May
18
The ownership of water resources.
As usual, people tend to freak out on the idea of privatizing the water resources like Rivers, and more importantly Oceans(yes, private ownership of Oceans must be allowed, keep on reading to find out how). Rivers because we have a big problem of lack of drinking water and Oceans, because of vast quantity of untapped resources.
Oceans
When human civilization first started, man used to live like a nomad, moving all the time, hunting animals, and gathering shrubs and berries. Man did not try to transform the land to more productive purposes. This is the reason why primitive men could only barely survive. Over the period of time, when agriculture was developed, human settled down, formed societies, and his standard of living, and technologies took giant leap forwards. It can also be said that it was Human civilization began with agriculture. Agriculture was not possible without property rights. No man could simply keep on doing farming if other men kept on coming to his land and took what he grew considering it as a part of nature. Had that been the case, man would never have proceeded with Agriculture.
Similarly, today we are still in pre-civilization stage in respect to Oceans. Today man acts as a primitive, unproductive hunter-gatherer on Oceans. Since nobody is allowed to own any part of Ocean, so anybody can simply hunt and collect fishes and move on. Nobody is allowed to farm the oceans, nobody can engage in Aquaculture on Ocean. The vast fish and mineral resources of Oceans are not put in any use.
For example nobody tries to fertilize a section of Ocean to increase the productivity of fish there, because immediately other fishermen will come there and deprive them of his product. So nobody tries to fertilize the ocean just like the land is fertilized. Also there are no economic incentives to do such thing, because there are no property rights. People would try to use different technologies to increase the productivity when full property rights are allowed on Ocean. People can electronically fence their part of ocean to prevent fishes going to other part, big fishes will not be allowed to come there, this would increase the population of the fishes. Food can be provided to them.
Not only that, vast floating artificial islands can be built on Ocean properties. We can already build large ships; nothing would be difficult to make such a thing. Sea beds could be used for more stuff. 100 years from now, we might as well have Under-ocean Cities. But all that will happen, when property rights in Oceans are allowed.
Rivers
Privatization of rivers is a very sensitive idea, just like the reaction of the above quoted Orkuteer; people tend to become repulsed by any idea to pay for using the river. But here is the thing, right now you pay taxes, and government provides you water, why not eliminate the monopoly of government on the river and have competing entities provide you water.
Right now government owns the river(and no matter how much they try to bull shit you in thinking “people own the river”, the truth is the government owns it), so it keeps on misusing the river as it wishes, Government officials cannot sell the rivers or sell stock in them. Hence, they have no economic incentive to preserve the purity and value of the rivers. Rivers are, then, in the economic sense, “unowned”; therefore government officials have permitted their corruption and pollution.
Anyone has been able to dump polluting garbage and wastes in the waters. But consider what would happen if private firms were able to own the rivers and the lakes.
If a private firm owned Lake Erie, for example, then anyone dump¬ing garbage in the lake would be promptly sued in the courts for their aggression against private property and would be forced by the courts to pay damages and to cease and desist from any further aggression.
Thus, only private property rights will insure an end to pollution-inva¬sion of resources. Only because the rivers are unowned is there no owner to rise up and defend his precious resource from attack. If, in contrast, anyone should dump garbage or pollutants into a lake which is privately owned (as are many smaller lakes), he would not be permitted to do so for very long the owner would come roaring to its defense.
The question which comes up first when the idea of water privatization is discussed is “Who owns the river?” Here is my answer to that question.
We use Homesteading principle to define the property rights in nature, that anyone who puts on an unclaimed part of nature into something useful by mixing his labor in it is the owner of that property. We will use the same homesteading principle to determine the ownership of the river and its water.
For example, if I create a water pumping station on the river, which pumps the water to adjoining areas where it’s needed then it’s my river up to that part.
Anyone who wants to use water downstream will be free to use it, but if I don’t release that water there, then he cannot complain. On the other hand, if I try to totally stop the flow of the water then I might be screwed if I can’t take the control of water, since I would be flooding the adjoining areas.
