The commodification of ‘blue gold’

Alexis Brown
North Shore News
February 15, 2009

Not far from Lynn Headwaters in North Vancouver is a "secret" spring – a hole in the ground with cold, clear water bubbling up.

Its thirsty fans come bearing water bottles and empty milk jugs, parking their cars in the park’s overflow lot before collecting a share of Nature’s beverage. Although the water is untested, that hasn’t stopped the crowds that gather on a hot summer day.

But fresh water is a resource that the spring’s frequenters – like many Canadians – may take for granted. There is a myth that this country is an endless resource of water and that its lakes, rivers and glaciers provide more freshwater than 33 million Canadians can consume.

Experts like Michael Byers, a Canadian Research Chair in global politics and international law, believe it’s essential this myth be debunked and that Canadians understand that a water crisis is not impossible. "Relatively speaking, Canada does face a situation of water scarcity with respect to where most people live," said Byers, who is a political science professor at UBC.

Canada ranks third among countries with the greatest freshwater supply, after Brazil and Russia respectively. According to Environment Canada, 2.5 per cent of the world’s water is freshwater, and Canada holds almost one-tenth of that supply.

Byers explained that most of Canada’s freshwater is in the north, and that by looking at river flow directions and arid zones it becomes clear the country’s urban centres are in trouble.

While 60 per cent of Canada’s freshwater flows northward, 85 per cent of the country’s population lives in the south along the Canada-U.S. border. "There’s actually significant areas of water shortage along the southern border with the U.S.," said Byers, but many aren’t aware.

Byers says in Vancouver specifically, heavy winter rainfall and proximity to the Fraser River mean most residents assume there’s an endless supply of water. "But we have seen problems in the last few years, concerning the reservoirs in the North Shore mountains and a growing population."

Last month, reports said that Vancouver should brace for a potential water shortage come this summer because snowpacks in the mountains around the Greater Vancouver area were lower than usual. As a result, runoffs into rivers and reservoirs could be below normal as well. This situation is a familiar one across the country.

According to the Council of Canadians, a citizens’ organization that promotes progressive policy and global social justice, more than 25 per cent of municipalities have faced water shortages in the last five years. Last spring, new U.S. government data revealed that 36 states would face a water shortage over the coming five years.

With these numbers coming in, Byers says the best solution is simply water conservation. This includes moving towards metered water in urban centres like Vancouver and implementing a pricing system that encourages conservation.

Water meters allow for water use to be charged based on volume consumed, which Byers says reminds people to consider and reduce how much they use.

In May 2008, the City of Vancouver’s engineering services began a pilot project to study water use in single-family homes. The city installed water meters in 34 properties last June and plan to read the consumption levels at the same time this year.

"We wanted to look at the summer peak and winter low and create a consumption curve based on that," said Peter Nazratil, manager of water design with the City of Vancouver.

The project’s results will be presented to city council with the goal of developing a strategy for implementing a metered water system. The North Shore has weighed the idea of using metered water systems, as well. In 2007, West Vancouver successfully began a universal metered water program. Data showed that 80 per cent of West Vancouverites had lower water bills under the new system than they had with flat-rate billing the year before.

While the City of North Vancouver has discussed the issue, city council has expressed hesitation about a potential for increased costs to the consumer.

District of North Vancouver council has made supportive comments about a metered water system, although it has as yet taken no official steps to implement one.

Elizabeth Brubaker, executive director of Environment Probe, says an accurate water pricing system is the best way to promote water conservation.

"Water should be priced to reflect its scarcity," Brubaker wrote in an e-mail. "Prices that reflect scarcity internalize the costs of resource use. They encourage users to weigh the costs against the benefits and to seek less expensive alternatives – including conservation – where appropriate."

Canada’s consumption has landed the country in deep waters with the Organization of Economic Co-operation and Development, which has criticized the country for consuming too much water. Of the 29 OECD countries, Canada is ranked 28th overall in per capita consumption, soaring at 65 per cent above the group average.

In an effort to normalize consumption, water management programs in Canada are increasingly turning to metered water systems.

