Water and the Future of Global Conflict

It is hardly news that water is precious. Despite the planet being 70% water, only 2.5% is fresh and of that only 0.007% is available for human use. It should also not come as a surprise then that as societies get richer and develop their water needs grow to match industrial and personal consumption, making water not simply an essential resource for nations, but also between nations.

As nations in Africa and Asia continue to make great leaps forward in economic prosperity, water needs are putting those countries at odds with one another. Very few places are like Canada or Indonesia, self sufficient in water and not relying on shared water basins. Most nations share water with multiple other countries, necessitating treaties for its use. But even then, the changing economic fates of nations may mean that treaties become useless and fall out of date.

Farming along the Nile

In 1959 Egypt and Sudan signed a treaty to regulate water use between them ensuring that Egypt would receive the bulk of the Nile’s water, but the world’s longest river flows through 10 other countries, many thousands of kilometers away, all of whom need that water to economically develop. In the past few years, as African nations have grown and stabilized following the 1990s, their own economic goals have started to clash with the older and more established economy of Egypt. In 2010 Ethiopia, Rwanda, Tanzania, Uganda, and Kenya signed an agreement aimed at stripping Egypt’s water rights from the 1959 agreement. It would create a new “Nile Basin Commission” to manage water sharing. In 2011 Burundi signed as well, and so far three of the countries have ratified the agreement.

In Asia water represents one potential flashpoint among many between China and any number of countries. Since Tibet was annexed by China in the 1950s the Chinese have secured the source of water to more nations than any other country, and today the most water that flows across borders from one country to another flows from China. Chinese actions to control water has meant that nations as diverse as India, Cambodia, Vietnam and Russia have all filed international grievances over shared water use. Water is also a flashpoint between Pakistan and India. The largely empty high altitude land of Kashmir, contested land that has been the source of three wars (two with Pakistan and one with China), is home to much of the tributaries that feed the Indus, which remains the primary source of water for agriculture in Pakistan.

An Indian soldier stands guard at the border with China in Kashmir

Sharing water isn’t simply an issue between nations, but an issue within nations too. In 2016, the Indian the states of Karnataka and Tamil Nadu ended up rioting over shared access to water, resulting in burning trucks identified as coming from the other state. Water rights are hotly contested not just in developing nations, but in the West as well. In California, which is a experiencing its worst drought in 1200 years, water rights have farmers fighting with cities. Orange groves, almond farms and avocados are all water thirsty crops that compete with other local needs for water.

The price of Almonds has continued to climb for years as water needs have made the crop more expensive

In the last few years issues around water have revolved around cities facing water shortages, most notably in Cape Town, South Africa, which got dangerously close to “day zero”, at which point the city would be officially out of water. Though rains finally returned before a full-blown crisis emerged, citizens of Cape Town spent months operating under water rationing while wealthier citizens paid for water to be delivered from other cities. Farmers were simply denied water for their crops, until finally they received a normal amount of rain for the rainy season (the first in four years).

But the ability to prioritize domestic and urban water concerns depends on a global order that is robust and sufficiently engaged to head off water conflicts between nations before they become more dangerous. But that world is eroding and with it the order that constrains nations.

It should not be a surprise that the decline of American global leadership coincides with increasing global tensions. India and China, having already fought one war, are currently engaged in ongoing military standoffs. Despite only sharing a few borders in largely remote places (in Jammu and Kashmir there exists only a frontier between China and India and there have been regular skirmishes in the past) Chinese and Indian military patrols regularly run into each other. Due to a treaty previously signed soldiers on either side are prevented from using guns to avoid escalation when two patrols meet (leading to some hilarious recounting of soldiers yelling, throwing punches and hurling rocks), but recently the response has been an increasing build up of military presence by both nations forcing an official diplomatic responses. The issue is not that China and India are about to go to war, but that the potential for war is increasing.

Far from heading into a period of increasing prosperity and international cooperation; something practically essential for tackling climate change, terrorism or pandemics, the global order is failing. Even before the age of Donald Trump and populist nativism it took enormous effort to corral nations into agreeing to restrictions on water use. The 1997 UN Convention on the Law of Non-Navigational Uses of International Watercourses, which aimed at establishing “equitable and reasonable use” of shared water systems and prohibited nations from using water access to impose significant harm on another state only ever had sixteen nations agree to it. In the current climate it is unlikely that any new nations would even consider such a binding restriction.

