Characteristics of Water
1. Water is essential: There is no life without water, no economic production, no environment. There is no
human activity that does not depend on water. It is a vital resource.
2. Water is scarce: The amount of water available is limited by the amount of water that circulates through
the atmosphere on an annual basis. All the water stems from the rainfall. The amount of rainfall that falls on the continents is finite. But not all that water can be used. It is unequally spread in space and time and large parts of the world experience shortages during certain periods of time.
3. Water is fugitive: The water flows under gravity. If we do not capture it, it is gone. The availability
of the water varies over time, and so does the demand for water. It flows through our fingers unless we
store it. Water is different from air and land, because these goods do not need to be stored: they are stocks,
whereas water is essentially a flux. There are of course also stocks of water: groundwater aquifers and natural
lakes. But these lakes and aquifers only can be used sustainably if they are replenished by the flux. The stock
is small compared to the flux. Of course we can store water artificially, but also then, the stock is small compared to the flux. You need annual recharge to make the water available. It is not like fossil fuel where stocks are huge compared to the annual flux.
4. Water is a system: The annual water cycle from rainfall to runoff is a complex system where several
processes (infiltration, surface runoff, recharge, seepage, re-infiltration and moisture recycling) are interconnected and interdependent with only one direction of flow: downstream. If you interfere upstream, there are downstream implications, externalities and third party effects. If you withdraw groundwater from an aquifer, further down in the cycle, at some later point in time, there will be less water in the river, for reliant uses. If you discharge waste at some point, damage is incurred somewhere downstream. A catchment is one single system and not the sum of a large number of subsystems, that can be added-up or optimised in a regular economic model.
5. Water is bulky: A domestic or industrial water user is willing to pay about 1$= m3 . A farmer is seldom
able or willing to pay more than a small fraction of that amount. Other economic goods are much more expensive than that. Fuel costs about 100$= m3 and food in the order of 200$= m3 . A factor of 100 more than the value of domestic water and at least a factor of 1000 more than the agricultural value of water.
There are no ways to condense water and it is therefore very difficult to transport water over large distances.s
6. Water is non-substitutable: Water can only be diluted with water to turn it into water. Although other
economic goods have alternatives, water has none. For fuel, one can choose between oil, gas, coal, wood, hydropower or solar power. For food one can choose between bread, pasta, rice, or maize. But what alternatives are there for water: rainwater, groundwater, surface water,. . . ? It is all the same water from the same system from the same source. There is no alternative, there is no choice.
Water is a public good. Water cannot be owned privately for its low excludability and the societal dependency
on water is high. This is a consequence of water being essential and non-substitutable. It is the responsibility
of governments to make sure that there is safe access to water (for domestic and other economic
uses) and that society is protected from water related hazards.