Cost, not emotion, likely to kill export idea

Philip Lee
Ottawa Citizen
August 16, 2001

Water is heavy: 1,000 litres of water weighs a tonne. Pump water hundreds of kilometres through a pipeline, or pour it into a tanker and ship it any distance at all, and water becomes expensive.

Just how expensive is a matter of debate. Estimates range from US$1,000 to $3,000 an acre foot (there are about 1.2 million litres in an acre foot).

Residents of cities in California now pay about US$600 an acre foot for water, and farmers as little as $50 an acre foot.

Are Americans so desperate for water that they would pay the cost of piping it or shipping it from Canada? That is the essential question in the often emotional great water debate in Canada.

Last month, U.S. President George W. Bush confirmed the fears of the most vocal opponents of bulk water shipments. Mr. Bush told reporters the United States would be interested in piping Canadian water down to the thirsty southwestern states and that he would raise the issue with Prime Minister Jean Chretien at the G8 Summit in Genoa.

The federal government immediately responded by insisting bulk exports of water from Canada weren’t on the table.

The Council of Canadians, which has led the campaign against water exports with the support of the Canadian Union of Public Employees and the Canadian Environmental Law Association, pounced on Mr. Bush’s statement. Maude Barlow, the chairwoman of the council, said Mr. Bush had been candid enough to tell the truth, and that Mr. Chretien has suggested he is willing "turn the tap."

"Canadians wanted bulk exports banned and the Liberals are opening the floodgates," she said.

The crux of the argument from the opponents of bulk water shipments is that under the terms of the North American Free Trade Agreement, water is not protected, and that if Canada permits the sale of bulk water, it becomes a tradable commodity. Once water is a commodity, a giant water valve will be turned on and stuck in that position.

The council has called on the Chretien government to pass legislation prohibiting the export of water, and has linked the trade of water with the trend across North America to hire private firms to deliver water services.

"What is more fundamental to democracy than control over the water we drink?" asks Judy Darcy, CUPE’s national president. "Access for all Canadians to a basic source of life is what’s at stake. Multinational corporations are trying to privatize water services in hundreds of Canadian municipalities and turn our water resources into an export commodity. They can’t buy the air we breathe, so now they want to buy and control the water we drink. What we are saying is simple: No water for profit."

Apart from Mr. Bush’s statement, the council appears to have evidence to back up its concerns. On the East Coast, Newfoundland Premier Roger Grimes continues to argue that his province should be permitted to export water. A company called McCurdy Enterprises wants to export 49 billion litres of water a year from Newfoundland’s Gisborne Lake.

On the West Coast, a California company, Sun Belt Water Inc., is taking Canada to court under the terms of NAFTA to force B.C. to sell bulk water to the U.S., and to claim millions of dollars in damages for the business it says it has lost through Canada’s refusal to adhere to what it claims are the terms of the trade agreement.

For the council, most water issues return to the question of exports and privatization. Early this year, the council opposed a plan by the OMYA stone manufacturing firm – the world’s largest supplier of calcium carbonate to the paper, paint, plastic, food and pharmaceutical industries – to extract water from the Tay River near Perth, Ont.

While the residents of the area were raising valid concerns about the ecological implications of a plan to remove several million litres of water a day from the small river, the council said the project "may trigger much broader obligations for water exports under the North American Free Trade Agreement."

Throughout the debate, the council has raised concerns about the potential ecological damage of bulk water shipments.

Canadian author Marq de Villiers points out that the transfer of water on a large scale from one basin to another is a risky business. A water basin is the "hydrological cycle’s recycling unit," he writes, and we are "tampering with this life-support system, with uncertain consequences."

But Mr. de Villiers notes that what is missing from the bulk water debate is an acknowledgment that water isn’t anyone’s property.

"Water is not ‘ours’ or ‘theirs’ but the planet’s. We use water, and it passes on, and then it comes back to us. But it is not, surely, something we should either hoard or prevent others from using."

Peter Gleick, a California water guru who heads the Pacific Institute for Studies in Development, Environment and Security, agrees that environmental and social consequences should be the primary issue when appraising any bulk water transfer proposals.

"I don’t think water should be exported from anywhere until local environmental needs have been guaranteed, the local ecosystems have been protected, and the local populations have been protected and their needs are met," he says.

Despite these legitimate ecological and social issues, the bottom line for bulk exports may turn out to be economics, Mr. Gleick says.

"I actually think this enormous controversy over bulk water exports is a little bit silly because no one’s going to be able to afford it," he says. "That might not be true if we’re talking about whether Chicago wanted to take more water out of the Great Lakes, but that’s a different issue. I think that no one is going to be able to afford to put water into tankers, move it very far, and make any money.

"And frankly I think some of these people who complain because they have been prohibited from doing it, I think we’ve saved them a lot of money. I think they should have been allowed to do it and go bankrupt."

What about the possibilities of transferring water from one place to another in giant plastic bags towed by ships? This system has been championed on the Pacific coast by entrepreneur Terry Spragg, who has developed water bags larger than the Goodyear blimp.

"I think that could be cheaper than tankers, but even so it’s not cheaper than improving water-use efficiency," Mr. Gleick says. "It’s not cheaper than changing the allocation of water from farmers to the cities. … If a city can afford to pay $600 an acre foot and farmers are paying $50 an acre foot, then the cities could buy some water from the farmers, and everybody would be happy. The cities could pay farmers $100 an acre foot and they’re getting cheap water and the farmers are making money."

Sandra Postel, Mr. Gleick’s counterpart on the East Coast, at the World Water Project in Amherst, Massachusetts, agrees that the economics don’t favour bulk shipments.

