Getting scarcity right.
It’s become a bit of a truism in some circles that water will be one of the largest markets of the 21st century. So it is heartening to read stories like this one about a town in India:
…Kundapur, a coastal town in Karnataka has decided to privatize it’s water supply. To summarize, so far, this town was dependent on ground water. Now, they are getting water from the river Varahi. Residents have to pay Rs. 4000 for the connection (half of that refundable), and the monthly bill will come within Rs. 100, they’ve said.
…Of course, there is still a long way to go. The private partner who will handle the operation and maintenance is yet to be selected. There are also bound to be a large number of protests against the privatization itself. The TMC needs to get past that. Also, it seems to be the first time when such an exercise is being conducted in the country. So, other hurdles also can’t be ruled out.
Nevertheless, this outsourcing of operation and maintenance of water supply is a welcome concept, and if implemented and priced in the right way, might become a model to emulate in the rest of the country.
And to read that finally, we might see metering of water in the UK. The irony is that while many services that provide an abundant resource - ie voice minutes - continue to be ‘metered’ while scarce resources -ie water - are sold on a ‘all-you-can-eat’ basis (or worse, given away for free…) The rectification of this unnatural state will be one of the key trends of the next several years. It’s not hard to figure out really:
ABUNDANT => flat rates (reflecting fixed costs only, tending to free)
SCARCE => metered (reflecting supply and demand, and any externalities/substitution effects)
…a good rule of thumb for governments and business people in any market for goods and services.
