May 1, 2013

Water Wars and Opportunities

Quenching a thirst for solutions to a global crisis

Water, water, everywhere, Nor any drop to drink…

“The Rime of the Ancient Mariner,” by 19th century English poet Samuel Taylor Coleridge, is a staple of most U.S. high school English classes. It describes the plight of a sailing ship crew trapped in murderous doldrums. But today, it could also represent the future—and in some parts of the world, even the present—of the human race, as governments, businesses, and environmental groups grapple with what is being called a “global water crisis.”

In recent years, a combination of ballooning populations, climate change, wasteful agriculture practices, increasing urbanization and inadequate wastewater treatment systems have placed extreme stresses on the global water supply. Three-quarters of the Earth’s surface is water, but less than 3% of that is non-saline, and much of that is trapped in polar ice. Less than 1% is potentially available to supply humans. “Drops to drink” may soon be insufficient to supply the basic necessities for human survival.

“It’s a crisis that kind of crept up on us,” says Jae So, manager of the Washington, D.C.-based World Bank’s water and sanitation program. 

One silver lining is that with the right technology, shrinking water supplies bring investment opportunities for alert companies and entrepreneurs in a newly developing “water market.” From new water systems and recovery technology to innovative water-efficient agriculture methods, there will be plenty of potential in finding solutions to this global crisis. 

“Investments in surface transportation and water infrastructure directly impact the competitiveness of the manufacturing sector,” says Thomas J. Gibson, president and CEO of the American Iron and Steel Institute. “This creates demand for steel fabricated products and valuable jobs.”

Manufacturers use about 4% of all fresh-water withdrawals in the United States, according to the U.S. Geological Survey (USGS). Combined with the huge amounts of water required for generating electrical power, they account for more than half of the 410 billion gallons the nation uses daily.

Some conservationists love to cite shocking estimates of water inputs to consumer items: 39,000 gallons for a new car, 300 million gallons for the nation’s daily supply of newsprint, 1 gallon for a quarter-pound hamburger. Environmental groups have their own egregious water-wasting examples. The Natural Resources Defense Council (NRDC) cites plans to retrieve oil from shale in Colorado and Utah, which would require 3 to 5 barrels of water for each barrel of oil. To produce 1.55 million barrels of oil a day, the new industry would need about 360,000 acre-feet of water a year, which the NRDC estimates as “the equivalent of one and a half times the city of Denver’s annual water use.”

In fact, according to USGS, industrial water is the one category that has declined consistently since 1985, because of conservation efforts like those employed in the steel industry.


How it Happened

When population growth began to outpace the natural cycles that replenish supplies of fresh water, rivers and lakes were unable to keep up. Cities and farms began to dip into underground aquifers, draining away water resources as climate change buffeted unlucky regions with droughts or hyper-monsoons.

Already, lakes in the United States have dried up as a result of over-pumping groundwater. Businesses have shut down because of insufficient water, and Lake Superior and the Mississippi River have become too shallow in places for big-load barges.

By most accounts, the world is on a course toward a global water demand that will exceed supply by 40% in 2030. According to a recent report by The 2030 Water Resources Group, this is mainly a result of population and economic growth fueled by increased agricultural and industrial production.      

Water technicians refer to groundwater—the underground aquifers that receive and store precipitation—as a kind of global bank account. In times of need, communities can draw on this stored water. Unfortunately, water users all over the world have been recklessly spending their savings. The 174,000-square-mile Ogallala Aquifer, which stretches from Texas to South Dakota, is typical of how water supplies are being misused, even in the relatively water-rich United States. 

“At the current withdrawal rate, the Ogallala will soon be depleted, bringing the area’s largely agriculture-based economy to a halt,” according to a recent report by the Massachusetts Institute of Technology. Experts expect water shortages there in as soon as 10 years.

The aquifer provides drinking water to most of the citizens in the Great Plains states—Colorado, Kansas, Nebraska, New Mexico, Oklahoma, South Dakota, Texas and Wyoming—but 94% of the extracted water is used for agriculture. Water is replenished at a rate of less than 1 inch per year, while more than twice as much is being pumped out.

Even More Serious Problems Abroad

Americans may have some troubling water resource problems, but South Asia easily outpaces them. Reliant on a tangle of fading rivers, South Asian nations, including Bangladesh, Bhutan, India, Nepal and Pakistan have resorted to large-scale well pumping to meet basic needs.

