The End of Abundance: Economic Solutions to Water Scarcity

by David Zetland



Scarcity is not shortage

April 18, 2017

Two words get thrown around as if they were interchangeable: shortage and scarcity. They are not the same, and confusing them is how good intentions turn into bad policy. A shortage is a temporary gap between supply and demand — a dry month, a broken pipe, a reservoir that dropped faster than expected. Scarcity is the permanent condition where there is simply not enough water to satisfy every demand at a price of zero.

Why the difference matters

If you believe you have a shortage, every tool you reach for is temporary: emergency restrictions, a public appeal to take shorter showers, a prayer for rain. You are buying time until “normal” returns. But if the real problem is scarcity, normal is never coming back. You are patching a permanent condition with temporary tape, and you will be back next summer, and the summer after that, surprised each time.

Treat scarcity like a shortage and you will spend every dry year astonished that it is dry again.

Scarcity asks a harder question

A shortage asks: how do we get through the next few weeks? Scarcity asks a far harder question: of all the things we could do with this water — grow food, run industry, fill a river, pour a cold glass — which uses matter most, and how do we move water toward them? That is a question about values and trade-offs, not about plumbing. It is an economic question, which is exactly why engineers alone cannot answer it.

The institutions of abundance

Most of our water laws, rights and habits were written in an age of abundance, when the honest answer to “who gets the water?” was “everyone, there is plenty.” Those institutions do not fail because people are foolish. They fail because they were built for a world that no longer exists. Recognising scarcity for what it is — permanent, structural, and manageable — is the first step toward institutions that fit the world we actually live in.

The good news buried in that hard truth: scarcity is manageable. We know how to allocate scarce things. We do it every day with land, labour and money. Water is harder because it is precious and emotional, but the logic is not new. We just have to admit the age of abundance is over.

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