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WATER POLITICS

Courtesy of STRATFOR (subscription required), an interesting analysis of Canada’s water resources:

Despite being “water rich,” Canada will experience increasing regional water stress as demographics and climate variability threaten the natural resources in the country’s prairie. Suggestions about the possibility of Canada exporting water will emerge sporadically, as they have in the past. But such plans are highly unlikely to come to fruition, both because public opinion opposes the commoditization of water and because the exporting water would not be profitable. While Canada will continue to protect its freshwater resources, it will not turn them into a traded commodity.

Analysis

Canada’s wealth of resources and comparatively small population allow the government to capitalize on the export of a number of goods, including oil, natural gas, fertilizer and wheat. But although Canada holds roughly 7 percent of the world’s renewable freshwater resources and less than 1 percent of the total global population, water is not poised to become another exported commodity — even as other areas of the world continue coping with water stress and water scarcity.

Canadian citizens generally view access to water as a basic human right and oppose attempts to sell it for profit. In addition, logistical difficulties and economic infeasibility — not only in Canada, but globally — ensure that bulk transfers of water across long distances will remain rare. 

Canada’s Deceptive Abundance

The amount of renewable fresh water available to each Canadian citizen is more than 80,000 cubic meters per year. Even other countries that are not typically considered water stressed have far less water available per citizen. For example, the United Kingdom’s annual per capita water availability is just over 2,300 cubic meters per year, and the United States has just over 9,500 cubic meters per person.

However, Canada’s surfeit of water is greater on paper than it is in reality. The country’s water prices are among the lowest in the Organization for Economic Cooperation and Development, encouraging overuse of the resources. Moreover, as in the United States, Canada’s water is not equally distributed. The majority of Canada’s population lives in the southern part of the country, but 60 percent of the country’s renewable water drains to the north, so access to water resources is limited. In fact, some areas of Canada are already experiencing some degree of water stress.

The prairie provinces of Alberta, Manitoba and Saskatchewan are typically more arid than other parts of the country. An expansion of agricultural and industrial activity in the region, along with population increases in recent decades, has led to greater water stress in parts of these provinces, and the pressure is expected to increase in coming decades. Agricultural and extractive industrial activity can be expected to continue in the region even as existing resources dwindle. Glaciers that feed the headwaters of many of the major rivers in the region have shrunk by roughly 25 percent in the past 100 years. Increasing temperatures and more frequent droughts are predicted, likely further increasing the strain on the water supply.

Constraints on Water Exports

Even with the rising pressure on water supplies in certain parts of Canada, the stresses on the country’s water are not as immediate or as great as other regional deficits on the continent. For example, California is in the midst of a severe drought, the Ogallala aquifer in the U.S. agricultural heartland remains severely overexploited, and the Colorado River is overallocated. Simply moving water from locations of abundance to areas of demand is often proposed as a solution. But ultimately, moving water is far more complicated than piping it from point A to point B.

In radical cases where political will and extreme demand overcame logistical barriers, countries such as China and Libya have undertaken large internal water transfer projects. And the idea of transporting water from Canada to areas of higher demand in the United States has been around for more than 50 years. A number of potential transfer projects have been proposed, none more extensive than the North American Water and Power Alliance. Conceived in the mid-20th century, the project would use existing waterways and a series of new canals, pumps, reservoirs and other infrastructure elements to redistribute water throughout the continent. However, despite revisions over the years, the project remains little more than lines on paper.

A slightly more limited project, the Great Recycling and Northern Development Canal of North America, was conceived at roughly the same time and aimed to gather freshwater runoff in James Bay and reroute it south to the Great Lakes. The project was projected to cost an estimated $100 billion in 1960 (more than $800 billion today) to construct and $1 billion a year to operate. Quite simply, water is expensive to move. Water is heavy, and elevation changes require energy-intensive pumping to keep it moving. Costs vary depending on the project, but moving water over long distances can be more than five times more expensive than local desalination or recycling options.

The large expenses might be justified if there were the potential for profit, but water prices often do not reflect a traditional supply-and-demand market. It remains unlikely, even in cases of severe stress, that prices in the United States would ever reach a point where such transfer schemes would make economic sense. Although some limited transfers occur near the border, without economic viability, corporations and governments are unlikely to undertake any large transfer projects.

Political Constraints on Water Transfers

Even if it were economically viable, public sentiment and the political environment would likely prevent the export of water. Canada is acutely aware of the importance of maintaining control of critical water resources and would not make a deal to cede control of those resources to its powerful southern neighbor. Federal water policy in Canada has typically been unfavorable to large-scale transfers. Indeed, in the late 1980s and early 1990s, a Canada-U.S. free trade agreement and later the North American Free Trade Agreement ignited the debate over whether water was considered a tradable good. Six companies initially received approval to export water out of British Colombia, but strong public resistance prevented those exports from ever materializing. A voluntary accord proposed by the federal government in 1999 sought to ban the withdrawal and transfer of water in quantities that could damage the environment. The Great Lakes-St. Lawrence River Basin Water Resources Compact of 2005 allowed basin-wide cooperative management of the water resources between the two Canadian provinces and eight U.S. states that border the lakes. It also effectively limited most bulk water transfers.

Even as Canada seeks to protect its resources, some of the Canadian public remains wary of using market-based methods to encourage water conservation and is concerned that if water were considered a good, it would be subject to the same trade requirements as other commodities. While the North American Free Trade Agreement does not compel a participating country to start exporting a good, market pricing of water in Canada could open the door for legal action on the part of the United States or Mexico — something that many Canadians do not want to risk. Freshwater may become scarce in the coming decades, and because Canada holds a large amount of that scarce resource, the government will likely continue to be protective of its water supplies.

The close relationship between Ottawa and Washington, the intricately intertwined Canada-U.S. trade and energy infrastructure and the two countries’ ability to manage shared water resources in the Great Lakes region would seemingly make Canada and the United States ideal candidates for international water transfers. But even if such transfers were to occur, the politics and economics of the situation would not allow water to be traded in the same way as oil or natural gas.

Access to useable freshwater resources will remain a geographic constraint for many countries in the future, but the diversion of large amounts water from water-rich countries to areas of water stress or scarcity will not follow in the footsteps of coal or oil. Economic realities will prevent it. Even if water were priced to market demand, public sentiment would still make such transfers unlikely. Canadian society does not perceive water in the same way it does other commodities. In the popular view, water is more of a right than a good, and even nations with abundant water seek to protect it. And as the strain on water resources increases in the coming years and decades, that sentiment is unlikely to change.