Water as an economic good
Topic: Environment and Sustainable Development · NCERT: Class 11, Ch 7 "Environment and Sustainable Development"
Meaning
Water was once seen as a free gift of nature. Pollution and overuse have dried up or poisoned rivers and aquifers, so it has become scarce. The 1992 Dublin Statement says water has economic value in all its competing uses, such as farming, industry and drinking. So it should be priced and managed as a scarce good. When water is priced, people waste less of it and it tends to go to its most valuable uses.
Example
Punjab farmers get cheap power and pump groundwater for water-hungry paddy. Groundwater there is falling fast. If the water had a price, farmers would have a reason to save it, for example by switching to crops that need less water.
Don't confuse with
- Virtual water: this is the water used to make a product. When India exports rice or sugarcane, it is in effect exporting scarce water. Virtual water measures water hidden in trade. Treating water as an economic good is a principle for pricing and managing water itself.
Related concepts
- Environment
- Biotic and abiotic components
- Functions of the environment
- Renewable resources
- Non-renewable resources
- Reserves-to-production life
- Hotelling rule
- Carrying capacity
- Absorptive capacity
- Environmental crisis