Water Privitization

Privatization of Water Supply: the proper valuation of essential needs

Introduction

This paper will discuss the issue of privatization of water supply from the perspective of utilitarianism, rights ethics and justice ethics. It is argued in the paper that privatization should not be adopted based on the above three aspects which are of decisive importance, and why it should not be implemented .

Utilitarianism

Utilitarianism is one of the most aligned to the economic analyses, which is to maximize the utility and happiness of the great number of the populations. It is theoretically characterized by consequentialism, welfarism and sum ranking.

Above everything else, the water supply is a specific industry. Due to the large sunk cost of the initial capital and infrastructure and the substantial investment in the scrutiny and in the improvement system of the water quality, it is convinced that the water supplier actually act as a natural monopoly, and it is consequently hard to contribute to competition as other common industries. In the sense of consequentialism, the monopoly will charge a higher price to earn their markup above the marginal cost, due to the allocative inefficiency, productive inefficiency, and dynamic efficiency such as lack of innovation of refreshing and improve water quality. No vivid evidence can be found that the privatization will be beneficial to the greatest utility of the masses.

On the other hands, the above disadvantages will have to provoke the public’s worrying on the water quality relevant to their health. If the happiness and the welfare are measured by the life quality and the price that the individuals have to pay, it is observable that the populations’ utility will decline. Privatization makes it in reverse against the increase of the welfarism that requires goodness derived from the utility of the individuals.

Moreover, sum ranking to assume each individual the equal weight on the utility illustrates that the feedback and...