The Economics of Water Resources: Internalizing Externalities and Integrated Management
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Water resources economics, internalizing externalities, integrated management, common good, water service externalities, water quality, infrastructure degradation
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Abstract
This document provides a comprehensive literature review on the economics of water resources, focusing on internalizing externalities and integrated management. It explores the concept of water as a common good, the challenges of internalizing externalities, and the impact of water service externalities on consumers. Written for a law course, this document offers valuable insights for policymakers and stakeholders in the water sector.
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[...] Water is generally what is called a common good: there is rivalry in water consumption by one actor (which prevents consumption by the other actor) but exclusion from water consumption is impossible or almost impossible, which makes water a highly sought-after good. Water services generally generate externalities (i.e. external effects that are not taken into account by the market in setting the price). We can then study the externalities related to a water service by first studying the externalities as a whole through works such as those of Ronald Coase. We can then study the common good that is water and finally cross the two approaches. [...]
[...] In short, consumers often bear the costs of the water service, which becomes increasingly expensive, and a thorough study by Calvo-Mendieta I., The Economics of Water Resources: From Internalizing Externalities to Integrated Management. The example of the Audomarois watershed, Economies and Finances shows us through the example of the Audomarois basin that water remains a common good whose external effects are difficult to internalize. Among these effects, we can easily cite the deterioration of water quality or even its impoverishment, which is not taken into account by the various actors who supply the different consumers. [...]
