Question 1 a Do you think it should be applied to water Why

Question 1:

a: Do you think it should be applied to water? Why or why not?

b: Do you think scarcity rent will be factored into a privatized price? Why or why not?

c: What would you need to know about your water to know if it should attract a scarcity rent?

d: Do you think Dams should be publicly or privately funded?

Solution

a. Though water is a public property so privatizing it sounds not good but it is a necessary evil because of several reasons like tragedy of the commons, less incentive to do research in the field it there are to direct individual benefits. So yes I am in favor of privatization of the water. It may have some big issues like control of such a important natural resource in hands of few but atleast it will be available to future generations.

b. Scarcity rent is normally inbuilt in privatized rent when companies think that they are going to have control on the product in the future also but if they think that control is not for long term then they will worry just about current profits. So it actually depends upon this condition.

c. We should know about the current and future availability of water and effect on cost of extraction of water in future per one additional unit that is used today.

d. Dams should not be privatixed because companies may charge very high premium to release water to another side or they may even deny to do so for their own selfish reasons