Privilege to Pee

“Privilege to Pee” is a song in the musical “Urinetown:” a satirical musical about a town which has experienced a drought, all public restrooms a controlled by a megacorporation, and it is illegal to find alternative means of going to the bathroom. The song highlights the dire situation from the point of view of a restroom attendant. This includes high prices that the poor cannot pay and yet can’t be avoided. Other economists have included the obvious economic outcome of a monopolist controlling access to restroom facilities as slides for this clip. We will focus on water property rights in this lesson.

STATS

  • CONCEPT: Property Rights
  • CLIP LENTH: 3 minute, 48 seconds.
  • TYPE of MEDIA: Theater

BEFORE SHOWING THE CLIP:

Ask the students to rank water uses from those with the highest marginal benefit to lowest.  Ask students that if a social planner-controlled water usage what would have to occur to have limits on going to the restroom.    The class will conclude, with little assistance, that nearly all other uses would have to cease before going to the restroom.  Certainly, agricultural and industrial uses will have to end.  Ask the class, if the market is working efficiently, would you ever have a scenario where agriculture is using water, but people can’t go to the bathroom.  Because prices should represent this shortage, the short answer is “no” as the marginal benefit per ounce of water is much higher for bathroom usage. Note that there is both a very high private benefit as well as a positive externality (due to public health) associated with toilet use.

FOLLOW-UP DISCUSSION AFTER SHOWING THE CLIP:

After showing the clip ask if it is possible that water could be so misallocated.  When the class concludes it is impossible, point out that California almond growers used 12 litters of water per almond during a drought, even while the state was asked to conserve water.  No, they weren’t asked to not go to the bathroom, but they were asked to not water their lawn.  What gives? This leads into the two dominate water property rights systems in the United States – neither of which is efficient. 

In the eastern portion of the country the riparian water rights system dominates, while in the west prior appropriations dominates.  Riparian water rights tie water rights to the land.  In other words, as long as the land touches a river (for instance), the owner of the land has every right to exact as much water as they choose (regardless of how much of their land borders the river).  When flying you might notice small strips of land touching a river – this is why.  Notably, these rights don’t change based on their downstream effect. A factory can implement a new technology that extracts more water thereby reducing water for downstream users. 

Under prior appropriations, the first to extract the water has the dominate right. Others can extract water as long as it doesn’t interfere with the usage of more senior members (i.e. earlier users).  Again, this does not account for changes in technology: a more senior member can extract more thereby reducing the available water for a newer user. 

In both systems usage isn’t a function of marginal benefit, but timing.  An upstream user in the east can, in fact, cause a drought downstream.  A more senior member in the west can, in fact, use water inefficiently that causes shortages for newer users.  So, could Urinetown exist?  Absolutely.

TAKEAWAY:

  • Water rights are not based on marginal benefit, but timing.

  • This results in inefficient outcomes and does not account for changes in technology.