At the beginning of 2018, experts predicted that Cape Town would be the first major city in the world to run out of water, and the date given for 'Day Zero' was 12 April 2018. This is a result of three years of drought. Residents at that time will only be able to have 25 litres of water a day for all uses, taken from central collection pipes.
Traditional economists will simply explain that this is a matter of supply and demand. All that is needed is to increase the supply - build some new reservoirs or desalination plants. It is not clear if this will increase the water supply in time.
However, public goods have always been a problem for economists, and in this instance the free riders might hope everyone else plays by the rules whilst they use as much water as they like.
One answer could be the nudge theory
of behavioural economics. People often choose what is easiest over what is wisest. So they may just need a 'nudge' to make a better decision. Residents and tourists
are now being reminded constantly of the danger of wasting water.
Is it working? The answer is a qualified 'yes' as Day Zero has officially been put back to 9 July 2018. But there is still a long way to go!
How would you solve a problem like this?