"It’s got to be cost-competitive with the next best alternative, which, in most cases where the water would be shipped, is desalination," she says. "Those costs, while still very high compared to traditional water costs, have been coming down. It’s funny, all of the information I’ve seen on the ideas for shipping water by tanker and all the phone calls I’ve gotten from various companies interested in doing this, I’ve yet to see some serious cost numbers. What does it cost to take water from some part of Canada and ship it to China or the Middle East?"

Ms. Postel also notes that bulk water shipments would deliver water too expensive to use for irrigation.

"If we (Americans) are growing wheat with water imported from Canada, nobody is going to be able to afford the food."

The debate over bulk exports began in earnest in the 1980s with a proposal, backed by former prime minister Brian Mulroney and Quebec premier Robert Bourassa, which would have dammed the mouth of James Bay and diverted canals of water to dry regions of Canada and the U.S. The project, called GRAND, the Great Replenishment and Northern Development Canal Concept, included possibly an aqueduct into the Great Lakes and then pipelines south from there.

Further west, the North American Water and Power Alliance (NAWAPA) proposed to dam most rivers in B.C. and divert the water into the U.S. and Mexico through hundreds of dams and canals. Mr. de Villiers says the NAWAPA plan would have done more damage to the environment than all the water diversions in America combined.

Neither of these heavily subsidized mega projects (NAWAPA had a $500-billion U.S. price tag) got off the ground. In the late 1980s, the Santa Barbara, California, decided to build a desalination plant instead of seeking water exports from Canada.

Elizabeth Brubaker, director of Environment Probe, a supporter of privatization of municipal water systems, thinks the bulk export debate is "a red herring." However she warned that Canadians must remain on guard against subsidized water diversion mega-projects.

"The mere lack of economic efficiency doesn’t prevent us from spending a lot of money on a project sometimes," she says. "Some of the water export proposals that have been pushed over the years have been potential disasters."

The export issue reared its head again in 1998 when Ontario granted the Nova Group of Sault Ste. Marie permission to export millions of litres of Lake Superior water by tanker to Asia. The Nova Group withdrew its proposal after a storm of controversy on both sides of the border.

The next year, the Canadian government announced a bulk-water prohibition strategy, introducing amendments to the International Boundary Waters Treaty Act to prohibit bulk-water removal from boundary waters, in particular the Great Lakes. Of all the possible sources of water for the thirsty U. S., the Great Lakes are the most obvious. The Great Lakes ecosystem holds 20 per cent of the world’s supply of fresh surface water. However, rainfall and rivers supply only one per cent of the Great Lakes water. The rest of the water is ancient glacial deposits.

Two years ago, the Canadian and U.S. governments asked the International Joint Commission to prepare a report on the bulk exports issue. The commission was established by the Boundary Water Treaty of 1909 and helps to regulate water diversion in the Great Lakes.

After holding public hearings, the commission delivered its report in March last year. It recommended that governments "should not permit any new proposal for removal of water from the Great Lakes Basin to proceed unless the proponent can demonstrate that the removal would not endanger the integrity of the Great Lakes Basin."

The commission said there should be "no net loss" of water from the lakes and and that any water that is taken must be returned in a condition that protects the quality of the water.

Moreover, the commission argued the era of major water diversions and transfers has passed. After building a network of dams, reservoirs and canals, the western U.S. is now focusing on ecosystem restoration to try to undo the damage that has already been done.

The commission noted the western U.S. has an option for water far less expensive than bulk imports, namely the buying and leasing of water rights from farmers, who consume 80 per cent of the water supply, many of them growing low value crops such as corn and alfalfa. Some farmers can make more money selling water than growing food.

The commission also noted that desalination is increasingly becoming a realistic alternative to bulk water shipments.

"Although it seems clear that climate change and continued reports of worldwide water shortages will continue to keep discussion of bulk water shipments alive, the cost of such shipments makes it unlikely that there will be serious efforts to take Great Lakes water to foreign markets, and cost will continue to serve as an impediment to bulk shipments from coastal waters," the commission concluded.

The commission noted that a hidden water transfer is already taking place, from aquifers in the Great Lakes basin that recharge the lakes themselves.

"Groundwater withdrawals at rates high enough to warrant concern" are already happening, particularly in the Chicago area, where aquifer levels have been dropping for more than two decades. Chicago is also withdrawing surface water from the Great Lakes basin at a rate of 4,300 cubic feet per second. Half the water is for drinking and the rest is used to reverse the flow of the Chicago Sanitary and Ship Canal. Excess water winds up in the Mississippi River.

The commission says we do not understand the issue of groundwater consumption and recharge in the Great Lakes, and there needs to be more aquifer mapping and study of the role of groundwater in supporting the ecological systems of the basin.

In June, the governors of the eight states that border the Great Lakes and the premiers of Ontario and Quebec agreed to limit exports of water to inland municipalities. Any plan to pipe water out of the lakes will require governments to consider whether the diversion is environmentally sound.

The Council of Canadians said it was disappointed that the commission failed to more definitely recommend against bulk exports.

But the commission did address the groups concerned about bulk transfers, admitting that at public hearings many speakers felt the commission too readily dismissed the threat of major water diversions.

"They indicated that while an analysis of past proposals for mega-diversions indicates that they may not have been feasible, at least from an economic standpoint, this does not mean that proposals of this kind could never be pursued for economic or other reasons.

"While the commission acknowledges the anxiety expressed by some at the hearings, the commission continues to believe that the era of major diversions and water transfers in the United States and Canada has ended.

"Barring significant climate change, an overcoming of engineering problems and of numerous economic and social issues, and an abandonment of national environmental ethics, the call for such diversions and transfers will not return."

No doubt questions will continue to be raised about the possibility of Canadian water exports, but, for now at least, one definite answer has been given.

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