By Baker L.A. (ed.)
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In particular, the question as to whether such projects versus buying water from existing commercial users represent the most cost effective way of increasing environmental flows has not being contemplated. As higher incomes in the future are likely to mean increased demands for the provision of environmental amenity, a more logical cost effective route to acquiring additional water is desirable. Also, as discussed, a well functioning market will Principles and Issues for Effective Australian Water Markets 21 provide incentives and rewards for much socially beneficial investment to increase effective water supply.
11. I am grateful to Alistair Watson for alerting me to this issue. For a related point, on economic grounds there seems no rationale for the proposed three-step block pricing scheme for urban water. In terms of opportunity costs and allocative efficiency, water is water whether it comes in small or large quantities suggesting a single price. Equity concerns are already largely met by a system of rebates for low income households with benefit cards. REFERENCES Coase, R. (1960), ‘The Problem of Social Cost’, Journal of Law and Economics, 3, 114–127.
Rivers and lakes are commonly in such recreational uses as bathing and swimming. Waters are also extremely valuable for navigation and transportation in a primitive age when roads are very bad. The moment that somebody can simply divert all the water from a particular river and consume it, or dam it up in order to obtain some other kind of advantage, then their conduct will precipitate huge losses for everybody else who has a stake in the management of water resources. And so the irresistible impulse in any settled community is to decide that no one person can engage in unilateral appropriation strategies; rather, the water has to be retained in some form of a common.
Environmental Chemistry of Lakes and Reservoirs by Baker L.A. (ed.)