The first day of my micro economics course the professor asked us what we do if we had five acres of grassy land and a herd of sheep. The response was logical; allow the sheep to graze on half of the land so it would not be consumed in one period and be allowed to replenish. Also this would leave some of the grassy land for another herder who could potentially graze their sheep there. The professor said, “Wrong!” Then asked us what would stop us from letting the sheep consume the entire field. We had no answer and he told us it would make most economic sense to allow the sheep to graze the whole field. From this he stated that people will consume a resource until it is gone or they no longer can. To tie this to Econ 2040, the Nash Equilibrium of the situation was to allow the sheep to graze the entire field since there is nothing to dictate otherwise. This example says that people abuse resources.         

      Chapter 7 in the textbook, Modeling Network Traffic Using Game Theory, introduced the network in figure 7.1 that had Nash Equilibrium of 65 minutes for 4000 travelers.  Then a zero time node was introduced to network in figure 7.2 and the Nash Equilibrium increased to 80 minutes for 4000 travelers. The system in figure 7.2 is Braess’s Paradox. All of the travelers taking advantage of the zero time edge increases the time for everyone. It is similar to abusing a resource since the result made the system inefficient for everyone. Speaking about resources, take water for example. Who owns water? It is a resource that is essential for our survival and it is a resource we abuse as well.

     The film “For Love of Water” asks the question, “Who owns water?” Public water resources in many countries are not suitable for consumption because of poor maintanence tying to ”Braess’s Paradox” where use of a resource yields an unfavorable result for all involved. Braess’s Paradox tells us that people will use a resource even if it yields poorer results if their is no incentive to change. With respect to water one idea to maintain it would be to assign a cost to it and have a private entity maintain the water. This can regulate the water, however it can be a form of abuse because who owns water in the first place. The private entity makes a profit from water which is a public resource. There are situations in the film where large water corporations have taken control of developing nations through control of the water distribution. This is a form of a Braess’s paradox where an opportunity to take advantage of a resource is abused and people are made worse off, yet that is the equilibrium of the situation.

     What is being done to help communities and nations in the world maintain their water resources. Some countries have removed the water corporations. Also communities have mobilized to dig wells for their areas or develop the land to catch rainfall and form a local reservoir. These are some of the small steps being taken to rectify the situation but the problem still runs rampent, there is a Braess’s Paradox involved with water. The major water companies in North America for example supposedly sell purified water. First the plastic containers pose an environmental problem. More detrimental the companies sell you tap water or water from a fresh water spring they bottled and sell. This is water available to you, yet a private entity is making profit off of a public resource.

 For more information on the film visit http://www.flowthefilm.com/   

I am sorry for this being 45 minutes late