The 21st century continues to throw new challenges at a global order that seems, at best, sclerotic. That breakdown in the international order is putting new risks on the table, leaving countries, sub-sovereign states, cities and farmers to fight their battles with less support, and more vulnerable to actors with military or diplomatic muscle to flex. China is one such nation that has a great deal of its future connected to the control of water, both through access to waterways in the South China Seas, and to the very water that irrigates crops and powers industry to its neighbours. A resource so precious and important deserves a great deal more attention than its currently getting.

Information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Adrian Walker from sources believed to be accurate. The opinions expressed are of the author and do not necessarily represent those of ACPI.

California could be at a tipping point…

I’ve been quite vocal about how one day we will have to accept that things we get for free may not be free forever. Water is of particular concern for everyone not simply because it’s a necessity, but because almost none of us live with water scarcity anymore its often hard to connect the dots when it comes to facing real water shortages.

Take for instance California, whose three year drought has reached new and frightening proportions. There are some excellent articles about what impact the drought is having here and here, but take a look at these images of water reserves from 2011 and then the same locations from 2014. Running out of water is a frightening prospect, but 30 million people don’t just pack up and move because water has gotten a little scarce. What happens instead is you begin paying more for water while getting less back in economic benefits.

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I highly recommend Elizabeth Renzetti’s excellent piece in the Globe and Mail today, and I suggest everyone have a read of it. Its an excellent reminder that the biggest issue we face in managing serious economic and environmental problems is not a lack of skill, knowledge, or imagination, but a simple willingness to face the problem. The outcome of which is usually higher costs for everybody immediately, and possibly disastrous results in the future.

Las Vegas and the Shrinking Invisible Economy

dsc1511lJust over a year ago I postulated that environmental investing may not be dead. The issue that keeps arising is the invisible economy. Traditionally in economics things that are provided “free” by the natural world don’t get counted in “The Economy”, while things that people do want from the natural world do get counted. For instance, everyone agrees that there is a market for commodities like gold, oil and lumber. Extracting any of those commodities is considered part of the economic growth of the country, from the people who build the roads and equipment for accessibility to the physical harvesting of the raw materials, back to its refinement all the way down to the finished product. All of that is part of the economic system. But by-products from all this economic activity that pollute water ways, or urban expansion that paves over marsh grounds, or excessive water waste that diminishes aquifers isn’t considered an economic activity, it’s called an externality.

In other words there are a number of benefits that are provided to us through natural processes that we get “for free” and rarely get assigned a price tag for their contribution. This has been allowed to happen since much of the ecosystems have been able to absorb considerable abuse without stopping the benefits that we have been provided. Except in Las Vegas.

Las Vegas already doesn’t make sense. It’s a desert oasis without an oasis. A bustling city that’s situated in the middle of nowhere, with few natural resources to support it. In fact Las Vegas is so heavily dependent on water that it is literally drying up the desert that will likely lead to the ending of the Hoover Dam as a source of power. Lake Mead, the lake created by the dam is the primary source of water for the city, and the city’s needs have become so great, and the water level so low that there are now two emergency tunnelling construction projects underway to ensure that there is still water for Sin City.

How low is the water? Currently the elevation of the lake shows 1104 ft. The lake is expected to be down to 1080ft by April of 2015. Five more feet and officially there is a level 1 emergency shortage declared. If the lake drops further, to 1050 ft. the Hoover dam stops producing electricity. Under current estimates (assuming that the desert doesn’t get torrential rains for the next few years) this isn’t a question about if, but about when.

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Las Vegas is unique for other reasons, it wastes an unbelievable amount of water, and its growth rate has been much higher than its gains in conservation. But its situation isn’t unique. It’s happening all over the world, and the result is both rising prices for water and growing infrastructure investments. These will be good opportunities for investors, but bad for local economies as disposable income will be shifted to covering increasing water costs. Las Vegas is useful because the scope of these problems is obvious. Hundreds of millions of dollars are being spent to extend the usefulness of Lake Mead to Vegas. Water rights are being purchased by the city as fast as possible, and if the Hoover Dam stops producing electricity there will be not simply lost revenue from the dam, but increasing electricity and infrastructure costs. The invisible economy of the environment may soon not be so invisible.

Lake Mead