Water 4 minute read

The value of water

If we ask people close to us if Panama is a country where water is abundant, they would all say […]

If we ask people close to us if Panama is a country where water is abundant, they would all say yes, so much so that it falls from the sky, in torrents. So much, so that sometimes streets and avenues are flooded; and in those events of intense rainfall, sometimes even cause damage.

But, let’s consider that since the beginning of time, or since creation, all the water on the planet is the same, since we have no way to bring water from other planets or “produce” more water. Then, when we realize or confirm that this finite amount is shared with the entire world population of approximately 7.5 billion people and growing, it is easy to understand the concept that water itself is a scarce commodity. Having presented this concept of scarce good, the reality is that Panama is a country blessed by the abundance of water; even the driest places of our geography have an acceptable precipitation regime, which in my opinion, allows the development of all human activities with relative ease.

El valor del agua

But, without water, life on our planet could not exist as we know it today. It is as simple as that. And to put things in perspective, water, as an element of life, has no substitute.

So, is it possible to value water correctly and logically? The first answer that comes to mind: it’s a complicated matter. I come to this conclusion because quantifying exactly the value of water is complex, given that we generally value the benefits that come with access to water, but not the water itself. This is because with water being the source of life, the value of the latter is incalculable.

For example, we all know that a property that has an efficient water supply is worth more than one that does not have access to water, or has an intermittent supply. But it is the property that we are valuing as a result of access to water from one location versus another, but we are not valuing the water directly in this example.

Now, it is important to mention that price and value, as applied to water, are not synonymous. Price is the amount we pay for water consumption, regardless of its value. If we focus on the price, this should be the result of adding up the cost of all the efforts necessary to conduct, make it drinkable, guarantee its quality as potable from the plant to the user, for the repayment of investments and the maintenance of all the infrastructure and efforts required for the “magic” of seeing water come out of the faucet when we turn on the tap. In other words, the price of water is the cost of all the efforts to purify and deliver water with the attributes that make it drinkable to the end user.

El valor del agua

Another approach, which we can also calculate, is the economic value of water. This is possible by computing the added value of the operations that this input allows in industry, navigation, tourism, hydroelectric generation and agribusiness.

Given all the types of use we make of water, doubts arise as to the proper use of this resource, or if the use being made of it is optimal and, in any case, equitable. For this reason, it is necessary to assign an exchange price to this resource, which allows self-regulation of the different users of this common good. Sometimes, adjustment mechanisms are required to achieve specific objectives, when the assigned prices do not achieve through self-regulation an equitable, egalitarian and inclusive distribution of the use that this resource requires, given its importance.

El valor del agua

In our case, if we compute the payments to the National Treasury contributed by the Canal operations, we are sure that the economic value of the interoceanic waterway is significant, which has been used to indirectly finance aspects that impact the lives of Panamanians in all corners of our country.

While it is true that this impact is real both economically and socially, those of us who live near the Canal operations receive in our homes, fresh and directly from the watershed, that which allows us to live and has an immeasurable intrinsic value: water.

El valor del agua

It is interesting: we cannot take our house to the Canal, but the Canal does reach the homes of thousands of Panamanians every day, to a greater or lesser extent.

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