At least water is cheap

By Amy Dain
July 21st, 2008

Your bills for gas and food are going up. Your mortgage was high to begin with. Want to hear arguments for increasing your water bill? Actually, there are some good arguments…

Last week Fox ran a segment on how low water prices are leading to water shortages in many places.

Pioneer put out a piece by Professors Rob Stavins and Sheila Olmstead on this topic last year. They argue that public enterprises have the opportunity to accomplish what private markets cannot do for water: get the prices right. Today’s water prices do not signal scarcity.

We have all heard that it is wrong to waste water, but with prices so low, we have little incentive to conserve. People respond to prices. Look at what high gasoline prices are doing to the market for Hummers.