The region contains a quarter of the world’s population but less than 5% of its renewable water resources. And the supply is sinking fast. Where a nation or a region falls on the plenitude-versus-scarcity scale is generally determined by its level of per-capita water availability, hydrology specialists say. On that score, South Asia has fallen 70% since 1950, says Michael Kugelman of the Woodrow Wilson International Center for Scholars, from a bountiful 21,000 cubic meters per person to a basic 8,000 in 2005, and the trend since then has been nothing but downward.

To complicate matters, cross-border tensions related to water are high in what the World Bank has called the world’s least integrated region. Under various nightmare scenarios, water wars or terrorist attacks could break out among South Asian countries that already view each other with deep suspicion, Kugelman says.

China, despite being lauded as the mega-manufacturing power that drives global business (second to the United States), has serious water problems. (See “China’s Soft Underbelly” on page 6.) Chemical and coal industries have been sucking up large amounts of China’s river water, and the China Geological Survey recently reported that the aquifers of most Chinese cities are polluted, often with heavy metals that can’t be easily filtered out.  

Experts predict by 2030, China may have to import wheat and corn, crops in which it is now self-sufficient. Unless the manufacturing giant imposes stringent efficiencies, it may face famine conditions by 2030, some experts say.

Climate Change Aggravates the Problem


While the global water crisis is frequently described in terms of drought-parched regions with desperate residents migrating in search of potable water, the problem is more complex. There are different, seemingly contradictory aspects of the crisis. 

When a huge storm strikes land, as Hurricane Sandy did in October 2012, it adds to the water crisis. Superstorms bring a hyper-abundance of water, but they can also wipe out communities’ water infrastructure, sending wastewater into nearby waterways. Sandy’s powerful floods released hundreds of millions of gallons of raw sewage from flooded treatment plants to channels and waterways, and even homes in New York and New Jersey. 

Jens Peers, lead portfolio manager for Calvert Investments’ Global Alternative Energy and Global Water funds, says there is already a “massive need” for investment in infrastructure, citing reports that predict trillions of dollars will be invested globally in water by 2030. The National League of Cities estimates the United States will need about $633 billion in new water infrastructure in the next 20 years. Canada will need more than $80 billion.

Regulators such as the U.S. Environmental Protection Agency (EPA) are demanding, among other things, that industrial water users remove contaminants from their wastewater, only adding to the opportunities for metals companies, Peers says. Contaminated water, fracking residues, substandard drinking water—all of these are “leading to significant opportunities for new and existing technologies,” Peers says. 

A Global Market for Fresh Water?

Other financiers go even further, talking about the future “commoditization” of water. Willem Buiter, chief economist for Citigroup, said in 2011 that he expects “to see a globally integrated market for fresh water within 25 to 30 years. Once the spot markets for water are integrated, futures markets and other derivative water-based financial instruments—puts, calls, swaps—both exchange-tracked and OTC, will follow.”

For consumer groups, talk about trading in water sounds suspiciously like early 20th century plutocrats squeezing profits out of consumers for a commodity that should be controlled by public utilities for the general welfare of their communities. Privatization of water utilities has a long, contentious history in the United States, and an even more contentious one in other parts of the world, particularly Latin America.

In general, bringing in private entrepreneurs to run water utilities is a bad idea, contends Mary Grant, a researcher with the water campaign of Food & Water Watch, an eight-year-old public interest group. “Private companies prioritize the bottom line over providing the highest quality water at the lowest price,” she says. “Rates quickly go up, largely because of the higher cost of private financing.” Then the promises of better water quality and higher efficiency gradually prove to be false, she says.

Grant cites various communities where consumers became quickly disillusioned after the water system was privatized. For example, after a subsidiary of Aqua America, one of the largest publicly traded water companies in the United States, took over water systems serving 14 counties in Central Florida in 2003, customers began to bridle under the company’s demands for rate hikes. Consumers complained to the state’s Pubic Service Commission about overbilling and about the bad-tasting, mineral-tainted water coming out of their faucets.  

Fiasco in Bolivia

The most egregious case of privatization gone wrong is a watershed for water activists all over the world, says Darcey O’Callaghan, also of Food & Water Watch. However, it did not occur in the United States, but in central Bolivia, about 150 miles southwest of La Paz, when the national government invited private interests to take over the water system in Cochabamba in 1999.

