Water, Water Everywhere, but Fewer Drops to Drink Ironically, the world’s most precious resource is also one of its most plentiful. More than three-quarters of the world is literally covered in water. Yet, only 1 percent of the world’s water supply is fit to drink. Ninety-seven percent is salt water, and 2 percent is frozen in glaciers or polar ice caps.
As the Economist made clear in a July 17, 2003 report, there are two problematic trends associated with the way mankind is using this resource.
First, the supply and the demand are out of whack. In some locations, such as Canada and Ireland, more fresh water is available than people can use. In other places, such as the Middle East and northern China, water is scarce. In fact, more than 1 billion people in developing countries do not even have access to clean water.
Second, the world’s population is wasting the water we have. Instead of treating water as an economic good, it is taken for granted in many societies, priced too low, or given away for free. The solution, as we will discuss, may be to place a price on water that reflects its true value and let market forces take control.
If you listen to environmentalists, the situation seems hopeless. For example, a recent report in the Wall Street Journal Online depicts a bleak future in which “massive global water shortages are possible by 2025.”
According to Reuters, that scenario calls for “chronic water shortages with higher food prices and a worldwide grain production loss of 450 million metric tons per year.”
However, it should be noted that the environmental group that made the forecast, the International Food Policy Research Institute, used a computer modeling program to devise the worst-case scenario.
Realistically, the world’s water situation is full of both good and bad news. Here’s the good news. The world’s water supply is not running dry, despite what some environmentalists claim. Rivers, oceans, streams, and lakes are constantly replenished by rainfall. More importantly, the per capita use of water is rapidly declining, even in the United States, the largest consumer of water.
Consider how improvements in industrial production and in consumer products have already reduced the amount of water Americans are wasting. In the 1930s, steel mills used 200 tons of water for every ton of steel they produced. Today, a ton of steel uses only 20 tons of water, according to researchers at the Pacific Institute. That’s a 90 percent savings.
In U.S. households, microwave ovens have decreased the number of meals that require people to boil their food. Showers use less water than the baths that were customary a generation ago, and water-saving showerheads increase the savings further. And toilets, which account for more water than any other household use, have been improved so that they use only 1.6 gallons per flush, compared to six gallons in 1980.
Now, the bad news. Throughout the world, 2.4 billion people lack adequate sanitation due to a lack of water. The Johannesburg Earth Summit adopted the goal of cutting this number in half by 2015. This would require bringing sanitation services to 400,000 people every day for the next 10 years.
Despite the challenges, it is an issue with far-reaching consequences. According to the Economist, as much as 60 percent of the world’s illness is related to lack of water or contaminated water.
Some nations are striving to solve the water shortages within their borders by moving water from locations where there is an abundance to places where it is needed. For example, in the northern part of China, about 400 of the largest cities lack enough water. China’s solution is to divert water from the Yangtse River to the Yellow River basin. Using canals and aqueducts, the project is expected to cost $50 billion.
Similarly, India plans to spend about $120 billion to connect nearly all of its rivers. India has 17 percent of the world’s population, but just 4 percent of its fresh water. By 2050, India’s population is expected to reach 1.5 billion, making the situation worse. The project to connect the Indian rivers will be finished by 2016 and its annual cost is forecast to be less than 1 percent of GDP.
However, the plan has encountered resistance from environmentalists, who point out that Indian states do not have a history of cooperating when they must share even one river, much less all of them. For that reason, the Economist asserts, “It is hard not to conclude that it would be cheaper and more efficient for both China and India to clean up polluted water, curb demand by pricing water more realistically ? and, if all else fails, move people rather than water.”
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Agriculture depends heavily on having enough water to grow crops. Throughout history, irrigation has been used to move water from a plentiful source, such as a river, to a place that needs water, such as farmland that doesn’t get enough rainfall. However, again and again, irrigation disasters have dried up bodies of water and ultimately turned fertile fields into deserts. For example, the Sahara desert was once thriving with trees and plants, until too much groundwater was diverted and the land turned into a barren wasteland.
Similarly, the Aral Sea was the victim of a Soviet irrigation blunder in the 1950s. Responding to Josef Stalin’s statement, “Water which is allowed to enter the sea is wasted,” Soviet officials siphoned off the water from two rivers that flowed into the Aral. The goal was to provide water for cotton fields in central Asia. The result was a nightmare.
The Aral Sea started shrinking, losing 75 percent of its volume by 1960. The fish population dropped dramatically, wiping out the local fishing industry. The saline residue left behind on the fields by the irrigated water stunted the cotton crops, and the salt in the air filled the lungs of nearby villagers, leading to higher rates of respiratory illnesses and cancer.
But, the Soviets weren’t alone in making short-sighted decisions about water. The history of the United States is based on the concept of manifest destiny and on Horace Greeley’s famous advice to “go west, young man.” Unfortunately, the west was a dry place. The U.S. government responded by giving settlers the water they needed for farming by building dams, pumping groundwater, or by tapping water from once-mighty rivers.
