Water Is Not a Public Good

by Don Boudreaux on April 14, 2016

in Economics, Myths and Fallacies

Last night in my seminar on Adam Smith’s Wealth of Nations my students and I covered Smith’s chapters on public goods.  During the course of the discussion one of my superb students, Chris Kuiper, mentioned in passing that Paul Krugman, in a recent New York Times column, mistakenly described safe drinking water as a public good.  Here’s that column.  Mr. Krugman emphasizes that safe drinking water is a public good according to “Econ 101.”

(Please excuse me for a moment while I take a sip of water from my bottle of Aquafina….  Ok – my thirst is now well and truly and safely quenched.  Back to this blog post…..)

Mr. Krugman should refresh his memory by reading a solid Econ 101 textbook.  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.  But Mr. Krugman is very sloppy these days when discussing basic economics.

I just learned that the ever-reliable Tim Worstall early on called Mr. Krugman out on this issue.

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