THE GLOBAL TRADE IN WATER

from the booklet

Blue Gold

The global water crisis and the commodification of the world's water supply

A Special Report issued by the International Forum on Globalization (IFG)

by Maude Barlow
National Chairperson, Council of Canadians
Chair, International Forum on Globalization (IFG) Committee
on the Globalization of Water

PIPE SCHEMES

The water privateers are now also setting their sights on the mass export of bulk water by diversion, by pipelines and by supertanker. Modified tanker deliveries already take place in certain regions that are willing to pay top dollar for water on an emergency basis. Barges carry loads of freshwater to islands in the Bahamas and tankers deliver water to Japan, Taiwan, and Korea. Turkey is preparing to sell its water by shipping it on converted oil tankers and through pipeline from the Manavgat River to Cyprus, Malta, Libya, Israel, Greece and Egypt.

In the summer of 2000, Israel began negotiations to buy over 13 billion gallons of water a year from Turkey; the tankers are already moored to huge yellow floating stations two miles offshore, awaiting delivery orders. Turkey's water company says it has the pumps and pipes to export four to eight times that amount.

To deal with droughts in southern European countries, the European Commission is looking into the possibility of tapping into the sources of water-rich countries such as Austria. If its plans to establish a European Water Network are realized, Alpine water could be flowing into Spain or Greece, rather than Vienna's reservoirs, within a decade. "This means that in theory we could supply everyone in the European Union, all 370 million of them," declares Herbert Schroefelbauer, deputy chairman of Verbund, the country's largest electrical utility. A high-tech pipeline already transports quality spring water from the Austrian Alps to Vienna, and the proposal to extend this system to other countries is creating great unease among Austria's environmentalists, who warn of the damage bulk exports could have on the sensitive alpine ecosystem.

Gerard Mestrallet of Suez Lyonnaise is planning another Suez Canal-this time in Europe. He has announced his intention to build a giant 160-mile aqueduct to transport water from the Rhone River through France to the Catalonian capital, Barcelona.

To address England's growing water crisis, some political and corporate leaders are calling for large-scale exports of water from Scotland, by tanker and pipeline. Already, several British companies are exploring the possibility of water exports and one Scottish entrepreneur told The Scotsmail that Scottish companies are also interested. Complicating the political sensitivities is the fact that Scotland still has a publicly owned water system, while British water is run by privatized companies. Ironically, some of these companies have been lukewarm to exports because the scarcity of water in England has kept prices and profits high.

Professor George Flemming of Strathclyde University claims that it would be relatively simple to extend pipelines and natural waterways that already exist between the north of Scotland and Edinburgh to London and other parts of England. However, support for water sovereignty in Scotland is strong. When Scotland's water authority, West of Scotland Water, publicly sounded out a plan to sell surplus water to Spain, Morocco and the Middle East, public reaction forced it to back off. Still, many see this reluctance as temporary. Flemming believes that England and Wales are running out of water because of global warming and that imports of bulk water are inevitable.

In Australia, United Water International has secured the contract of the water system of Adelaide (located in southern Australia) and has developed a 1 5-year plan to export its water to other countries for computer software manufacturing and irrigation. Domestic companies were not allowed to bid for this contract because it was assumed that a large transnational would increase the value of the water exports, now expected to be in the range of $628 million.

Several companies around the world are developing technology whereby large quantities of freshwater would be loaded into huge sealed bags and towed across the ocean for sale. The Nordic Water Supply Company in Oslo, Norway, has signed a contract to deliver 7 million cubic meters of water per year in bags to northern Cyprus. During the Gulf War, Operation Desert Storm used water bags to supply water to their troops.

Aquarius Water Trading and Transportation Ltd. of England and Greece has begun the first commercial deliveries of freshwater by polyurethane bags, towed like barges through waterways. The company, whose corporate investors include Suez Lyonnaise des Eaux, delivers water to the Greek Islands where a piping system links the bag to the main water supply on the island. Aquarius predicts that the market will soon exceed 200 million metric tons per year. The company's bag fleet consists of eight 720-ton bags and two 2,000-ton versions. The larger bags hold two million liters of water each. Aquarius has completed research and development on bags ten times larger and is searching for the capital investment to produce them. The company has its sights set on Israel, and claims to have the interest of several major water companies.

Nowhere are dreams for the trade in water as big as they are in North America. Every few years, plans to divert massive amounts of Canadian water to water-scarce areas of the United States, Asia and the Middle East by tanker, pipeline, or rerouting of the natural river systems, are raised only to be shut down by public protest. One of the largest proposed diversion projects was called the GRAND Canal-the Great Recycling and Northern Development Canal. It originally called for the building of a dike across James Bay at the mouth of Hudson Bay (both of which now flow north) to create a giant freshwater reservoir out of James Bay and the twenty rivers flowing into it. A massive series of dikes, canals, dams, power plants and locks would divert this water at a rate of 62,000 gallons a second down a 167-mile canal to Georgian Bay, where it would be flushed through the Great Lakes and taken to the U.S. Sun Belt.

