Called the diamond water paradox, Adam Smith wondered why diamonds cost more than water when we need water to survive and diamonds are merely an extravagant luxury. Years later, economists had the answer.
It took them to the margin, to the cost of the next extra unit. With diamonds,we would rather have that one extra diamond and will pay a lot for it. However, with water, when there is a lot, the next extra glass, or flush, or shower costs little.,,
…Until we have a drought.
Mississippi River Slowdown
Because of the lack of rain in the Ohio Valley and Upper Mississippi, the streams, creeks, and rivers that feed the Mississippi River have not sent it enough water.
As a result, along the Mississippi, prices are up and boat traffic is down. Some barges have to carry lighter loads, others are getting stuck, and tows are hitting sandbars with such force that the barges they are transporting disconnect. While river boat cruises have been canceled, shipments of crops, oil, and construction materials have diminished.
Rising prices reflect classic supply and demand. Whereas the Mississippi River had provided relatively cheap transport, now, prices have skyrocketed because of a supply curve that shifted to the left. Whereas a year ago, on October 5, it cost $28.45 to ship a ton of corn or soybeans from St. Louis to Southern Louisianan, now, the price is a whopping $105.85.
Our Bottom Line: Water Infrastructure
The World Economic Forum created a series of what they called Transformation Maps. In their Map (below), I would have used Water Infrastructure as my single big category. Like a transportation infrastructure, an information infrastructure, and a financial infrastructure, a water infrastructure includes people, technology, and values.
While this WEF map for water is overlapping and redundant, I liked it as a springboard for pondering the significance of water:
My sources and more: Skimming through WSJ, I stopped to ponder this article about the Mississippi drought. From there, I found more details at The Washington Post. Then, with the bigger picture, the WEF (World Economic Forum) had an interactive water infrastructure graphic. And finally, in our featured image, you can see the kind of lowboat that pushes barges up and down the river. Please note that this recent econlife post focuses on barge problems in Europe (from which we copied our Bottom Line).