The Effects of Setting a Price Ceiling on Water:
the Bolivian Experience
the Bolivian Experience
Water is a necessity, right?
And so its price must be kept low, right?
Not necessarily.
While we need water to live, we don't need it (to live) in the amounts that most people use it. And so keeping the price of water artificially low is not necessary to preserve life. But doing so will have many undesired effects. Larry White reports these effects at Division of Labour:
For more about Bolivia's misguided utopianism, see this [link via Newmark's Door]
And so its price must be kept low, right?
Not necessarily.
While we need water to live, we don't need it (to live) in the amounts that most people use it. And so keeping the price of water artificially low is not necessary to preserve life. But doing so will have many undesired effects. Larry White reports these effects at Division of Labour:
Five years ago in Cochabamba, Bolivia, the New York Times reports, local leftists ran an American monopoly franchise (Bechtel) out of town for trying to raise water rates. A victory for the people!
One small catch: today, because the local public utility has kept the old low rates, they can’t cover the cost of keeping the pipes filled, let alone extending them. Half the population still has no piped water service (they rely on wells and freelance water trucks), while even for the lucky households the taps run only a few hours of the day. Maybe not such a victory for all of the people.
For more about Bolivia's misguided utopianism, see this [link via Newmark's Door]
Category: Economics, Price Controls Posted on
Wednesday, January 25, 2006 at 12:35am
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