New Horizons in Environmental Economics series
Chapter 1: Introduction
THE CONTEXT A study of the economics of water has many motivations. The simplest route is to emphasise the intrinsic importance of water in our societies and proclaim like Thales in pre-Socratic Greece that ‘all things are water’. A more sombre and tragic rationale is that every year some 2 million deaths including some 1.7 million deaths among children under ﬁve years of age are caused by diarrhoeal disease (WHO, 2001; 2005: 190), and it is generally argued that a signiﬁcant number of these lives could be saved by improving access to water, sanitation and promoting hygiene education. Worldwide, some 1.1 billion people lack access to safe water and another 2.6 billion people lack access to sanitation (WHO–UNICEF, 2004). Lack of access to basic services such as water is a manifestation of poverty and inequality. This is recognised for example in the United Nations Development Programme (UNDP) human poverty index1 and in discussions of basic capabilities2 (Nussbaum, 2000; O’Neill, 2000; Sen, 2004a, 2004b). There are also issues related to conservation of natural resources and sustainability given that water is crucial to many ecosystem functions, and our decisions to withdraw water for particular uses can have signiﬁcant impacts on other uses now and in the future. These are examples of some of the instrumental or consequence-based motivations to study the economics of water. Improving access to water is not easy. There appears to be a positive association between per capita national income and the proportion of people having...