Water markets

A lot of water used for drinking and other household purposes in Faisalabad is pumped in and then piped from Chiniot. A lot of water that people in Islamabad use comes from Haripur and other adjoining areas. Nestle has a huge plant in Sheikhupura. They pump hundreds of thousands of gallons of water from there, bottle it, and then sell it across Pakistan.
Would it be wrong to ask whom does this water belong to? And what do the people of Chiniot, Haripur or Sheikhupura get in return? If I owned a small piece of land in Sheikhupura I could bore a hole and start getting some water out of the land for my use. Could I start supplying that water to neighbours too, and could I sell that water to whoever could pay the price for it?
In economics, Ronald Coase, a Nobel prize winner in economics, had suggested long ago that for markets to work well property rights have to clearly defined and unambiguously assigned. The computer I am writing on belongs to me. I own it. I bought it from someone who had the right to sell it and who sold the rights to the computer, with the computer, to me. I can do whatever I want with the computer. I can destroy it, sell it, use it, or put it on top of a shelf if I want to. Of course, I cannot do things with it that will endanger the life or property of others, but short of that, I can do with the computer whatever I feel like.
If property rights are not assigned as clearly and unambiguously, there are always going to be problems. Who has the right to usage, to buy/sell, what is right use, and what is abuse. Furthermore, markets can only work when rights are clear. If the seller does not have a clear right to sell something, how can a buyer buy that product?
It is not the case that rights have to be individual. They can be collective too. Public has a 'right' to enjoy public parks. Or collective or common property is owned by all people in the collective. Collective rights have their specific issues, like the famous 'tragedy of the commons', and specific ways of addressing these, but that is a different topic and for another day.
Rights, individual or collective, if not defined precisely, give rise to serious issues of abuse and other problems. And what is strange is that for ground water, a commodity as precious as that, rights are completely ambiguous in Pakistan. Ground water in a locality belongs to whom? There is an old Supreme Court judgement that said that water is an inalienable right of every person. But it did not say whom it belonged to.
Who can bargain, buy, and sell. Right now local governments and private corporations are really taking advantage of this lacuna to satisfy their needs and make profits. And it is the localities who are losing water and are suffering, but given the right is not assigned and there is no jurisprudence on it, there is not much that the people can do about it.
Take the case of Sheikhupura and Nestle (it could be any company that bottles water). It is the aquifer beneath Sheikhupura that is losing water, it is the people of Sheikhupura who are and will live with the consequences in the future of deeper boring needed for extracting water for themselves or having less of it, while all of the profits from bottling and selling that water are going to a private corporation. And even if Nestle owns some land in Sheikhupura, does it have rights over all of its water? Should the people of Sheikhupura not have any say in who gets this water, and under what conditions, and at what rate?
It seems that the case for establishing ground water rights makes sense. It will get stronger as water becomes a scarcer commodity. And it also makes sense to invest water rights in the local government. Aquifers are geographic and so taking this right to the lowest level of government that has the capacity to mange water rights issues, say Tehsil level, makes sense. It can be a source of funding for the local level government and they can use revenues from water to ensure provision of quality drinking water supply to the people in their geographic area.
If a good is in limitless supply in nature and has positive demand for it even then if it takes resources to make it usable, it will command a price and we will need to establish rights over it to see who has a right to buy/sell, use and so on. Water is no longer in limitless supply, it is not free, and it costs a bit to make it usable (pumping it from sufficient depth and filtering/cleaning it). It should have clear and unambiguous assignment of rights. Not having these rights established is costing us millions while it is mostly the private corporations who are benefiting from the lacuna. Furthermore, if we establish the right thoughtfully, it could become a precious commodity for communities sitting over potable water reserves and this could be an important source of revenue for them, as is the case of oil, gas, and other mineral resources.