Friday, April 15, 2016

Quote of the Day: Why Drinking Water is Not a Public Good

A public good, according to Econ 101, has two specific characteristics: it is (1) non-excludable and (2) non-rivalrous in consumption. In lay-persons’ terms, this means that (1) if the good is supplied to Smith, no one – including the supplier – can, at reasonable cost, prevent Jones and Williams from also consuming the good even if Jones and Williams refuse to pay for their use of it; and (2) Smith’s consumption of the good does not diminish (that is, does not “rival”) Jones’s or Williams’s ability to consume the good.

Safe drinking water is emphatically not a public good as defined in Econ 101, for safe drinking water is both excludable (your water supply, and yours alone, can be cut off if you don’t pay your water bill) and rivalrous in consumption (every gallon of water that you use today is a gallon that your neighbors cannot use today).

To note that safe drinking water is not a public good as economists define public goods is not to say that it should not be supplied by the state; that’s a different question. 
This is from Professor and Blogger Donald J Boudreaux at the Cafe Hayek

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