The Problems With Water Pricing in the US

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New communities are not paying the marginal cost of their additional demand or even the additional network reaching into that community. They're paying an average cost for the entire network, which tends to mean that the existing customers are subsidizing growth for the new customers. So a lot of the problems in the US that are really good for newspaper sales would go away if we manage water as an economic good.

David Zetland of Leiden University College in the Netherlands and author of Living with Water Scarcity talks with EconTalk host Russ Roberts about the challenges of water management. Issues covered include the sustainability of water supplies, the affordability of water for the poor, the incentives water companies face, and the management of water systems in the poorest countries. Also discussed are the diamond and water paradox, campaigns to reduce water usage, and the role of prices in managing a water system.