Henry George’s normative notion of the political economy calls for the recapture of the rental value of land because it is a “free gift of nature” and not owned as a freehold. Locke posited that land sites would only have a market price when there was “enough, and as good left in common for others.” And neither he, other classical economists, or Henry George ever thought much about other natural (or manmade) resources having a scarcity value.
But now we recognize many such resources: air pollution sinks, the electromagnetic spectrum, the timeslots for airports, the earth’s biota, and much of the intellectual commons that, when enjoyed at levels beyond the sufficiency of their demand, ought to be priced for optimum use. At the present time, there is a desperate need for better market solutions for the use of water.
It has become abundantly clear that water ought to be charged and used according to its rental price. Users of fresh water can be divided first between residential and non-residential. The latter include industrial, commercial, agricultural and general public purpose. Users then need to be charged for both their consumption and their discharge, which is usually referred to as water and sewer. Charges for transport and delivery need to be separately calculated from charges for the amount of usage.
Moreover, since non-residential users often alter the quality of their water by its use, they should be charged a fee for the cost of its alteration, if it is called for. Agricultural industries contaminate their usage by adding pesticides, and animal raisers by waste run-off. Manufacturers use water for innumerable processes without assuring its purity when it is discharged. Powerplants release water back into rivers and streams with changed temperatures. And our streets are contaminated by salt and other chemicals used to control for snow and ice.
Usage may be unpredictable and intermittent, seasonal and predictable, sporadic or uniform. Suitable pricing structures have unfortunately not been designed and implemented to address such problems. A number of ethical questions arise regarding the ways in which users are charged, and creative engineers have sometimes devised means by which to allocate usage fairly. In practice, however, designs and formulas for providing equitable consumption have not been widely employed.
Just as with the supply of land, the amount of water is a set amount when viewed inclusively and over broad areas. But its uneven supply and use begs the question of how its use should be costed. And the limitations of its management have resulted in its widespread waste as a finite or scarce resource, and with profound costs in both time and space economically speaking. Solutions have not been adequately explored, let alone implemented. And the concept of rent as classical economists employed the term has been almost totally lost. It needs to be reintroduced.
British Georgist David Triggs, past President of the London-based International Union, once developed such a scheme as a response to at least part of the challenge. In his recent recollection to me, almost two decades after his first explanation, he offered a Georgist solution:
My engineering solution addressed the situation where the water demand (at any price) outstripped the supply capacity and where supply was intermittent (e.g. on for say 2 hours in every 24 hours). Under those circumstances water metres don’t work (measuring air or running backwards etc.) and consumers hoard what water they can get in their own tanks. The rich install a pump and a big tank that they fill during their ‘on’ period, the poor get little or nothing. With the supply pipes empty for most of the day they leak inwards and so contaminate the supply every day.
My solution was to replace existing supply pipes with very small (leak-proof) pipes as used in drip irrigation, and replace water meters with a constant flow valve (CFV) or ‘emitter’ again as used in drip irrigation. The CFV would then deliver at a constant rate according to the household size ensuring that every household received at least a basic supply before anyone received more than a basic quota. Flow would thus be continuous with no leakage or contamination. Supply would then exceed basic demand and the rich could then bid to receive a 2, 3, 4 or 5-star service say. In this way the real value of the water for non-essential purposes could be established and collected, and would cover more than the total costs of supply. The basic quota could then be free and affordable!
Assuming all supplies are metered, it would be possible to introduce a tariff that reflected what I have described. So the first, say, 40 litres per head per day (LPHD) per household would be at a low or zero rate, the next, say, 40 LPHD at a higher rate, etc., until those households with a very high demand per head were required to pay a very high rate on this precious resource; indeed, much like rent on a prime land site! This would leave marginal sites/people paying zero rent.
Triggs, though still an active Georgist, is now long retired, and the patent he originally registered in Africa (where he was then working in international development) has likely long been lost. But his understanding of Georgist economics and his interpretation of the concept of ground rent has stayed with him, and, as his explanation to me shows, has an increased bearing on current challenges and their solutions.