WATER RESOURCE MANAGEMENT and the PITFALLS of PRIVATIZATION: A causal feedback structure for commoditized water and the management of unintended consequences in privatization

As the development and exploitation of earth's water resources accelerates ahead of population growth and quality of life our ability to develop water resource management frameworks that economize consumption without creating unintended consequences will determine whether we witness a triumph of collective action or a deadly tragedy of the commons in this century. This work explores the indirect outcomes that may follow the privatization of water in a free market system. Although concerns are justified it has been shown that the essential elements of privatization-rivalry and excludability-must exist in order to manage consumption and control externalities. Balanced free markets proficiently maximize economic growth and profitability but these may come at the expense of other non-market considerations such as economization, sustainability, and social justice. The causal feedback structure proposed herein captures the tragedy of the commons effect that typically dominates water resource management and develops a new framework that can begin to reverse the standard outcome. The new framework is embedded into an expanded tragedy of the commons archetype and is useful for predicting both water's market behavior and its potential for economization while managing externalities. This contentious issue is important to water resource managers on the basis of its technical management significance and because many experts predict that freshwater access will be a leading cause of conflict in the 21st century.