All commodities, with one major exception, are priced according to market demand. If there is a glut, the price falls. If something is scarce, it becomes desirable, whether it is a handbag or a new four-wheel drive. Diamonds would not be fought over if they appeared like mushrooms every September. When there is a bumper wheat harvest, the price falls; when the crop fails, prices rise. As many people in the UAE know from bitter experience, the housing market follows a similar model. Rents have doubled in Abu Dhabi in the last year and show few signs of abating as increasing numbers arrive looking for somewhere to live.
However, there is one commodity, the most precious of all, which does not follow this model of supply and demand at all: water. Water has been classified as a human right by the UN. It is hard to think of anything that could have been more unhelpful. This is a good example of the dictum that no good deed goes unpunished. According to the UN's own figures, more than one billion people do not have access to clean water. Meanwhile, the price of a litre of water in a Third World slum is often more than it is in Mayfair or Chelsea - and you don't have to buy it from a water seller but can draw it from a tap.
Most people in countries with a lot of water do not like to pay too much for it - and think that neither should people in other countries, partly because it is a human right. But talk to the mother of an Indian girl who cannot go to school because she has to wait by the roadside every morning for a tanker of water - this is in the heart of Delhi, India's capital - and you get a different story. She would pay for water if it were available, but neither the local government nor private companies will risk installing the necessary infrastructure. Instead she has to pay a higher price than most westerners could bear.
Her child is substituting her education for a few gallons of water a day, and the result of this will be that her children will wait for a water tanker in 20 years' time. No city in India has 24-hour running water. If you are middle class this is fine, because your elaborate system of water storage tanks comes into play for the two hours a day that the pipes run. But should a country with First World aspirations not be able to supply its citizens with water, particularly at a time when it is talking about manned flights to the moon?
The perception persists that nobody wants to pay for this precious commodity. Countries around the world take varied approaches to pricing and supplying their water and almost without exception, they are wrong. In the UK, for example, water supply was privatised in the 1980s. Some 15 different companies were created, but the customer had no choice in where to buy his water. This produced a privatised monopoly at a stroke. Private companies are generally more efficient than public companies. Give a private company a monopoly and it will make more money from its customers than its state counterpart.
Lack of water is not normally a problem that Britain has to cope with - although a few years ago there was a hosepipe ban in the south of England. In Australia, there has been a drought lasting almost eight years. The authorities have tried introducing various strategies to alleviate the drought, such as allowing interested parties to trade water rights, but none of this gets to the root of the problem, which is that demand outstrips supply. This is often the case in dry areas, such as parts of California, Las Vegas, and most of North Africa.
How to put a brake on demand? An American economist, David Zetland, caused a ripple in water circles recently by suggesting that water should be more expensive. This is heresy in the development world. What about the poor? bleats the World Bank among others. But the poor suffer most under the status quo in most countries - much of the water subsidy goes to the middle classes. South Africa is one of the few countries to address this issue. Its policy of Free Basic Water - 6,000 litres per month for every household - ensures that most people get enough to survive, as long as they are lucky enough to be connected to the mains, that is.
In the Middle East water has always been a big issue. The origins of Shariah law come from the concept of shared water. One meaning of the Arabic word Shariah is the clear, well-trodden path to water. The Quran is quite clear on the importance of water. Nobody was allowed to have a monopoly on water, while the Arabic spirit of hospitality extended to sharing the little water that was available. In a place where water is scarce, it is not surprising that there was a tradition of using it sparingly. Except that nowadays, with the introduction of desalination plants, countries in the Gulf are using more and more of it.
The great thing about water is that you cannot waste it: it is endlessly recycled via the hydrological cycle - some 37 times a year, according to Dr Felix Franks, a water industry expert. However, it does not always return where you want it. The UAE has an innovative and elaborate system of meteorological monitoring - and when clouds are spotted, planes are scrambled to shower the clouds with seeds, in the hope of producing rain.
This probably produces the most expensive water in the world, with a giant carbon footprint. It might be cheaper to import bottles of Evian water. Desalination plants are more efficient - but perhaps they are storing up environmental problems for the future. It is no surprise that it is so easy to float in the waters around Abu Dhabi; it is among the saltiest I have encountered outside the Dead Sea. Part of this may be caused by the reintroduction of the salt from the desalination plants - much of which is unable to escape through the Straits of Hormuz and mix with the waters of the Arabian Sea.
It is thus rather shocking to learn that the UAE is the world's largest consumer of water per capita. Plants grow where once there was desert. Cars are washed and swimming pools are built. But history suggests that the more water that is made available - the more a population consumes. Roman aqueducts were not essential for city life - Rome prospered for hundreds of years without any - but once the first aqueduct was built, demand grew, and continued to grow. The taps were never turned off and the fountains played all day and night.
Likewise Manhattan. The city is in the middle of its most ambitious infrastructure project in its history: the construction of a third water tunnel, known as the Manhattan Spur, at a cost of US$670 million (Dh2.4 billion). So why not increase the price of water, rather than always trying to find more? This has the very desirable effect of limiting use. Nobody in America stopped driving their Hummer until the price of oil went past $60 a barrel.
Once it got to nearly $147 a barrel, driving a four-wheel drive was considered positively anti-social. American cyclist Lance Armstrong has just been fingered as Austin, Texas's number one water consumer. His Spanish-style villa, with its lawns and swimming pool, used 330,000 gallons of water in July - at a cost of just $2,460. That is a lot of water bottles. How to stop Lance using so much? My guess is that if you added a zero to his water bill, even the thirsty cyclist might cut back on consumption.
Rupert Wright is author of Take Me to the Source: In Search of Water, published by Harvill Secker