So I will be the owner of that part of the river which is adjoining to my land. I can take as much water as I can, and I become owner of that water.
Now let’s presume hypothetically, that upstream guy has the capability of completely stopping the water flow, or to take all the water, and sell it to people who need it around upstream basin.
Does that mean that people living in downstream basin will now be devoid of the water? Isn’t that counter productive?
The answer is, NO! Let me explain it how.
Let’s presume that people all across the basin have same utility of water, and same population density. So the upstream guy takes the water needed by the people living in upstream basin, lots of water is still left over to be flown to downstream people, and they use it.
So what prevents the upstream guy to supply more water to its market? People might just start building swimming pools in their backyard, to waste water. The answer is marginal utility of water.
Marginal utility of something means what utility a product has for its current quantity to people. For example, if you are in a desert, there is no water; the marginal utility of water is really high for you. On the other hand if you live on marshy lands, the marginal utility of water is really less. So you would pay mere pennies in a marshy lands for water, on the other hand you will be ready to pay a gold bullion to buy water in desert.
So from the perspective of upstream people, when there is no water being supplied to them from the river, the marginal utility of that water is really high for them, soon all the water they need is being supplied to them, so the marginal utility of water for them has come down. Soon more water then what they require is supplied, so the marginal utility of the water is really less for him now.
On the other hand, the marginal utility of water for downstream people is more since less than required water is being supplied to them.
This means once the requirement of upstream people is met, their willingness to pay for more water comes down too, and since the requirement of downstream people hasn’t met, their willingness to pay goes up.
This example of Marginal utility can also be explained as, the upstream guy who wants to fill up his swimming pool will not be willing to pay the price a thirsty man in downstream would be wiling to pay, considering both people have same buying power.
What this means for the market is, that NOW, the downstream river owners will be willing to buy water from upstream guy, at his market price. The only difference is, the upstream guy instead of supplying them water through a pipeline, will simply release water in the river.
If this sounds too complicated, or if you feel that the downstream guys will be a massive disadvantage in terms of water they receive, take a look at this example:
Let’s take a hypothetical example of River Ganges.
Following major cities (in the other of upstream to downstream) are located on Ganges:
Haridwar, Moradabad, Rampur, Kanpur, Allahabad, Varanasi, Patna, Rajshahi
For the ease of example, lets presume these cities to be individuals/entities which own the river.
Haridwar since its on the uppermost stream of the river, can take the full water out of River Ganges(lets talk in terms of percentage of water taken, taking 100% water means no water is leaving out from that point, 0% water means no water is being taken at that point).
Haridwar supplies water to Uttaranchal, Delhi, Punjab and other states (let’s call it Haridwar’s market).
Since there is literally no water being left for Moradabad, Kanpur and other downstream owners, and they too want water, so Moradabad offers Haridwar to buy water they want at Haridwar’s market selling price of water.
Here Haridwar is being offered the market price of his water; it will sell the water to Moradabad. Whatever water Moradabad needs for its customers.
Now Kanpur, is going buy the quantity of water it wants on the Market price of Moradabad’s water. This is an increased demand, so Moradabad will in turn buy it from Haridwar.
So it works like in a chain. Patna will buy what water it needs from Varanasi, which will buy the water it needs from Allahabad, which will buy water from Kanpur. Of course someone at the end of the river, like Patna, will have to pay a bit more price than what Kanpur or Moradabad pays, but then in return Moradabad and Kanpur and all the upstream owners are doing service to Patna to keep the river clean, to provide clean water to Patna. If the downstream owner gets polluted water, it can sue for property damages to upstream owners. So it’s the responsibility of upstream owners to not to pollute the river for downstream owners.
Yes, living downstream is bit more expensive than living upstream, but then you will be getting the same quality of water everywhere, without this system right now; downstream people get more polluted water than upstream people. Today city of Agra cannot sue the city of New Delhi for polluting Yamuna. After all it’s the same government everywhere.
