The Many Costs of Public Control of Water Rights

Although water rights are often used as the poster child of the need for government intervention, the private market actually presents many compelling solutions for their allocation. State control of water rights, while compelling, actually presents many unseen costs and damages the efficient allocation of one of the necessities of life. Clear ownership frameworks and enforcement of that ownership will allow water to become far more available than in the current system of state control. The state has three primary layers of costs. The administrative costs of determining water use rates adds a cost with no clear opposition to its continual rise. The state’s monopoly on water also allows monopolistic pricing practices, particularly when they can be justified through environmental concerns. Finally, the greatest cost of government water ownership is the loss of technological discovery by people competing in the water market.

While the government taking ownership of water has some costs given to the taxpayer, the problem of allocating, distributing, and pricing it is able to suck up an unnecessary amount of resources. Understanding how to set prices for various types of consumers for water often takes up entire teams of civic servants. They devise various methods to make farms accessing water conditional upon their environmental agreeability. Even with water prices already high, they enforce strict regulation on private well use, and also on the selling of water between farms. Regulation of consumers takes up a similar amount of time as restrictions are put on lawn watering and various other activities seen as socially suboptimal. While the direct cost of all this is high in terms of administrative time and salaries, the indirect cost is much greater as farms and citizens must re-orient their lives to count for this loss in access to affordable water. The actual distribution of water is one of the few areas where the government holds a genuine advantage, because their ability to take over land land through eminent domain enables them to build more direct pipelines at a cheaper price than private citizens. However, the state has less incentive than a private business to be efficient with its time, because local governments most often hold the theory that if they just deliberated for enough time, they could come to a far more expedient solution.…