8 Sep 2014

Do academics understand how to fix water policies?

Long-time readers know I worry that "irrelevant academics" fail to connect their work to reality (example example). Michael Strong asked for my thoughts on this topic recently:

Q: To what extent are your perspectives [on water policy] mainstream within academia, outside of economics? (I expect your ideas are not too controversial within econ)

A: Actually, they are not very well understood within econ. I am finding this now, as I constantly need to remind my students that we are learning with play models (perfect markets, 100% private goods). Many academics bring this over-simplified view to water, e.g., forgetting the "public good" dimension of environmental water flows.

Q: Is it your perception that most professors in humanities and non-economic social sciences understand that pricing water appropriately is the best way to ensure water sustainability?

A: No. Their solutions tend to rely on (1) treating water with respect or (2) government intervention. (The worst solution -- just desalinate -- tends to come from engineers.)

Q: Perhaps more controversially, would most humanities and non-econ social science professors accept that privatization of water that required personal allotments of water for free might be a more socially beneficial arrangement than democratic governance of water supplies?*

A: I think they would buy this idea IF quota could not be permanently transferred, since sales can turn a bad decision into "a lifetime of (water) slavery." OTOH, "democratic governance" often means leadership by them (in their minds), which they may prefer to privatization that left water in the hands of citizens/a decentralized market that "leaders" could not control for the public benefit -- or leaders' biased priorities.

Q: I don't know if you are familiar with Dan Kahan's work, but he is a leading scholar on the issue of science communication. Kahan is interested in why some cultural groups are anti-vaccine, why some cultural groups resist global climatology research, etc. It strikes me that the basic science of water economics is fairly straightforward and yet that it remains relatively unrecognized in public debate. Is this a case in which some cultural groups are resistance to the science of water economics? And, if so, are the academic humanities and non-econ. social scientists among those groups?

A: Great question and the real barrier to improvement here. I think it comes from an assumption of "public-owned utility" = "serves the public" which is true in most OECD countries as well as a belief that "we need water to live" which is why we get it for free from fountains. Both beliefs argue against pricing as well as private participation, but those tools are useful. That's why I discuss the role of prices and private sector skills using example from other sectors. These paradigms can help address water scarcity and improve management at struggling utilities. OTOH, these "soft" academic really do have useful ideas on community management of resources and the importance of non-quantifiable uses and impacts of water. Over the years, I have definitely benefited from the diversity of useful and effective methods for sustainably managing water.

Bottom Line: Academics from all disciplines need to test their theories against realistic problems to find viable solutions. We should not let ideology get in the way of reliable water service and sustainable management of water resources.

* Michael: Regarding the latter I just came across this article that is clearly hostile to your message:
This article focuses on the arguments used to support private sector participation (PSP) in the provision of water and sanitation services (WSS) since the 1980s. It addresses the following questions: what was the historical evidence informing the claim that promoting PSP would be the best instrument for reducing water poverty? What are the principles that provided the foundation for this claim? And, what has been the empirical record of the resulting WSS policies? It argues that early neoliberal WSS policies since the 1980s were not intended to expand services to the poor. A pro-poor rhetoric was added to these policies since the 1990s, probably as a result of increasing citizen unrest in developing countries and the failure of privatized WSS projects in the Americas and Europe. However, the claim that PSP can provide the solution to public sector failure in extending coverage of essential WSS to the poor has little ground both in the theoretical literature and in the historical record. As could have been expected from the accumulated knowledge about the relationship between market-driven WSS and the poor, the recent experience with PSP projects has been disappointing. In practice these policies not only have failed to extend these essential services to the poor but have also contributed to deepening existing inequalities of power resulting in the weakening of state, local government, and civil society capacities to exercise democratic control over private water monopolies in most developing countries. Reversing this imbalance is one of the crucial challenges ahead in order to achieve the Millennium Development Goals. However, the article argues that the inertial forces set in motion by the neoliberal model of water policy based on market-centred governance of water and WSS remains the crucial obstacle for the achievement of the goals.
Me: This article is based on opinion, not fact, i.e.**
  1. Privatization in Buenos Aires definitely helped the poor, i.e.,
    Galiani, S.; Gertler, P. & Schargrodsky, E. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality" Journal of Political Economy, 2005, 113, 83-120.

    Abstract: In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country's municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas. We check the robustness of these estimates using cause-specific mortality. While privatization is associated with significant reductions in deaths from infectious and parasitic diseases, it is uncorrelated with deaths from causes unrelated to water conditions.
  2. There's an ECONOMIC case for serving the poor, in terms of profits, because they are willing to pay more than the cost of service; see this report from Phnom Phen [pdf]

  3. Public companies fail the poor due to poor governance. It's not private that fails, but corrupt governments, as we saw in Cochabamba, Bolivia
** With all due respect to my geography colleagues, their discourses do not often include analysis or empirical evidence

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