Is Water Becoming ‘The New Oil’?

Is Water Becoming ‘The New Oil’?
Population, pollution, and climate put the squeeze on potable supplies – and private companies smell a profit. Others ask: Should water be a human right?

by Marc Clayton
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Public fountains are dry in Barcelona, Spain, a city so parched there’s a €9,000 ($13,000) fine if you’re caught watering your flowers. A tanker ship docked there this month carrying 5 million gallons of precious fresh water - and officials are scrambling to line up more such shipments to slake public thirst.

Barcelona is not alone. Cyprus will ferry water from Greece this summer. Australian cities are buying water from that nation’s farmers and building desalination plants. Thirsty China plans to divert Himalayan water. And 18 million southern Californians are bracing for their first water-rationing in years.

Water, Dow Chemical Chairman Andrew Liveris told the World Economic Forum in February, “is the oil of this century.” Developed nations have taken cheap, abundant fresh water largely for granted. Now global population growth, pollution, and climate change are shaping a new view of water as “blue gold.”

Water’s hot-commodity status has snared the attention of big equipment suppliers like General Electric as well as big private water companies that buy or manage municipal supplies - notably France-based Suez and Aqua America, the largest US-based private water company.

Global water markets, including drinking water distribution, management, waste treatment, and agriculture are a nearly $500 billion market and growing fast, says a 2007 global investment report.

But governments pushing to privatize costly to maintain public water systems are colliding with a global “water is a human right” movement. Because water is essential for human life, its distribution is best left to more publicly accountable government authorities to distribute at prices the poorest can afford, those water warriors say.

“We’re at a transition point where fundamental decisions need to be made by societies about how this basic human need - water - is going to be provided,” says Christopher Kilian, clean-water program director for the Boston-based Conservation Law Foundation. “The profit motive and basic human need [for water] are just inherently in conflict.”

Will “peak water” displace “peak oil” as the central resource question? Some see such a scenario rising.

“What’s different now is that it’s increasingly obvious that we’re running up against limits to new [fresh water] supplies,” says Peter Gleick, a wat­­­er expert and president of the Pacific In­­­sti­­tute for Studies in Development, En­­vi­­­ron­­ment, and Sec­­ur­­ity, a nonpartisan think tank in Oak­land, Calif. “It’s no long­­er cheap and easy to drill another well or dam another river.”

The idea of “peak water” is an imperfect analogy, he says. Unlike oil, water is not used up but only changes forms. The world still has the same 326 quintillion gallons, NASA estimates.

But some 97 percent of it is salty. The world’s re­maining accessi­ble fresh-water supplies are divided among industry (20 percent), agriculture (70 per­­cent), and domestic use (10 percent), according to the United Nations.

Meanwhile, fresh-water consumption worldwide has more than doubled since World War II to nearly 4,000 cubic kilometers annually and set to rise another 25 percent by 2030, says a 2007 report by the Zurich-based Sustainable Asset Management (SAM) group investment firm.

Up to triple that is available for human use, so there should be plenty, the report says. But waste, climate change, and pollution have left clean water supplies running short.

“We have ignored demand for decades, just assuming supplies of water would be there,” Dr. Gleick says. “Now we have to learn to manage water demand and - on top of that - deal with climate change, too.”

Population and economic growth across Asia and the rest of the developing world is a major factor driving fresh-water scarcity. The earth’s human population is predicted to rise from 6 billion to about 9 billion by 2050, the UN reports. Feeding them will mean more irrigation for crops.

Increasing attention is also being paid to the global “virtual water” trade. It appears in food or other products that require water to produce, products that are then exported to another nation. The US may consume even more water - virtual water - by importing goods that require lots of water to make. At the same time, the US exports virtual water through goods it sells abroad.

As scarcity drives up the cost of fresh water, more efficient use of water will play a huge role, experts say, including:

• Superefficient drip irrigation is far more frugal than “flood” irrigation. But water’s low cost in the US provides little incentive to build new irrigation systems.
• Aging, leaking water pipes waste billions of gallons daily. The cost to fix them could be $500 billion over the next 30 years, the federal government estimates.
• Desalination. Dozens of plants are in planning stages or under construction in the US and abroad, reports say.
• Privatization. When private for-profit companies sell at a price based on what it costs to produce water, that higher price curbs water waste and water consumption, economists say.

In the US today, about 33.5 million Americans get their drinking water from privately owned utilities that make up about 16 percent of the nation’s community water systems, according to the National Association of Water Companies, a trade association.

“While water is essential to life, and we believe everyone deserves the right of access to water, that doesn’t mean water is free or should be provided free,” says Peter Cook, executive director of the NAWC. “Water should be priced at the cost to provide it - and subsidized for those who can’t afford it.”