The NAWAPA-the North American Water and Power Alliance-was a similar scheme. The original plan envisaged building a large number of major dams to trap the Yukon, Peace and Liard rivers into a giant reservoir that would flood one-tenth of British Columbia to create a canal from Alaska to Washington state and supply water through existing canals and pipelines to thirty-five American states. The volume diverted would be roughly equivalent to the average total annual discharge of the St. Lawrence River.

In the early 1 990s, a consortium named Multinational Water and Power Inc. spent $500,000 promoting the diversion of water from the North Thompson River (a tributary of the Fraser River) into the Columbia River system for delivery by pipeline to California.

In the last decade, these projects have quietly been drawing support again from the business community in Canada. In 1991 Canadian Banker magazine said that water export would become a multi-million dollar business "The concept of NAWAPA... remains a potentially awesome catalyst of economic and environmental change."

In the same year, Report OH Business magazine stated "Pollution, population growth and environmental crusading are expected to put enormous pressure on the world's supply of freshwater over the next ten years. Some of Canada's largest engineering companies are gearing up for the day when water is moved around the world like oil or wheat or wood...What will be important is who has the right to sell it to the highest bidder."

Meanwhile residents of water-scarce regions continue to live in denial. In a July 1998 article for The Atlantic Monthly titled "Desert Politics," writer Robert Kaplan notes the blind faith of people living in the Arizona desert believing that some magical solution to their water shortage will manifest itself while they Id continue to build in an area never meant for human habitat in these numbers. He notes that more than

800,000 people live in greater Tucson alone and four million in Arizona, a tenfold increase in seventy years. According to Wade Graham of Harper's Magazine, municipal development in Phoenix is occurring at a rate of an acre every hour. Kaplan writes,

"Maybe, as some visionary engineers think, the Southwest's salvation will come ultimately from that shivery vastness of wet, green sponge to the north Canada. In this scenario a network of new dams, reservoirs, and tunnels would supply water from the Yukon and British Columbia to the Mexican border, while a giant canal would bring desalinized Hudson Bay water from Quebec to the American Midwest, and supertankers would carry glacial water from the British Columbian coast to Southern California-all to support an enlarged network of post-urban, multiethnic pods pulsing with economic activity."

CANADA AND ALASKA: OPEC OF WATER!

The call to export water by supertanker is heating up again in Canada after a lull of a few years. In British Columbia, a number of export companies such as Western Canada Water, Snow Cap Water, White Bear Water and Multinational Resources were already lined up for business when the government banned the export of bulk water in 1993. One project was to involve a Texas company prepared to pay for a fleet of 12 to 16 of the world's largest supertankers (500,000 deadweight tons) to operate around the clock. Under one contract, the annual volume of water to be shipped to California was equivalent to the total annual water consumption of the city of Vancouver.

The British Columbian government that made the decision to ban bulk water exports is politically committed to this position; however future governments in B.C. might easily reverse this policy, opening a floodgate of export proposals. Canadian water expert Richard Bocking explains that the same companies would transport oil and water, in some cases, emptying oil on one leg of the trip, and carrying water home on the return voyage

"Water export from the B.C. coast would involve huge supertankers, operating year round on tight schedules. They would wind their way through tortuous coastal waterways, maneuvering around islands and reefs in an area where no well-developed marine traffic management system exists. There are strong and often turbulent tidal currents in coastal inlets where winter winds often reach ferocious velocities.

"These huge tankers would travel through waters that are amongst the world's finest for recreational boating and fishing. Pods of killer whales move regularly through these waters. Along with commercial and sports fisheries, spawning for almost the entire commercial oyster industry of coastal B.C. is located here. The enormous fuel tanks of supertankers are full of bunker C fuel, the worst possible grade of oil in environmental terms. With currents, winds, rocks, and reefs intersecting with tight ship schedules, the stage is set for tragedy on a grand scale."

In recent years, two other Canadian provinces received corporate applications to allow the export of bulk water for commercial profit. In the spring of 1998, the Ontario Ministry of the Environment approved a plan by Nova Group to export millions of liters of Lake Superior water by tanker to Asia. However, the province later rescinded the grant after an outcry from the International Joint Commission; (then) U.S. Secretary of State Madeleine Albright, who claimed that the United States had shared jurisdiction over Lake Superior; and the public, most notably those living in the Great Lakes area of Canada and the United States. The other application, a request to export 52 billion liters of water a year from pristine Gisborne Lake in the Newfoundland wilderness, seemed poised to receive the go-ahead, given recent statements made by Newfoundland's new premier, Roger Grimes. The company, McCurdy Group of Newfoundland, plans to ship the water to the Middle East by supertanker.