Brubaker suggests that an effective way to establish prices for consumption is to allow parties to bid on the sources themselves.

"One of the best ways to determine water’s value is to auction off rights to it," she wrote. "There’s nothing like a market to give us a better understanding of a resource’s value to competing users."
Brubaker adds that water conservationists or environmentalists could place bids, all the while intending to leave the water in place.

Brubaker’s proposal represents an important facet in the issue of water commodification: the conflicting interests of those who want to keep Canada’s water in public hands and those who want to privatize it for business.

Perhaps the most contentious of private water businesses in Canada has become the bottled water industry.

According to the Canadian Bottled Water Association, bottled water production in Canada counts for less than 0.2 per cent of total groundwater withdrawn annually. In the past, it has been a lucrative industry, adding $437 million to the Canadian economy in 2006. In the international market, bottled water exports increased from $130 million in 1996 to $284 million

in 2002. By 2007, however, that number had declined significantly to $57 million. On the website for the Ministry of Agriculture and Agri-Food, this steep dive is attributed the rise of the Canadian dollar, making Canadian goods more expensive compared to other markets.

One North Shore bottled water company, Rain Coast Water Corp., stood to gain from the once growing bottled water industry. But the company became embattled in a lawsuit with the B.C. government over what it claims was preferential treatment given to its competitor, Western Canada Water.

Rain Coast Water Corp., owned and operated by West Vancouverite Colin Beach, has been fighting a legal battle with the provincial government for 13 years now. The company once made its profit selling bottled water under the brand name "Mountie" and "Aquasource." It now operates almost solely to fight the lawsuit and has stopped producing bottled water. Beach, who is representing himself, claims that his company suffered financial losses at the hands of a contract granted by the government to Western Canada Water.

After receiving a water licence to reserve and extract water from Freil Lake in 1986, Rain Coast Water Corp. was required to pay the necessary fees for water reservation – whether it was used or not – and for extraction.

Beach claims that Western Canada Water did not have to pay these same fees to extract from Link Lake in Ocean Falls because it was an affiliate of the government.

Ocean Falls, once a pulp mill town, was purchased by the B.C. government in 1975 who then established Ocean Falls Corp.

Ocean Falls Corp. signed a contract allowing Western Canada Water to extract water from Link Lake, but when the government-owned Ocean Falls Corp. dissolved, Western Canada Water was able to keep the contract. Beach’s complaint revolves around the supposed preferential position given to Western Canada Water. The competitor had exclusive rights to the body of water for three years while Beach’s company had no such rights. In addition, Western Canada Water’s contract was granted for 25 years while Rain Coast Water Corp.’s was for a 15-year period. Western Canada Water also had to pay royalties from its annual profits, rather than the rental and extraction fees outlined in the Water Act.

"I think the key thing is the determination that under the Water Act, to get access to water, a person must hold a water licence and a person must pay the legal rate that is on the books . . . as opposed to being able to get access to water by having a secret agreement with a government ministry," Beach told the North Shore News.

In 1990 and 1991, Rain Coast Water Corp.’s licences were cancelled. In 1991, an Order in Council was passed, placing a moratorium on any further licences issued for the purpose of bulk water export.

Before Rain Coast Water Corp. launched the lawsuit in 1996, Western Canada Water changed its name to Western Canada Beverage Corp. The company went bankrupt in the early 1990s and was acquired by Selkirk Springs International in 1993.

Beach is seeking damages for the potential profit lost by the alleged preferential position given to Western Canada Water. In an e-mail to the North Shore News, Beach estimated the amount to be $1.5-2 million and up to $10 million, depending on the method for evaluating loss of opportunity.

Rain Coast Water Corp.’s lawsuit is far from over, with a summary trial date set for June 15. It has the alleged deception and backroom deals that could make a good mystery novel.

And it has.

