Mises Daily Articles

Facebook icon
LinkedIn icon
Twitter icon
< | < | <

Water Down Government

  • Water_flow_on_nerimangalam_dam.JPG

Tags The EnvironmentFinancial MarketsFree MarketsValue and Exchange

09/01/2004Benjamin Marks

Down under, in Australia, it is often thought that we are a dry country. What if I was to tell you that we have more rainfall than the United States! As the legendary Aussie, agriculture designer, P.A. Yeomans said: "Australia is not short of water on any comparable per capita basis." However, "the incidence of rainfall is not very reliable."1

At current, Sydney’s water supply is in dire straits. Government has declared itself the monopolist of water. The water storage level is 45.8% of capacity. And there is a growing supply and demand imbalance. The solution to our water supply problems is to eliminate government interference. In Australia considering the erratic incidence of rainfall it is all the more important.

Note: whether it starts flooding tomorrow and the drought well and truly breaks is not consequential to this article. In fact, chances are, I’d just be writing one on the effects of large volumes of rainwater, on our government sabotaged waterworks and waterways.

In our analysis of this "supply and demand imbalance," perhaps the most obvious point is; where on the free market will you find a supply and demand imbalance? One where fines are enforced for using too much of the resource or for non-optimum usage or for usage at the wrong time of day? Where at whim the price of water and conditions of use can be changed, with no contracted notification? On the free market things are priced so as to clear the market. Government cannot possibly do this. They claim everyone has a right to water at below the market price. I wonder if they will still be saying that when they run out?

Apologists for government monopoly of water use the usual litany of long refuted arguments. Here I will address two. (1) That water is something each individual needs therefore government must provide it. And (2) who, other than government, has the capital necessary to build the massive dams necessary for water storage?

Point 1 suffers from the fallacies of non sequitur (how is therefore implied?), conceptual realism (what is government, if not a group of individuals?), and contradictions galore, i.e., why doesn’t government provide us with food and clothing? Also, why doesn’t government allow me to steal off others, even if I claim it is for their own good?

As for the 2nd point, water tanks on each property would make much much more economic sense if government did not supply water below cost or have the monopoly of the water grid. And to add insult to injury, up until a few decades ago, government banned water tanks. All for the individual’s health, of course! Now government subsidizes the water tank industry, but this just leads to a whole other set of problems. For example, it hinders improvements in the water tank industry, by encouraging marginal production to continue, rather than the development of superior production lines.

Second, smaller rather than larger dams, like those built by the government, are actually less economic, both in storage and in transportation costs. In the tradition of the Australian Keyline planner, P.A. Yeomans, his son Ken states:

One reason [for the higher storage costs] appears to be the, far higher cost per cubic metre (or yard) of earth for the wall of the "big" dam which is usually over 10 times higher than the cost of the earth placed in the farm dam. And here the cost of transporting the material is a large factor in this comparison. Whereas on the farm, a dam site to be used has to have good earth for wall construction at, and usually within, the dam site. A suitable site for a "big" dam has no such favourable feature. The materials have to be much more carefully selected and invariably carried far greater distances. Concrete walls for these structures are much more costly again.2

As implied in this, transportation length will be increased since big dams are more spread than smaller ones and topographies suitable for big dams are not as easy to come by. (Not that government could possibly choose the best location anyway). Leakage of water increases relative to transportation. Percent of leakage in the Sydney area is around 10.7%, which is comparable to other areas of Australia and the world. It seems to me that to lose over 10% of your product is a bucketload!

Also, inland where the government dams are, there is not as much rainfall compared to the coast, where most of the people live. We have a situation where, there is plenty of rain on the coast, yet still restrictions on water usage, as there is still a drought out west where the government dams are.

Now, it should be obvious that the "huge amounts of capital necessary," are not. But for arguments sake lets say they are. Surely if an entrepreneur sees a potential market for water from big dams (like those of the government) he will invest capital into the venture. If he can convince others of its ability to satisfy customers relative to cost (profitability), then he can allow them to participate in and contribute capital toward the venture as well. The point is: where does government get its money (other than through counterfeit)?

Lastly, when we consider the alternatives to the incomprehensibly huge amount of money the Australian government has spent over the years, it makes you think . . . Instead of the money the Australian government spends on its "defence" force, they could of used the money to divert rivers inland.3 Instead of having a dry and arid inland, Australia would have rainforest. It would have opened up huge areas of farmland. Just to think of it!

Or, to further satirize the government and its propensities, instead of wasting money to create pointless jobs in the Snowy Mountains Scheme, they could have built the beginnings of a huge (a few thousand kilometres long) mountain range, which would stop the clouds from just passing over the inland and hallelujah.4 And the mountains would be hollow and we could put shopping centres inside and . . .

I do not know if these seemingly wacky ideas make economic sense, as my entrepreneurial instincts are a bit immature. All such ideas need to be tested by market standards. However, if anybody is willing to give me an appropriate sum of money, I will green the desert. What an investment! Think of all the free riders!

As we can see, there is no positive role for government in the supply of water. It has created a drought where there is none. It could very well threaten the lives of its subjects if the "drought" escalates. There is no valid reason for government interference in the water supply.

The best solution, in my opinion, is for those with suitable air quality (everyone in Sydney) and roofing to install water tanks and capture rainwater off their roofs. It is easy and beneficial to secede from government’s water grid. After a few years you will save money. It is better for your health (government wont be able to contaminate your water supply). And, as long as your calculations are correct, you are much less likely to be affected by drought, than reliance on government. How about it?

Image source: commons.wikimedia.org
Shield icon interview