But private companies’ promises of efficient, cost-effective water delivery have not always come true. Bolivia ejected giant engineering firm Bechtel in 2000, unhappy over the spiking cost of water for the city of Cochabamba. Last year Bolivia’s president publicly celebrated the departure of French water company Suez, which had held a 30-year contract to supply La Paz.

In her book, “Blue Covenant,” Maude Barlow - one of the leaders of the fledgling “water justice” movement - sees a dark future if private monopolies control access to fresh water. She sees this happening when, instead of curbing pollution and increasing conservation, governments throw up their hands and sell public water companies to the private sector or contract with private desalination companies.

“Water is a public resource and a human right that should be available to all,” she says. “All these companies are doing is recycling dirty water, selling it back to utilities and us at a huge price. But they haven’t been as successful as they want to be. People are concerned about their drinking water and they’ve met resistance.”
Private-water industry officials say those pushing to make water a “human right” are ideologues struggling to preserve inefficient public water authorities that sell water below the cost to produce it and so cheaply it is wasted - doing little to extend service to the poor.

“There are three basic things in life: food, water, and air,” says Paul Marin, who three years ago led a successful door-to-door campaign to keep the town council of Emmaus, Pa., from selling its local water company. “In this country, we have privatized our food. Now there’s a lot of interest in water on Wall Street…. But I can tell you it’s putting the fox in charge of the henhouse to privatize water. It’s a mistake.”

Water and war: Will scarcity lead to conflict?

Cherrapunjee, a town in eastern India, once held bragging rights as the “wettest place on earth,” and still gets nearly 40 feet of rain a year. Ironically, officials recently brought in Israeli water-management experts to help manage and retain water that today sluices off the area’s deforested landscape so that the area can get by in months when no rain falls.

“Global warming isn’t going to change the amount of water, but some places used to getting it won’t, and others that don’t, will get more,” says Dan Nees, a water-trading analyst with the World Resources Institute. “Water scarcity may be one of the most underappreciated global political and environmental challenges of our time.” Water woes could have an impact on global peace and stability.

In January, United Nations Secretary-General Ban Ki Moon cited a report by International Alert, a self-described peacebuilding organization based in London. The report identified 46 countries with a combined population of 2.7 billion people where contention over water has created “a high risk of violent conflict” by 2025.

In the developing world - particularly in China, India, and other parts of Asia - rising economic success means a rising demand for clean water and an increased potential for conflict.
China is one of the world’s fastest-growing nations, but its lakes, rivers, and groundwater are badly polluted because of the widespread dumping of industrial wastes. Tibet has huge fresh water reserves.

While news reports have generally cited Tibetans’ concerns over exploitation of their natural resources by China, little has been reported about China’s keen interest in Tibet’s Himalayan water supplies, locked up in rapidly melting glaciers.

“It’s clear that one of the key reasons that China is interested in Tibet is its water,” Dr. Gleick says. “They don’t want to risk any loss of control over these water resources.”

The Times (London) reported in 2006 that China is proceeding with plans for nearly 200 miles of canals to divert water from the Himalayan plateau to China’s parched Yellow River. China’s water plans are a major problem for the Dalai Lama’s government in exile, says a report released this month by Circle of Blue, a branch of the Pacific Institute, a nonpartisan think tank.

Himalayan water is particularly sensitive because it supplies the rivers that bring water to more than half a dozen Asian countries. Plans to divert water could cause intense debate.

“Once this issue of water resources comes up,” wrote Elizabeth Economy, director of Asia Studies at the Council on Foreign Affairs, to Circle of Blue researchers in a report earlier this month, “and it seems inevitable at this point that it will - it also raises emerging conflicts with India and Southeast Asia.”

Tibet is not the only water-rich country wary of a water-poor neighbor. Canada, which has immense fresh-water resources, is wary of its water-thirsty superpower neighbor to the south, observers say. With Lake Mead low in the US Southwest, and now Florida and Georgia squabbling over water, the US could certainly use a sip (or gulp) of Canada’s supplies. (Canada has 20 percent of the world’s fresh water.)

But don’t look for a water pipeline from Canada’s northern reaches to the US southwest anytime soon. Water raises national fervor in Canada, and Canadians are reluctant to share their birthright with a United States that has mismanaged - in Canada’s eyes - its own supplies. Indeed, the prospect of losing control of its water under free-trade or other agreements is something Canadians seem to worry about constantly.

A year ago, Canada’s House of Commons voted 134 to 108 in favor of a motion to recommend that its federal government “begin talks with its American and Mexican counterparts to exclude water from the scope of NAFTA.”

© 2008 The Christian Science Monitor