In 2002, former Vancouver-Kingsway MP Ian Waddell published a book titled A Thirst To Die For. The political mystery tells the story of secret B.C. government Orders-in-Council that allow water export to the United States. The story involves murder and hidden bank accounts in the Caribbean. Although Beach says the book is "patterned" on his battle with the B.C. government, author Waddell says there are no parallels and his idea came from years of being the NDP energy critic in Parliament. "I did a lot of work on oil and gas, but I realized on reading a lot of material, that the issue in the future would be water," Waddell said. Referring to the United States, Waddell says, "They’re going to want our water sooner or later."

The issue of exporting water south of the border, as Waddell forecasted, has become an incredibly political issue. Beach’s lawsuit was based on events that occurred when bulk water exports, in particular to the United States, were legal in the province of British Columbia.

The federal government has not been silent on the issue of protecting Canada’s water, but has yet to pass a bill that absolutely bans the export of bulk water. In 1988, Bill C-156, known as the Canadian Water Preservation Act was tabled in an attempt to prohibit the exportation of bulk water. The bill never made it into law, however, as Parliament dissolved later that year for an election.

All provinces have since passed regulations or laws that ban bulk water export, with British Columbia passing the Water Protection Act in 1995. In last November’s throne speech, Governor General Michaëlle-Jean, speaking for the Conservative government, brought up the issue once again. "To ensure protection of our vital resources, our government will bring in legislation to ban all bulk-water transfers or exports from Canadian freshwater basins," she read.

Private interests, including Beach, are wondering how this legislation can be enacted when part of the North American Free Trade Agreement allows for free trade of water. Some argue that water is technically a "good" under the General Agreement on Tariffs and Trade, and using this clause, NAFTA essentially allows Mexico and the United States to freely access Canada’s water resources in trade.

The government, on the other hand, has adamantly said in the past that water in its natural state does not, in fact, qualify as a tradable good and therefore bulk water is free from trade obligations. After announcing plans last fall for legislation, it’s apparent that the government has acceded to pressures calling for a legal protection of Canada’s water.

For those advocating keeping the water in public hands, the announcement came as good news. The Canadian Union of Public Employees is one group that has fought for such a law for a decade now, working under its Water Watch program.

"We’ve said for 10 years Canada should have a water policy. It can’t just be left to provinces, because . . . it’s the federal government that enters into trade deals," explained Paul Moist, national president for CUPE. "It should not be a commodity, it should be a human right. And it should be an excluded item from trade deals."

Moist says the public is more informed than when Water Watch launched 10 years ago, and it has become more protective of resources such as water. In general, Moist says most Canadians polled by CUPE are opposed to privatizing water for business purposes.

And while it may be true that an increasing number of Canadians want to keep the water on home terrain, it’s not a universal viewpoint by any means.

A report by the Montreal Economic Institute published last August suggests that Canada, specifically Quebec, should consider exporting water – or "blue gold."

The paper notes that Quebec holds three per cent of the world’s renewable freshwater reserves but its population represents a mere one-tenth of one per cent of the world’s population. Quebec could increase its gross annual income by $65 billion if were to invest, through public-private initiatives, in water export.

"Freshwater is a product whose relative economic value has risen substantially and will keep rising in the coming years," the report states.

Quebec should take advantage of its water supplies, the report argues, and share it with a world that is facing serious issues of water scarcity. Fears about overexploitation can be quelled if the proper regulations and legislations are in place.

This outlook – that water can and should be commodified – is not new, and it continues to be met with harsh criticism from those who maintain that Canada simply doesn’t have an abundance of freshwater. But with more than a third of the world’s population now living in a situation of water scarcity – and that figure expected to rise to two-thirds by 2025 – most groups could probably agree that Canada has a responsibility to ease this looming crisis.

Political and environmental analysts around the globe are predicting that wars will increasingly stem from a water shortage. For some, the solution to potential conflict is exporting water to those in need.

Others believe that Canada can’t afford – in more than one way – to sell its precious resource.

As both approaches face the increasing politicization of the water issue, perhaps the most pragmatic advice for all comes from expert Michael Byers.

"It’s important that in countries like Canada we set a good example about the fact that water is an essential resource and that we’re doing our best here at home to use it carefully."

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