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Dry, Dry, Dry? 26 May 2006

Posted by David in Uncategorized.
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The water shortage continues to loom over the South, Glass of Wateralthough there's an interesting news article here looking at how selective statistics have greatly inflated the news story and drama levels of the drought. Basically, it may not be as bad as it sounds.

An unusual result of the potential 'non essential usage' ban and ongoing story has been an increased discussion over water companies and public services. Several people I know have even claimed they were better back when they were nationalised, as they were less accountable to the shareholders wanting bigger profits for less investment. I have heard talk of a water tax, to make water dearer so we conserve it more, right through to rationing.

The South East England Regional Development Agency has called to merge water companies, why I do not know, they seem to forget 1+1 is always 2; the sum will always equal the parts. We'd simply have a big company with a water shortage, instead of two smaller ones with water shortages. Ken Livingstone says we shouldn't flush the toilets.

The water companies currently don't invest since it isn't economical to – the increased capacity would only be used in the Summer, and so would never earn back the costs.

The real problem however is lack of competition. Each water company has complete monopoly over its area. Other privatised services – such as electricity, gas or telecomms – have a single delivery network (the pipes, phone lines, cables etc) but you can choose providers/suppliers. This means their market is always at risk, but they can increase their market if they deliver what the customers want. No-one would use a provider that limits use, or costs too much, so they are forced to invest or lose customers.

This system works fine for these services, with places such as www.uswitch.com informing customers and increasing choice. For it to work with water, there would need to be a single 'water grid', or at least pipes used by multiple providers. The suppliers would then put in water, and be able to sell the same amount anywhere in the grid. There would obviously have to be some sort of agreement over maintenance and leaks, as well as water quality.

So the answer is not greater state control or monopolisation, but a more competitive and open market. Under such a system, the awful demand size economic model – where we must change our lives and watch gardens die – would be over. Companies would invest more, or someone else will, and will steal their customers.

So far I have heard no one suggest this idea. Libya is already working towards a national water grid, Dubai has water bills less than Durham, and Las Vegas never has water restrictions. But Britain, it's raining all week but also a drought.

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