In 1922, the government divided the Colorado River’s annual flow among the states around it. The problem is that the deal gave the states more water than the river contained, because it was based on measures that were taken when rainfall was abnormally heavy.
In southern California, the Colorado River irrigates crops like rice, cotton, and alfalfa, all of which need a lot of water. The Economist notes that half of California’s water is devoted to growing crops that are better suited to a wetter climate than to the desert-like conditions that the irrigation tries to overcome.
In the Midwestern United States, the problem is groundwater depletion. Farmers have been able to grow their crops because they’re tapping into the vast Ogallala aquifer, which lies underground in several states. However, the aquifer is being drained eight times faster than it is being replenished. Unless this practice stops, the Ogallala will be used up within 90 years.
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Throughout the world, one of the primary drivers of our misuse of water resources is the fact that the price of water is out of line with its value. In Florida, the Army Corps of Engineers has tamed the Everglades to provide irrigation for the heavily-subsidized sugar growing industry. In rural India, most farmers get free irrigation water, plus free electricity to run the millions of water pumps that are depleting the nation’s groundwater.
Perhaps the most mind-boggling misuse of water is occurring in Saudi Arabia, where both ground water and desalinated seawater are being squandered on wheat crops. Because each ton of wheat needs 1,000 tons of water, the price of Saudi wheat is 100 times the price it would fetch on the world market. There’s no sound reason why an oil-rich country like Saudi Arabia can’t simply import wheat, at a small fraction of the cost to grow it in the desert.
On the other hand, some countries are succeeding in using water wisely. Their examples can lead the way for the rest of the world to solve the water shortage.
For example, in South Africa in 1994, 14 million people had no access to clean water. Today, that number has dropped to 5 million, and the country’s water minister predicts that it will be zero by 2008.
South Africa’s progress is due to a 1998 law that gave the government control of the water supply. To make sure that even the poorest people could have water, the law provided that everyone would receive 25 free liters of water per day. People who use more than that amount are charged at increasingly higher rates, so that those who use the most pay the most.
Innovations in water management are also being used in Australia. The government decreed that water rights are no longer tied to property rights. Instead, all of the water belongs to the government, which issues access rights to users. Those rights can then be traded on water exchanges between farmers, businesses, cities, and states. And, now that every home and business has a water meter, users pay for the actual amount they consume, not just for access to water.
Looking ahead, we forecast the following five developments:
First, the model that has been pioneered in places like South Africa and Australia will lead to reforms in the United States. Look for a repeal of the 1922 law that divides the Colorado River water among the western states, for changes in ownership rights to water, and for a new pricing scheme that charges the biggest users of water at the highest rates.
Second, water prices will increasingly be set according to demand management goals. Water usage by consumers and industries will be metered, and they will pay a fee based on how much water they use. Prices will reflect the full cost of the water.
Third, in the poorest nations, techniques like rainwater harvesting will provide some relief to water shortages. In drought-ravaged Rajasthan, India, for example, more than 1,000 villages rely on the practice of collecting rainfall using underground tanks, as well as reservoirs and dams.
Fourth, farmers will have to pay for irrigation water and use more efficient methods. In many countries, 75 to 90 percent of water is used for irrigation, and water is often provided to farmers at a very low cost or at no cost at all. If farmers have to pay for water, they will be more motivated to use techniques such as drip irrigation. This approach can be 95 percent efficient, which is a big improvement over the 60 percent efficiency of traditional flood irrigation.
Fifth, the Trends editors expect water-trading exchanges to create an efficient market for water supplies. If the U.S. government asserts its control over the nation’s water, it can then declare that those rights can be traded. This would clear the way for farmers to trade water with each other, or to trade it to cities that need it.
References List :
1. The Economist, July 17, 2003, "Priceless." ⓒ Copyright 2003 by Economist Newspaper N.A., Inc. All rights reserved.2. The Wall Street Journal, October 18, 2002, "Aids, Water Shortages and Chaos," by Mark Ingebretsen. ⓒ Copyright 2002 by Dow Jones & Company. All rights reserved.3. ibid.4. The Economist, July 17, 2003, "Priceless." ⓒ Copyright 2003 by Economist Newspaper N.A., Inc. All rights reserved.5. The Economist, July 17, 2003, "Damming Evidence." ⓒ Copyright 2003 by Economist Newspaper N.A., Inc. All rights reserved.6. The Economist, July 17, 2003, "Irrigate and Die." ⓒ Copyright 2003 by Economist Newspaper N.A., Inc. All rights reserved.7. The Economist, July 17, 2003, "Liquid Assets." ⓒ Copyright 2003 by Economist Newspaper N.A., Inc. All rights reserved.