If you were a poor man who lives in Agra, you cannot get clean water, the people of New Delhi pollute it a lot, and you cannot sue the people of New Delhi because no property rights exist.
Conclusion
Property rights represent an immense achievement in human civilization, all the progress we have done is not because we intended to share our produce with each other, we have done it for ourselves, for our families, for our grandsons. Because if we don’t feed our family, nobody else would.
Its time that we extend these property rights into areas of other Natural resources like minerals, fossil fuel, rivers, oceans, air, radio frequencies etc.
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21 Responses to “Case for Private ownership of Natural Resources - II.”
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nefariousoutlook Says:
May 18th, 2008 at 11:52 ama very interesting argument!!!
keep posting :)
Hitesh Says:
May 19th, 2008 at 3:22 pmInterestin argument but sounds more liken an utopian concept…
Privatization of resources is not always THE ONLY solutions for the inability of govt… if this is the case then railways shud also be pvtised…
People are already tlkin abt wars because of the water and in this scenario ownership of water in the pvt hands will worsen the matter….
plus its important to know that many of the rivers are flowing accros the nation bounderies….
And allow me to say that not all theories and hypothesis work in real lyfe…. this are my personal views….
All in all very thought provocating post….
unpretentious_diva Says:
May 19th, 2008 at 3:39 pmwell, all other solutions have been used by people like you and what you got? a situation where people fight for water?
t is your own ways which lead to this situation where ganges yamuna, krishna kaveri all are nothing but collection of garbage.
About theories, it is practical theory. Ground water is selled out all over in villages of India, and government cannot control it, hence it is safe and proper and most efficient.
You need to read this Water Crisis in India, Is subsidizing water a sustainable solution? and this article of Indian Express Report on global warming: forget carbon emission, make people rich.
about trains, they must be privatized, that is the best way to safeguard against the train bomb blasts, and other problems like useless and inflatory tatkaal reservation and other illusive concepts which are being applied by Lalu and Gang to loot public by one hand and show how generous he is by other hand.
You can read here at Times Of India by Swaminathan Aiyar, that How Government wastes water resources.
about Utopian, even flying was considered Utopian during the times of Wright Brothers.
I am sure before the evolution of agriculture, it was a utopian talk for pre-historic man to think about ownership of house and land.
We are much worst than the pre-historic man, we have no property rights. That is why CPI goons and government was able to kill people in Nandigram.
Hitesh Says:
May 19th, 2008 at 3:45 pmHow about coming up with ‘ceiling limits’ for evry individual and the corporate for water usage..?
something on the lines of carbon credits…
renegade_division Says:
May 19th, 2008 at 4:00 pmHitesh said
Interestin argument but sounds more liken an Utopian concept…
Dude we are living in such a times that anything remotely towards freedom sounds Utopian right now.
Lemme first take down the argument “if that is the case then railways should also be privatized”
OF COURSE Railways should be privatized, take a look at Aviation industry in India, its booming, the costs to travel today through airplane is already quite comparable to traveling through railways in AC.
Today if you need to travel at the first available date through railways, you will have to wait for exactly 2 months before first reservation can be made available.
Sad part is, people are fine with it. At max blame the population.
Instead of even dreaming about going to a Railway Station with a bag in hand, buying a ticket to Delhi from Mumbai and taking sleeper class ticket without heckling with TC would sound Eutopia to you.
If Railways are privatized, private railway companies are free to run Railway lines form anywhere to anywhere, then they will be fighting for the customer, rather than you bribing TC for a seat.
The poor indoctrinated brains argue “but how can we give an important responsibility like Railways to private hands, what if those greedy corporate executives grind the whole infrastructure of India to halt?
Now coming to water. Only govts fights war with each other, corporations merely find agreements, arrangements, payments.
All the conflicts of water take place due to “rights on water”, people think they have a right on water. So downstream people fight with upstream people.
Take for example Tamil Nadu people think they have a right on water of Kauvery, Bangalore people think otherwise.
