Affordable Housing Institute : US

[Continued from the previous Part 1, Part 2, Part 3, and Part 4.]

 

As we’ve seen so far in this extended series on the economics of water, since housing is what makes cities, for cities to scale upward, they have to bring infrastructure to their slums.  The Roman emperors, who needed larger capital to administer a larger empire, invested heavily in municipal infrastructure to supply Rome with water for drinking, washing, and bathing.  As discussed in Duke law professor Jim Salzman’s article Thirst: A Short History of Drinking Water, the shift to municipal infrastructure came when Rome moved from a republic to an empire, which enabled the state to undertake the major capital expenditures involved.

 

5.         As in the Basic Model, water infrastructure’s capital cost was non-recoverable

 

The emperors paid for aqueducts out of general revenues, not user fees. 

 

Aqueduct construction was obviously a major public works project, funded primarily by the emperor and private donations. 

 

This is the Basic Model of infrastructure finance.

 

 

Thereafter, the run costs were paid by users:

 

The funds raised by the vectigal were used to cover the costs of system maintenance.  The net effect of this water financing scheme gave Roman drinking water a dual nature. 

 

The vectigal, we saw above, was the premium or surcharge assessed to rich users who had running water in their homes.  Rome thus used a variant of the Basic Model, where shortfalls in the maintenance fees paid by ordinary customers were covered by premium fees charged to rich households.

 

Public Roman toilet Ostia, 40 BC

 

Public children’s toilet, Mumbai, 2007

 

6.         Public municipal water was subsidized

 

Having spent the vast sums to create the infrastructure, the emperors were then able to offer a citizenship subsidy – free public water.

 

To the average Roman resident, however, drinking water in the city was available by right, as free for the taking as water from the Tiber.  Each source relied on different rationing strategies for a scarce commodity – use of lacus water was limited by the physical effort of carrying water from the basin to the home, use of water in the home was limited by the cost of paying the vectigal. 

 

Bludgeoning the obvious, I have to note that because water is both heavy and formless, there is a natural limit on how much one can take away for free.

 

Lacus water was, in modern parlance, a completely subsidized municipal service.  The lacus were used by citizens for gathering water for domestic use.  Importantly for our purposes, the water in the lacus was free for the taking.  Most residents of Rome collected their water in this way and the lacus provided communal meeting places, much as wells continue to do in many rural societies.  Excavations in Pompeii have uncovered their spacing of about 150 feet from one another throughout the city. 

 

Dense urban living, and a lacus every 50 yards

 

7.         As in the Basic-Plus model, premium customers got personal water

 

Lacus municipal water, though free, was limited de facto, and the rich wanted better service – which they paid for.

 

Not everyone chose to collect their water from public sources, however, and Roman water finances depended on this demand for private water.

 

To the wealthy Roman, water in the house (whether for drinking, an ornamental fountain, or domestic uses) effectively was a priced good. 

 

Indeed, it is estimated that 40% of all the water delivered within Rome went to private buildings, and not all of this was for baths. 

 

Once the expensive trunk infrastructure had been built, the city could make a profit by running site infrastructure into individual homes.

 

A special water tax, known as a vectigal, was charged for people who had pipes running from the main system to their houses or baths. 

 

Like the English window tax or the Colonial roof tax, the assessors taxed the indirect indicator of consumption, not the hard-to-measure consumption itself.

 

Because the aqueduct was free-flowing and the distribution system worked by gravity, the water was always running.  Thus the tax was assessed by the size of the supply pipe nozzle rather than the amount consumed. 

 

You see a drain, I see a tax

 

With the premium for service came a better quality product:

 

Almost half of the Marcia aqueduct’s water, prized for its drinking quality, went to private uses and roughly a quarter went to the city’s public basins, known as lacus. 

 

You may laugh at the Romans distinguishing their water by quality, but how many of us drink bottled water even though what comes out of the tap is both virtually free and virtually pure?

 

How much more is it worth?

 

8.         The Romans had a ‘free-rider’ problem as well

 

Any group-benefit asset is vulnerable to what economists have named the free-rider problem – that some people gain the benefit without paying for it.

 

Piped delivery of water to a private residence was a status symbol, and a common luxury of senators.  It was clearly of considerable value, as well, because a major black market arose in what Frontinus called “puncturing” – attaching secret pipes to main lines in order to draw water illicitly into private residences. 

 

When I was in Ahemdabad looking at Mahila Housing’s small-scale neighborhood street improvements, among the benefits they cited was precisely this same phenomenon – households running illegal pipes or electrical wires alongside the legal ones.

 

You don’t mind me borrowing your infrastructure, do you, trunk?

 

Once the infrastructure is built, the marginal cost to add another consumer (legal or illegal) is quite small, so piggybacking on other people’s infrastructure is perfectly sensible, especially when the penalty for doing so is likely to be not much worse than one’s current situation – one of the many reasons why slums are economically rational. 

 

Home-grown wiring in Kibera, Nairobi, Kenya

 

Indeed, those who live in a slum may come to see it as their collective social fiddle against the rich formal outside world, making the resulting utility theft rampant.

 

This became such a problem that a section of the Roman law code was dedicated specifically to this type of offense, made punishable by a 100,000 sesterces fine.

 

The ultimate solution is legalize and tax.  In other words, when an informal settlement or spontaneous community has become sufficiently integrated into the larger city that it’s leeching away free utilities, then the locality which may have ignored it up to now must bring it into the formal community, in economic self-defense.  If I’m right about this, slums turn into normal communities through a process of post hoc formalization when their scale, longevity, and civility have collectively legitimized them politically. 

 

This may be the missing link in De Soto’s theories of formalizing property.

 

It’s a big concept – beyond the scope of this extended essay.  We’ll save it for another day.

 

9.         Water was seen as a service of the state to its citizens

 

Whether ego-based (plaudits), self-interest-based (workforce housing), or otherwise, once the emperors had got into the habit of building aqueducts, basins, and fountains with other people’s money (the tax-based revenues), they found they quite liked it:

 

These beautiful fountains and basins provided water and a clear justification of regime change.  The Romans’ right to water was acknowledged, ensured, and enhanced in the name of Caesar. 

 

Rome’s creation of a municipal water-delivery network is important as the first recorded example of two innovations:

 

1. Utility infrastructure at a metropolitan rather than household scale.
2. A basic-plus financial and operating model to sustain and improve service over time. 

The Roman story, then, provides within the same city fundamentally different visions of drinking water – as a public good provided by right through imperial beneficence, on the one hand, and as a private good for domestic consumption, on the other.  Yet the two depended upon one another, for it was the treatment of drinking water as a priced good that enabled cross-subsidization to ensure its public nature. 

 

As with many Roman innovations, these principles would be forgotten in the feudal times, but they’ll recur during the Enlightenment.  When they come back, they’ll be back to stay.

 

You’re going to need some clean water soon

 

[Continued tomorrow in Part 6.]

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