Question

1) Explain Adam Smith statement that : "nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it." Use the Diamond-Water paradox as an example.? Do you think Adam Smith statement still holds true today? Which drivers make water a scarce resource today? Do you think management of water will be a challenging issue in Saudi Arabia within the next few decades?

Answer 1

According to Adam Smith's Statement, water is essential for life whereas diamond, on the other hand, is more expensive than the water because it involves huge cost of production which makes it more expensive as compared to the water and at the same time it is also true that diamond is not essential for the life as compared to the water. The reason behind the lower price of the water is that it is available in the abundant supply as compared to the diamond and it does not involve the huge cost of production. These days the water is becoming a scarce resource because of the low availability of the drinking water and many countries are concerned about it as they are suffering from the lack of supply of water and many people are suffering because of drought and dry seasons. Water pollution, Climate change, excess of water for bathing and cleaning, and overpopulation are making the water a scarce resource.

The management of water will be a challenging issue for the whole world including Saudi Arabia as we are only left with less than 3% of the water that can drink. There are various ways of managing the water such as rain harvesting, reducing the consumption of water for bathing and cleaning, and reducing the water pollution.