Newspaper and business publications are intensifying the debate. In February 1999 the National Post called Canada's water "blue gold" and demanded that the government "turn on the tap." Its business columnist, Terence Corcoran, added fuel to the fire "Canada is a future OPEC of water. Here's a worthwhile long-term bet By 2010, Canada will be exporting large quantities of freshwater to the U.S., and more by tanker to parched nations all over the globe.

"The issue will not be whether to export, but how much money the federal government and the provinces will be able to extract from massive water shipments. Rather than resisting the idea of water exports, Canada will end up scrambling to head the WWET, the World Water Export Treaty, signed in 2006 by 25 countries with vast water reserves. Using the OPEC model, they will attempt to cartelize the world supply of water and drive the price up." The Calgary Heraid's editorial board agreed, "Canada has plenty of freshwater, so let the commercial exports begin."

However, Canada isn't the only water-rich region being eyed by transnational business. A Canadian company, Global Water Corporation, has signed an agreement with Sitka, Alaska, to export 18 billion gallons (58 billion liters) per year of glacier water to China where it is to be bottled in one of that country's "free trade zones" to save on labor costs. Although the company brochure acknowledges that there is a severe water crisis in China, it entices investors "to harvest the accelerating opportunity...as traditional sources of water around the world become progressively depleted and degraded" and laments the fact that the government of British Columbia in Canada has placed a ban on bulk water exports.

The company is now engaged in a "strategic alliance to plan an international strategy to move water globally in bulk tankers" with the Signet Companies, an international maritime shipping company based in Houston, Texas. Signet has been engaged in the bulk movement of water since 1986 when both Western Canada Water and its predecessor contracted the shipping company for the "design, development, analysis and implementation of an international water transport system." As Global explains, "Water has moved from being an endless commodity that may be taken for granted to a rationed necessity that may be taken by force."

But Global is only one of the many companies with interests in Alaskan water. Alaska has become the first jurisdiction in the world to permit the commercial export of bulk water. The Ataska Business Monthly bluntly states, "Everyone agrees water has 21st century potential as an export from Alaska, and communities from Annette Island to the Aleutians are thinking about turning on the tap." The journal reports that a Washington-based company has begun shipping city tap water from Alaska on barges to be bottled in Kent, Washington, and that several other projects are in the works.

Alaska's water resources are staggering, reports the pro-export Alaska Business Monthly. For example, it suggests that if Sitka filled a million-gallon tanker per day, this would still be less than 10 percent of its current water usage. In Eklutna, Alaska, Brian Crewdson, assistant to the general manager of the Anchorage Water and Wastewater Utility, estimates the export potential to be as high as 30 million gallons (90 million liters) per day.

He reports that in 1995 a Mitsubishi-leased tanker taking on petroleum by-products for processing overseas also loaded a couple of millions of gallons of Eklutna water for shipment to Japan. He believes this may have been the first tanker shipment of water out of the United States and when word got out, he received calls from companies interested in doing business in New York City, Washington D.C., and Charleston, S.C. Crewdson adds that there is more money in bulk water exports than bottled water exports.

One entrepreneur who is poised to profit from Alaskan water exports spent much of his career shaping water policy in the public sector. Ric Davidge, president of Arctic Ice and Water Exports, served in the U.S. Department of the Interior as chairman of the Federal Land Policy Group and was a key advisor to both the federal and state governments in the clean-up operations for the Exxon Valdez oil spill. As Alaska's director of water, Davidge was responsible for initiating the marketing of the state's water and established the policy framework that allowed for the export of water. Soon after he set the export wheels in motion, he moved into the private sector and began a water export business. He is now known as "Alaska's Water Czar."

Davidge's curriculum vitae states that he provides a "wide range of consulting services to foreign and domestic companies developing bulk and bottled water exports from Alaska." Clients include companies from Saudi Arabia, Taiwan, Alaska, Washington, Canada, South Korea, Tanzania, Japan, Mexico, California and Nevada.

There are some who say that bulk export of water is too expensive to be economically viable and suggest that the future lies with desalination. However, the World Bank points out that the world has already tapped all its low-cost, easily accessible water reserves; the financial and environmental costs of tapping new supplies, however they are developed, will be two to three times more than those of existing investments and the demand will be there even if the sources are expensive.

While desalination will be used by some countries, it is a very expensive process and is fossil fuel intensive. Massive desalination projects would be possible only to those countries with abundant energy supplies, and would seriously add to global warming-a crisis already exacerbated by freshwater diversion.

