May 17, 2006

Water Shortages and Free Riders

We're suffering from a drought in the UK, or so we're told.

Advertisements are appearing in which we are told that it's wetter in southern Europe than it is in England.

The green movement is writhing in post-orgasmic i-told-you-so bliss, making the obvious and completely unwarranted link between global warming and the fact that the UK is dry.

For the record, it's not bloody dry. It drizzles constantly here. When there isn't a light smog-laden patter of acid rain, there's the impending arrival of a grey, smog-laden raincloud. The UK gets the worst of both - a grim and miserable Winter and Autumn, followed by months of awfully-written press articles about how we're all going to die of thirst unless everyone stops washing for the entire summer.

The recent water "crisis" has led to renewed calls for water meters in every home. In the UK, you see, water is sold to you on a subscription basis - you pay your annual charge, and you can use as much as you want. The British are as averse to having this system changed as they are to the introduction of ID cards (don't get me started).

In a grand example of how the prevailing system becomes a "right" in the eyes of those that benefit from it, consumers of the world's most essential resource rise up in arms at the thought that their consumption of it should be measured, and that they should perhaps pay for what they consume.

This looks awfully like a tacit admission that most people believe they consume more than their fair share. I've yet to see a Brit turn down a good deal, and if they believed they consumed less than their fair share, they'd be screaming blue murder because they were effectively being billed more than their share of consumption.

There's a term in economics for people who exploit systems that must be paid for centrally by taking more than their share of the resulting good - they're called free riders - in the sense that someone who uses a transport system without paying is being subsidised by everyone else on the transport system who actually ponied up the cash.

There's some interesting psychology surrounding free riders. It's a form of game theory.

Imagine a world where there was no enforcement ensuring that everyone paid for public transport. You were expected to pay, but there was no barrier or guard checking that you did. Assuming that on day one, everyone paid, what would happen as time passed? The less honest among us would stop paying within a day. Soon thereafter, a few others would follow. Then, as a shrinking proportion realised that they were actually paying everyone else's travel for them, they too would stop paying on the grounds that this was unfair. Before you know it, there would be no transport system because it would be bankrupt.

That's the free rider problem - while everyone in isolation thinks that the damage they do to the system is minor (and it is), their behaviour, extrapolated to the entire population, breaks the system. Free riding is also inherently unfair.

Transpose this argument to water, and what do you get? Spiralling demand for water since the amount you use is not linked to the cost you pay, no incentive to economise, and steadily increasing prices as the system struggles to cope. A drought on an island best known for its bad weather, and a bunch of previously stiff upper lips quivering in anticipation of actually being billed for what they use.

It's usually at this point that some imbecile brings in the point about water leakages from the system.

Emotionally, this is a powerful argument. Logically, it's completely irrelevant. The fact that there are leakages from the pipelines cannot (as far as I can tell) be logically linked to an argument not to pay for what you consume.

While there is little doubt that everything must be done to limit the loss of water from the system due to leakages, it's one hell of a leap to go from "The system leaks water" to "Therefore I must be allowed to consume as much as I like without monitoring". To those who reply, "But I use water responsibly, I just don't want to be measured doing it", I refer you to the bit on free riders above.

I for one am happy to have my water usage monitored. It would be a very elegant gesture if, in accepting to fit a water metre to my property, my water supply company were to offer me an incentive such as financial assistance in installing a more economical flushing system in the toilet, since mine dates from long ago and wastes water chronically. But that incentive is no prerequisite.

There are people pouring cubic metres of water over their cars to keep them shiny on the grounds that they "pay for it". Until they per per cubic metre, they're not paying for it - everyone else is.

Posted by nlvp at May 17, 2006 08:09 AM
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