On the other hand, what Tamil Nadu people fail to realize is that they are getting clean water from Karnataka, and they should pay the Karnataka for this service of clean water.
For all I know Bangalore people can poop in Kauvery before releasing all the water TN wants.
Why don’t we simply not have ANY private property rights at all?
Why don’t we simply not let anyone to own any land or house? Why don’t we simply make it a use based thing, anyone who needs to live in this house, may come and live in it.
What will happen when that thing happens? People will only fight to get that house or a land. Same thing happens right now. This is a situation of total Chaos. We don’t find anything wrong with it, because we are too accustomed to see things the way they are.
Hitesh Says:
May 19th, 2008 at 4:27 pm1st of all let me make it clear that i m not at all against the pvtization….
Suggesting sumtin is very imporatnt and necessary and thats good dat u have done it… all wat m saying is wen we r tlking and discussing abt sumtin like this we need to have certain clear picture abt the possible hurdles and far reaching effects on the society as a whole….
I am here to add the value to the raised question and discussion…. m not at all pro socialist and anty capitalist…..
renegade_division Says:
May 19th, 2008 at 4:37 pmdiscussing abt sumtin like this we need to have certain clear picture abt the possible hurdles and far reaching effects on the society as a whole….
This is not a Policy discussion in the chambers of Montek Singh Ahluwalia(Chairman of 5 Year planning commission).
Govt has no moral right on maintaining the monopoly on doing business.
We are a Free Individuals, we are not slaves of Indian govt.
Tomorrow if the far reaching benefits of killing all the Muslims in India greatly outweigh than not killing the Muslims, then would you ask the question “Should we do it?”
Maybe killing sounds inhumane, how about this, if govt thinks they know which guy your sister is best fitted to be married to(your sister or you or your parents have no say in it), should you debate about the benefits of allowing such a thing, or straightaway say NO to the Govt?
A simpler question, would you rape your sister if govt makes a law forcing you to do so because there is a far reaching public policy benefit in it?
Hitesh Says:
May 19th, 2008 at 4:39 pm@ prashant…. IT will seem out of the context but since u have raised the question….
as far as i know none of the airlines are making profit… most of the airlines have strtd recently in india and busy making headway in the business and in the process of establishing themselves they are ready to suffer losses in initial years….
Coming to indian railways…. i wil not tlk abt its service but let me tel u it does subsidies ur rail travel to grt extent…
Eg… THe distance btwn mumbai n delhi is anywhr btwn about 1000 to 1500 (m not sure) and the 2nd class fare is arond 600 to 700 rs…. it comes less then 1 re per km…. which mode of trnsprtation will cost u likethis….
Wen we r tlkin abt railways we like to comaplin abt the qualty and services but how many ppl wud b willing to pay for this….?
We shud remember that the railway operates in the whole country which also includes states likes bihar MP and other such BIMARU states whr ppl still cant afford the existing fares….
and the argument that pvt handling will increase the safety of the passenger is sumtin beynd my undstndin cos there are cases in pvt ownership where accidnts due to negligence is common thing….
unpretentious_diva Says:
May 19th, 2008 at 5:11 pmcos there are cases in pvt ownership where accidnts due to negligence is common thing….
You can sue them, you can question them, you can reject them and apply for other private service. The loss of customers will force them to avoid negligence.
Its same as autorikshaw, if you are traveling by a private autorikshaw, you can tell him to drive slow or fast, and he will listen to you, you cannot tell a best bus driver to do so, nor he will listen to you, though the diver or conductor of best bus can surely harass you.
What will you do against Government?
What did delhites did against Blue line bus service? They are still killing people.
About aviation, are you sure they are working for loss? so you mean money comes from air?
They are not working for loss, but by increasing number of customers and hence usage (and thus decreasing the prizes) they are making huge profits which air India was never able to make.
It is just similar to usage of mobiles, now you can talk one Rs1/- per minute all over India, it is basically because of competition for gaining more subscribers and hence more profits.
Governmental service of telecommunication before 1990’s was never so popular nor so profitable.
