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A solution trickling away : Comments
By George Williams, published 30/7/2007The dispute between the federal and Victorian governments over who controls Australia's waterways will ensure a less than ideal outcome.
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The invention of property rights and the trading of those rights as a way to solve issues like the use of water is not a happy one. The problems are that when you create something out of thin air that has real value then it is certain to create problems. Every smart operator sees money being created out of nothing and wants to get a piece of the action because they can see how they can get wealthy by manipulating the process not by creating something of value.
The issue that should be addressed is how to build a system that will encourage directly through market mechanisms the development and implementation of technologies that will effectively increase the supply of water through savings and better use and mechanisms that will find the true marginal price of producing "new water" or saving water and of directing the use of water to the most economically valuable. This can be done and the way to do it is address the problem directly.
If you think water rights creates problems imagine the problems that are going to be created with emissions rights (or the right to pollute) where we need to get countries to agree. This whole approach to solving problems associated with community properties (water and air) will not work - or if it does work it will take too long and be too expensive. A new approach is needed that does not depend on inventing property rights for something that is not property.