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WATER POLITICS

Courtesy of STRATFOR (subscription required), analysis of Saudi Arabia’s water challenges:

Though a desert land devoid of the abundant natural resources often needed for life to thrive, modern Saudi Arabia has always been capable of growth. The driver of this growth — hydrocarbons beneath the earth — mean that lower oil prices hurt the Saudi economy, exacerbating other issues, namely its growing population with high youth unemployment. These domestic concerns have been just as daunting to the Saudi government as have shifting foreign policy priorities in the region. Austerity measures and perpetual tweaks to Saudization — the effort to employ more Saudis instead of using expatriate workers — look to address some of the more pressing employment and public spending issues. Riyadh has also laid out lofty goals for the next decade and a half with its Vision 2030 policy. But the question now is what could hamper these ambitions. And underneath it all is one of Saudi Arabia’s main resource constraints: water.

Analysis

That Saudi Arabia is a water-scarce nation should surprise no one. The largest country on the Arabian Peninsula is mostly barren desert, save slightly wetter parts in the east. It is a fact that the kingdom has coped with since its inception after World War I, and something the tribes of the Arabian Peninsula had learned to live with for centuries. However, continued overuse during the second half of the previous century and mounting demographic and economic pressures of the coming decades have pushed Saudi water supplies to their breaking point.

Nothing in the Desert?

Minimal surface water across most of the country forces the large and growing Saudi population to rely on groundwater. The water is only enough to provide 76 cubic meters (about 20,000 gallons) per person per year, far below the generally accepted 500 cubic meters per person per year of absolute scarcity. Even with the largest desalination capacity in the world, Saudi consumption far outstrips its naturally available renewable water resources.

Furthermore, the aquifers that furnish the majority of the kingdom’s water supply are slow to recharge. When more water is withdrawn than is replenished, groundwater levels, and ultimately quality, decline. The type of aquifer found in Saudi Arabia, otherwise known as “fossil water” or water in a contained space undisturbed for millennia, has extremely slow replenishment rates and can be irreparably damaged by overextraction. By some estimates, natural water resources in parts of the country are in danger of disappearing within the next 20 years. The problem is largely due to the Saudi agricultural policies of the last 50 years, which stressed the country’s minimal resources.

Statistics clearly show just how much agriculture has dominated overall Saudi water usage. In the 1970s and 1980s, Saudi Arabia, despite often conjuring images of endless sand and infertile fields, became the globe’s sixth-largest wheat exporter. Government incentives were responsible for this surge in production, which exceeded both self-sufficiency goals and the country’s storage capacity. During the agricultural expansion, irrigated acreage skyrocketed by over 400 percent in less than 20 years.

The strategy’s lack of sustainability, especially in domestic cereal production, eventually became evident. Cereal grain production eventually fell off, but production in other parts of the sector, especially in high-value agricultural goods such as fruits, vegetables, meat and dairy, did not necessarily see similar declines. Even as major government initiatives shrank, the total irrigated surface did not.

Agriculture remains the largest consumer of water resources in the country, yet consumption in the domestic and industrial sectors is also growing. Industrial water demand has increased at a rate of 7.5 percent per year over the past several years and is projected to continue that rapid growth, increasing by 50 percent in the next 15 years. As Riyadh seeks to diversify from its dependence on oil and natural gas production (a sector that is projected to demand more water as well), those numbers will only grow, especially as industrial and manufacturing growth are key parts of Vision 2030. Further desalination development will be crucial to meeting these demands.

Making ‘Artificial’ Water

To help meet higher water consumption, Riyadh is looking to expand its already substantial desalination operations as well as build new projects. To keep up with urban demand, an estimated $30 billion worth of investment will be required over the next 15 years. There are numerous plants under construction and even more in the planning stages. Should all planned projects go through, it could add nearly 3 million cubic meters per day to the country’s capacity. The fuel needed to power these additional plants and create much-needed “artificial” water could possibly further contribute to rising domestic oil demand, threatening the sustainability of the kingdom’s energy exports. However, many of these new plants — including what would be the largest solar-powered desalination plant in the world, which is under construction — focus on improving efficiency and using alternative energy sources. Regardless, meeting the energy demands of desalination will undoubtedly contribute to Saudi Arabia’s domestic demand for petroleum.

The Saudi goal of privatization will also have a part to play in the desalination sector. The share of desalinated water produced by government-run Saline Water Conversion Corporation, fell from 84 percent in 2009 to less than 60 percent by 2013. Jubail Water and Power and Shuaibah Water and Electricity are the two next-largest producers, with an additional eight providers making up the difference. The sector represents the potential for increased employment of Saudi citizens as well as the opportunity for collaboration with private investors. Desalination has been opened up to foreign investment, too. Jubail, for instance, which has Saudi-based shareholders, has attracted Kuwaiti funding and partners with French, U.S. and South Korean companies. There have even been some indications that Riyadh would be interested in collaborating with Israel, a nation that has developed desalination and water recycling technologies that vastly improve its water security.

Still, desalination will not come close to making up the difference between demand and available renewable water resources. To protect its dwindling water supply, the kingdom must invest in the water sector, reduce system loss, decrease agricultural and industrial consumption rates, and end unsustainable water rate subsidies. Subsidized water rates encourage excess consumption: Saudi Arabia has one of the highest per capita water consumption rates in the world. While the government recognizes this fact, the public has been less than accepting of any changes to pricing schemes. Subsidy cuts in the water sector as part of austerity measures implemented late last year, for example, led to public outcry, which eventually resulted in the water and electricity minister’s firing in April 2016. Any further adjustments will be equally difficult. Even Saudi efforts to taper personal water consumption through public relation campaigns, which have been somewhat successful in other Gulf Cooperation Council countries, will likely not have much of an effect.

So Saudi Arabia’s minimal water resources will continue to be stretched thin. Of course, the water sector has not been forgotten in the Vision 2030 plan, with numerous investments planned. However, until oil prices recover, budgetary constraints will only highlight an underlying issue that had previously been buried under excess funds. Investment will increase desalination capacity, but that alone will not be enough to make up for natural deficits, and Saudi Arabia will continue to teeter on the edge of what its limited water resources can support.