About trains to Bihar MP, UP, I am MPite, and I was borne in UP.
Privatization will actually make much more easier safer, and cheaper train services, because it will mean for the profits of the train service providers, more customers means better profits and customers increases with better facilities provided.
Why this simple market economics cannot be understood, where is the problem?
Who can deny that now telecommunication, phone, mobiles are a poor worker’s tool to increase his earnings? Even vegetable, newspaper and milk vendors uses mobiles, it helps them in their work/business. And it is cheap.
renegade_division Says:
May 19th, 2008 at 5:17 pmas far as i know none of the airlines are making profit.
Its none of your concern(I mean literally not sardonically), its their business, you left the field wide open, now let free market operate in their own way.
When they make profit, its their profit, when they make a loss, its their loss. They are not there to do a public service, their whole point is to make more and more profit.
Its different thing that in their pursuit of making profit, you get good service. Its merely a side effect of Free Market.
Trust me if you NEED airlines, you will be provided airlines by the market, but in India most complaints are like, “we need a man on moon..”, now no matter how much your inner person speaks about such a need, there is no such ACTUAL need, so market will not provide you such a thing.
it comes less then 1 re per km…. which mode of trnsportation will cost u like this..
Here is a simple thing, if Railways is providing such a cheap rate after taking so much massive subsidies, what is such a proud fact about it.
It simply means the railways screwup, run very inefficiently, and then govt uses Tax payer money to hide their inefficiency.
There is no way of knowing whether Indian Railways is working at its maximum efficiency or not without competition around it.
Lemme tell you one more thing, Privatization does not only means selling govt companies to private hands, Aviation is privatized but Indian Airlines and Air India still are in business.
Of course the current subsidies must be removed, if I don’t use Railways at all, why should I be made to pay for the Railways.
When you say “how many people would be willing to pay….” its a non-sequitor argument.
If people are not willing to pay for high Quality and service, they WILL not be provided the quality and service by the free market.
You don’t have to worry about it.
For example, if Reliance Railways runs 100 trains, all like Palace on Wheels, and nobody travels, then its a clear market signal to Reliance that people don’t want that fancy stuff.
Now another company runs 100 trains in average quality, and it makes massive profit(because its cheap), then Reliance Railways will convert its Palace on wheels to Indian Railways quality.
I don’t care whether Market will be able to provide good quality or cheap prices, all I know is one thing, whatever people want, Market will be provide it.
Today we need WAY more trains then available, people are willing to pay, but we just don’t have trains, its such a waste. Rich people wanna pay more so that they can travel safely and more luxuriously. Poor people just wanna travel somehow.
But we don’t allow more trains or better more safer trains to run, because of our stupid Bihari Minister, so everyone Rich or Poor has to buy the same ticket.
When there are too many people to buy the same ticket, a Black Market(which is another aspect of Free Market) develops where TC literally auctions the ticket.
Hitesh Says:
May 19th, 2008 at 6:43 pmLolz….I have also put the disclaimer that the inspiration is confined to only title and not the content…. wel that was therecent book i read n just a coincidence….
Is it a rule that only a socialist can read his books….? I wonder how can ppl so quicly form opinions abt others…?
and about me being confused socialist… wel, as u please….
Hitesh Says:
May 19th, 2008 at 6:53 pmAll said and done….
I think the debate will never end… will any one of u pls make me undstd that how will u convinnce the general public of india abt this initiative….
i hope u guys will atlst agree on this that its very difficlt to make them undstd…. for eg ppl of karnataka and tamilnadu….
How will this be possible in case of river flowing in more den two countries….?
Which is best option between pvtising the water resources and linking the rivers in india for more efficient use….
unpretentious_diva Says:
May 19th, 2008 at 6:54 pm@hitesh,
No, in free society, theres no such rule.
You can read what ever you wish for.
I read Carl marx too.
But we decide on reason.
