
in case the aquifer is damaged or destroyed. They have the
best incentives to preserve their resource, ensure its
sustainability, manage it optimally and work out its best
If local government had the
right to sell/buy water, it could a) ensure the aquifer is
not depleted by overuse, b) the right price for extracted
water is charged, and c) the revenue from selling the water
perhaps used for maintenance of the aquifer as well as other
local needs (water/sewerage systems, schools, hospitals,
local roads, etc).
But prices are just one way in which our behaviour is
Our moral and social outlook, whatever its basis, also has a
significant role to play. We have to have internal systems
that tell us when we are misusing or wasting a resource.
Even if water is free, we should not be wasting it.
If we leave taps open or do not get running taps repaired in
time, use running water when a mug or bucket could do, wash
our car every day, water the garden excessively, allow
others to waste water, whatever our social system, it would
We live in societies. We live in social contexts. Whether
one is a Humean (David Hume’s moral philosophy rests on the
community of humans in society for its moral force and to
provide a basis for its imperatives) or not, it is our
interactions with others that determine the quality of life
And this dependence creates
moral obligations, rights and responsibilities.
Irrespective of whether the law, institutions and even the
norms of a society are comprehensive and encompassing
enough, moral obligations remain.
If we are going to behave
properly only if there is a policeman looking over our
shoulders, or if markets are going to force us to behave in
a certain way, we are not great examples of our species.
We, as individuals and as a
society, need to internalise the calls of moral imperatives.
What has been said of water applies to a lot of other
products. Water is just a special case as even the markets
for it do not work.
But in other cases,
irrespective of markets, we have to give weight to moral
issues: we should not waste electricity even if we can
With 200 million people to feed and provide basic services
to and with the task of creating opportunities for a
meaningful life, with the aim of leaving behind a decent
society for future generations, we have our work cut out for
If we are to move beyond
self-interested behaviour and the current zero-sum type
equilibria in our socio-economic life, we need to think not
only in terms of institutional, organisational and market
The larger task is to reflect
on the moral transformation that is needed at the individual
and societal level.