That report, like this recent piece on US cities that face a risk of running dry (nearly 3,000 comments, some of them typical of Yahoo! people) fits the water crisis meme that I've been fighting for years. Why are they wrong? What are they missing?
- Nature makes a drought, man makes a shortage: These problems can be traced to mismanagement.
- Politics makes it hard to implement economic solutions -- either because it's too hard to get political approval to do anything or because a change in rules can eliminate shortage (the profit motive).
- Scarcity pricing in water-short areas (in the US, for sure) can end shortage overnight.
But the biggest problem with the Ceres report is that there is ZERO financial risk of default on bonds when municipal agencies can just raise prices (or property taxes) to meet their obligations. So I guess that revenue risk is really about political risk -- that populist politicians just decide to default or shift the burden to outsiders (as recently happened when Placerville, CA decided to raise sales taxes to lower water and sewer rates; tourists are now subsidizing lawns).
Bottom Line: The biggest financial risk to water users (and bond holders) comes from failing to price water for scarcity and balance supply and demand for sustainability.
H/Ts to DL and BP