Davidge points out that the price of water on a dollar-per-unit basis is already higher than refined gasoline. "Everything from soft drinks to French wine to microchips will get many times more expensive as area reserves of clean water are drawn down." He argues that desalinated water is more expensive to produce and more environmentally destructive than bulk water shipments in tankers and water bags.

Quebec businessman Paul Barbeau of Aquaroute, Inc., a company "dedicated to water transportation in bulk," agrees. He says that water can be easily exported by tanker vessel on very short notice. He claims that at his former company, Enercem Tankers, he converted and operated a petrol carrier into a water carrier which was used to transport Canadian water to the Bahamas. "Capturing water is easy. A floating ship can simply pump what may be declared as a water ballast. This is done daily on any coastal or ocean-going vessel or even more simply with any barge as there are already some on the Great Lakes. The tools to export water afloat are already there. What is missing is the precise development in law to prevent an uncontrolled practice."

Even some environmentalists believe that water commodification and trade is inevitable. Says Allerd Stikker, "It could very well be that in the beginning of the 21st century clean water will start to become a major regional and inter-regional commodity, being produced and traded in volumes undreamt of today."

Especially in light of economic globalization, it is a myth that large cross-border transfers of water are not economically feasible. The only difference between these and other mega-projects is that water becomes a product transferred across borders. These megaprojects are identical in purpose to domestic water projects and governed by the same economic analysis. There is no reason to believe that current massive government subsidies to industry and agribusiness are going to end anytime soon. Transnational corporations operating in water-intensive industries are going to expect local governments to find and fund the water supplies they need before making investment and production decisions.

BOTTLED WATER BECOMES BIG BUSINESS

Where there is a demand for the trade of water across borders, it is already well underway. The trade in bottled water is one of the fastest-growing (and least regulated) industries in the world. In the 1970s, the annual volume was 300 million gallons. By 1980, this figure had climbed to 630 million gallons, and by the end of the decade, the world was drinking two billion gallons of bottled water every year. But these numbers pale in comparison to the explosion in bottled water sales in the last five years-over 20 percent annually. In 2000 over 8 billion gallons (24 billion liters) of water was bottled and traded globally, over 90 percent of it in non-reusable plastic containers.

In Canada, the amount of water extracted by bottlers has grown by more than 50 percent in less than a decade; bottlers, who pay no fee for the water they capture, have the legal right to extract about 30 billion liters a year-1,000 liters for every person in the country. Almost half of it is exported to the U.S.

As the world's freshwater supply becomes more degraded, those who can afford it are favoring the packaged item, even though bottled water is subjected to less rigorous testing and purity standards than tap water. A March 1999 study by U.S.-based Natural Resources Defense Council (NRDC) found that much bottled water is no safer than tap water and some is decidedly less so. One-third of 103 brands of bottled water studied contained levels of contamination, including traces of arsenic and E. coli and at least one fourth of bottled water is actually bottled tap water, the study found.

Alongside the giants of the industry, such as Perrier, Evian, Naya, Poland Spring, Clearly Canadian, La Croix and Purely Alaskan, there are literally thousands of smaller companies now in the business. As well, the big soft-drink players are entering the market en masse. PepsiCo has its Aquafina line and CocaCola has just launched the North American version of its international label, Bon Aqua, called Dasani. CocaCola predicts that its water line, which is just processed tap water and sells for more than gasoline, will surpass its soft-drink line within a decade.

These companies are engaged in a constant search for new water supplies to feed the insatiable appetite of the business and are engaging in the trade of water by tanker shipments and by purchasing water rights from farmers. In rural communities all over the world, corporate interests are buying up farmland to access wells and then moving on when supplies are depleted. In South America, foreign water corporations are buying vast wilderness tracts and even whole water systems to hold for future development.

Sometimes these companies leave dried-up systems in a whole area, not just their own land. A ferocious debate has been taking place in Tillicum Valley, a picturesque fruit and wine district in British Columbia. Clearly Canadian Beverage Corp. has been mining the ground water of the region so relentlessly that local residents and orchard growers say the company is "draining their water supply dry."

Of course, the global income gap is mirrored in inequitable access to bottled water. The NRDC reports that some people spend up to 10,000 times more per gallon for bottled water than they do for tap water. For the same price as one bottle of this "boutique" consumer item, 1,000 gallons (3,000 liters) of tap water could be delivered to homes, according to the American Water Works Association. Ironically, the same industry that contributes to the destruction of public water sources-in order to provide "pure" water to the world's elite in non-reusable plastic- peddles its product as being environmentally friendly and part of a healthy lifestyle.

Blue Gold

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