Microeconomics: IB Economics

After a week where they've announced plans to recycle human waste to provide heat for a housing development, Thames Water are back in the dock for their poor environmental standards, being fined £2.3m for a raw sewage pollution incident. 

Proof, if it were needed, that the Lord giveth, but he also taketh away! 

Government failure in the water industry? It would seem so.

This Utilitywise research into the introduction of competition to the commercial part of the water industry is a demining indictment of the relative merits of competition. As the article highlights, "the £421m estimated cost of the market overhaul has shaved just £8m in total off non-domestic water bills in the last year.".

Factor in the longer-term costs of stabilising the market, and the net welfare position doesn't seem to be a favourable one. 

Polemic.

Should  the water industry be renationalised? Discuss. This article suggests that the sector is inefficient, encourages waste, has redistributed income away from customers to shareholders and should be put back into the public sector. I'm not convinced.

It's easy to suggest that "Having our water industry run by public servants who are elected and are accountable to voters means that we can reinvest money in technologies, maintenance and systems that will ensure our water supply’s viability – instead of giving huge payouts to shareholders". However, was the Water Board really any better.