"The word VALUE, it is to be observed, has two different meanings, and sometimes expressed the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use’; the other, ‘value in exchange’. The things which have the greatest value in use have frequently little or not value in exchange and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. " (Adam Smith, "The Wealth of Nations," Penguin Books, London, England, 1997, pp 131-2.)
Smith’s observation of water as having little or no exchange value is quickly becoming obsolete.
In 2007, the United Nations released its fourth "Global Environment Outlook." Among its conclusions: “Available freshwater resources are declining; by 2024, 1.8 billion people will live in countries with absolute water scarcity.…Globally, contaminated water remains the greatest single cause of human disease and death.”
If Adam Smith were alive today and knew the following facts, he would change his tune -- fast:
1. 75% of the earth is covered in water. However, 97.5% is salt water.
2. The remaining 2.5% is freshwater mostly retained in polar ice, glaciers, snow areas and subterranean water. Only 0.26% is in rivers, lakes, lagoons and swamps.
3. 2/3 of that 0.26% cannot be used due to contamination, etc.
Basically, water, an extremely scarce and necessary resource, is cheap economically because, like fresh air, its distribution has largely evaded control. I can walk down to the river and get a bottle of it for free. As scarcity mounts, however, increasingly powerful control will be asserted -- and probably during the lifetimes of people reading these words today, February 15, 2020.