I cannot call a looter like Marx as some legendary because that would be inproportionately unreasonable and unjustified.
though you did that.
renegade_division Says:
May 19th, 2008 at 6:57 pmHonestly speaking I won’t go upto the limits of calling a Mass Murderer of millions of people “legendary personality” if I didn’t agree with him.
Anyways, continue this discussion somewhere else, not here.
unpretentious_diva Says:
May 19th, 2008 at 7:08 pm@Hitesh
Ideas evolves, and reasonable Ideas stays well to sustain the human life.
This blog is just a medium to sparkle the reasonable ideas.
People do read it, they try to understand it too. Propagation starts like this.
Although reservation is still going on, but the fact that anti-reservation demand is becoming more and more strong because reservation is anti-reason,anti-mind and anti-freedom, anti-equality, people do understand this now much more.
I don’t dream of changing world within one day, but that cannot stop my mind to think right and reasonable will it?
Just because people won’t understand it, won’t make me dumb and lost.
what will linking the rivers will do?
it is more against Individual freedom, it will make system much more statist. and much more fights will occur between various states, that which is the case of Karnataka and Tamil Nadu now, will become a case of every state.
shex Says:
May 20th, 2008 at 6:53 ami agree with you about property rights but this India it can never be implemented here
talk about the privatization of rivers which river, the most polluted one ganges . haha its the people’s river give it to one person and whole UP will riot and believe me its not just only with ganges its with almost everything….. In this nation covered by religious fanatics and crazy politicians and half illiterate janta nothing is possibile ever
but we sure can dream ………
unpretentious_diva Says:
May 20th, 2008 at 2:31 pm@shex
every change needs an initial step and this is it!
manorath Says:
May 20th, 2008 at 3:50 pmnice ads by google!! worth clicking on them sometime later!!
Sushant Says:
May 20th, 2008 at 6:44 pmPrivate ownership of natural resources is a good idea. its just we will need moderation mechanism to make sure the resources don’t run out of steam and become useless with an approach which is just directed by pure profiteering.
renegade_division Says:
May 20th, 2008 at 7:40 pm@Sushant
Private ownership of natural resources is a good idea. its just we will need moderation mechanism to make sure the resources don’t run out of steam and become useless with an approach which is just directed by pure profiteering.
Well then I take all my suggestions given in the post back. What is the point of privatizing if pure profit is not the motive?
I didn’t cover that part in this post because it was covered in first part of this post:
Case for private ownership of natural resources - I
You our going to go out there thinking that we must have Govt sitting on our heads before free market’s benefits come up, then please don’t support this idea, I would rather have you NOT promote privatization of Natural resources, rather than supporting govt moderation on private companies.
Please go through the first part of the post, where I demonstrated(not just explained) why Govt moderation and capping the amount of minerals, or water results in RUNNING out of Natural resources.
Yes you heard it right, having govt moderation results in exhaustion of Natural Resources.
Take for example you cannot explain me why doesn’t Saudi Arabia govt drill all its oil out in one day and make trillions in profit?
Not because they care about environment(they hardly have any).
Because drilling less oil means more profit, prices of oil are $120 now, if Saudi drills all its oil in one day, the prices will come down to $1 per barrel, their profit come down).
Then why doesn’t Saudi govt halves its output, this will surely increase the price and increase their profit, well though Saudi govt can do that, and the price of Oil will reach $250 or even more but then they are selling less oil, so the profit comes down again.
So what is the optimum amount of oil Saudi govt must drill? Well it all depends upon the consumption, just match the consumption of the people no more, no less, and that will get you the max profit.
That my friend is the beauty of pure profit seeking Capitalism.
Sushant Says:
June 3rd, 2008 at 12:22 amOk..I agree no form of government intervention can actually help in saving or preventing any misuse of resources but natural resource by their very nature are limited and human exploitation even though driven by sound capitalistic principles will alter the environment which can in time can be fatal for us all. We all know what mindless use of fossil fuel has done to our cities. I think a better approach to solve our problems is to look within the resources we have and implementing control measures and slowing down the demand. We can have parasitic tendency but I don’t think it can take us very far..