Under pressure from the World Bank to make “structural adjustments” to allow for free-market efficiencies, the government turned Cochabamba’s water system over to a consortium controlled by a British subsidiary of Bechtel, the American construction and engineering company, for $2.5 billion. By early 2000, the new water company, Aguas del Tunari, started sending out water bills double the size of previous bills, with working families complaining that water was grabbing a quarter of their income. The company, asserting its right to all of the region’s water, even installed meters on communal wells. 

Protests turned Cochabamba’s central plaza into Bolivia’s version of Tiananmen Square, escalating over several months to include other Bolivian cities. Finally, Aguas del Tunari administrators fled Cochabamba, and the government rescinded its contract. 

The World Bank’s Jae So says since the Cochabamba fiasco, her organization had “learned quite a lot about successful ways to bring in the private sector and how to do it better.”  

Peers’ firm sees particular opportunities in infrastructure and technology projects. The Calvert Global Water Fund, which Peers manages, has had returns of better than 9% for its first three years of operation. About 6 billion gallons of water are leaked per day in the United States because of faulty infrastructure. “That’s about 14% of the daily water usage,” he says. There are publicly traded construction and engineering companies ready to step in to create the infrastructure to solve problems like these.


Developing Success Stories

There are also more workable, non-exploitive private solutions. Healthpoint Services India is bringing low-cost drinking water to an area of rural India where potable water is virtually unavailable. Hundreds of people in Punjab arrive daily at Healthpoint-funded water treatment plants with company-dispensed 20-liter containers, carrying off enough water to supply a family’s daily needs. The cost: 5 cents. 

“It’s about one-fiftieth of what they’d pay for the same amount of bottled water,” says Healthpoint CEO Al Hammond.    

On rainy days in Northeast Washington, D.C., about a mile from the White House, two sidewalk gardens look like swatches of marshland, with bristly grasses and bushes sprouting from sandy soil around a shallow, rock-strewn pond. These are not just gardens, but “bioretention cells” designed by engineers from the District’s Department of the Environment.

The idea is to, in a small way, cut down on the rainwater that flows into the city’s waterways, washing away automobile oil, antifreeze, pet waste, debris, bacteria and other contaminants that can eventually add to the pollution of Chesapeake Bay. On rainy days, the gardens can sop up about 10,000 gallons, the amount that will fall on the gardens during a 2-inch downpour, says the department’s Matt Robinson. The water filters through 5 feet of soil, most of it either sinking back into the aquifer under city sidewalks or evaporating into the atmosphere.

The sidewalk gardens in front of Robinson’s office building are part of an ambitious District-wide effort to make the city and its endless stretches of pavement cooler, cleaner and “spongier.” The District has proposed similar cells be mandated around and on top of any new construction. Put enough cells around the city, it argues, along with green roofs, and they’ll begin to have a real impact.

The EPA estimates that every year 10 trillion gallons of untreated storm water runoff goes into the nation’s waterways. The NRDC has done a study of rain allocation in eight U.S. cities, showing “if they could collect all the rain water from their rooftops, they’d meet between 21% and 25% of their total annual water needs,” says NRDC analyst Ben Chou.  

Large U.S. cities are doing much of the same. Philadelphia, Pennsylvania, initiated a $2 billion Greenworks program, with rain barrels for homeowners, permeable sidewalks, water diversion channels under city streets and spruced-up public lands. Such efforts, along with hundreds of other projects around the world, big and small, may eventually turn the tide on the water crisis. The important thing is that there are more people aware of the high stakes involved, says So of the World Bank.

In fact, efforts like these are starting to pay off, at least in the United States. People are actually building smarter, growing crops less wastefully and generating electricity with less water, “even if we do still keep the water running while we brush our teeth,” says Charles Fishman, author of The Big Thirst, a wide-ranging book about water conservation.

The USGS notes that the nation actually used less water in 2011 than it did in 1980. “This is the best news about water in the United States,” Fishman told Forward, “and almost no one realizes it. We’ve doubled the size of the largest economy on Earth and reduced our water use while doing it. That means that dramatic progress to be smarter about water is possible. And even in the United States, we’ve barely gotten started using water smartly.” 

Edmund Newton is a Washington, D.C.-based writer, formerly of the L.A. TimesNewsday and the New York Post, as well as the former managing editor of New Times-Broward Palm Beach. He has written for, among others, The New York Times, Time, People, Daily News Sunday Magazine, Black Enterprise, the Ladies Home Journal, Essence and Audubon.

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