Current and likely future international trade in water

Louise Waters18th February 2011

Major fresh water resources available to a country: •rainfall • groundwater • surface water • river flow.

Other serious sources are desalination and trade.

CONTENTS:1. Bulk Water Transport Methods2. Current International Trade in Water3. Future International Trade in Water4. Conclusions

CURRENT AND LIKELY FUTURE INTERNATIONAL TRADE IN WATER

BULK WATER TRANSPORTCanal or modified natural channel

Historically, canals used for transport by water rather than transport of water – this is now changing

Example: China’s South-North Water Diversion Project:

• Started in 2002; scheduled for completion around 2050

• Will transport 45km3 per year from four major Southern rivers to the dry but populous North

• Two longest diversions will be 1267km and 1155km long.

BULK WATER TRANSPORTPipeline

Oil industry specialises in long-distance transport of liquids – Druzhba pipeline is 4000km long

Water is about 100 times less viscous than oil but similar density – so friction head loss is less

Colonel Gaddafi’s “Great Man-Made River” (Libya) is 1200km long, with construction on an extension underway

Large-scale water pipelines also built in USA and Australia

BULK WATER TRANSPORTMarine vessel

Transport by supertanker:

• Ultra-large Crude Carriers can carry 500,000 deadweight tons

• Possibility of two-way use, transporting oil one way and water on the return journey

Transport by sealed water bags:

• Have been used to transport water to Cyprus and other Mediterranean islands

• Pioneering firms claimed enormous cost savings over transport by supertanker – but commercial success has been elusive

CURRENT INTERNATIONAL TRADE IN WATER

In economic terms, trade in bottled water still dominates

According to WaterNews, “the trade in bulk water exports has not yet commenced”:

• Desalination often the preferred option

• Short distance bulk water transfer (e.g. Malaysia to Singapore) considered co-operation rather than trade

• Transport by supertanker to supply dry/densely populated islands or to relieve drought still relatively small-scale and irregular. Significant contracts for longer-distance transport have yet to materialise

• Recent cancellations of international water-transfer projects

CURRENT INTERNATIONAL TRADE IN WATERVirtual Water

Virtual water is the water that is consumed in the production of a traded good.

The scale of virtual water “flows” dwarfs that of real flows.

Net importers: Africa, Europe and Middle East.

Net exporters: USA, Canada, Australia

(between 1997 and 2001)

Export Type

Virtual water transfer per year

Crop 991 km3

Livestock 276 km3

Industrial 358 km3

TOTAL 1625 km3

Chapagain and Hoekstra, Water International, 2008.

FUTURE INTERNATIONAL TRADE IN WATERWater Shortages

The proportion of the Earth’s land surface that was classed as in ‘severe’ or ‘extreme’ drought (according to the Palmer Drought Severity Index)

12% in 1970

30% in 2002

By 2030 “47% of world population will be living in areas of high water stress” (UN World Water Assessment Program)

Multiple pressures from climate change, population growth and consumer lifestyle changes

FUTURE INTERNATIONAL TRADE IN WATERNorth American Water And Power Alliance (NAWAPA)

Rejected by US Congress in 1960s, but undergoing a revival in American politics

Rationale:• A third of US precipitation falls

in Alaska; 60% of Canadian river flow is to the North

• Agriculture and industrial development in Mexico and south-western US limited by availability of water

• Rio Grande, Colorado already almost fully exploited

• Network of canals allowing transport by boat across the continent

FUTURE INTERNATIONAL TRADE IN WATERNorth American Water And Power Alliance (NAWAPA)

Problems:• Huge cost (at least $1 trillion)

• Damming some of the world’s largest rivers and flooding a tenth of British Colombia

• Unprecedented environmental damage

• Non-economic cost greatest for Canada, but benefits greatest for United States

Unlikely to be built anytime soon – but legislation is in place to allow bulk water transfers between US and Canada in the future

FUTURE INTERNATIONAL TRADE IN WATERWater as a commodity

NAFTANorth American Free Trade Alliance (1994) explicitly lists ‘waters, including natural or artificial waters and aerated waters’ as tradable goods

If implemented, countries that do not allow free movement of this ‘tradable commodity’ could be subject to economic sanctions under GATT.

Under both NAFTA and GATT, corporations are given the right to sue national governments for breaches of the trade legislation – e.g. Sun Belt Water, Inc. vs. Canada.

Global Trade Legislation: GATTWorld Water Forum, The Hague, 2000: Water explicitly defined as a commodity

The World Trade Organisation’s General Agreement on Tariffs and Trade (GATT) is technically applicable to international water trade.

FUTURE INTERNATIONAL TRADE IN WATERWater trade in 2020

Turkey and the Middle EastTurkey has long held plans to export water to its drier neighbours: Syria, Jordan, Cyprus and Israel

Dependent on regional political situation

Desalination likely to lose popularity when energy prices rise

Japan: Exporting treated sewage water2012: Japan plans to start exporting water in ballast tanks of iron-ore cargo ships returning to Australia

Water output from sewage works is normally rejected into the sea, but can be used by the mining industry in Australia (which currently uses desalinated sea water).

CONCLUSIONSAt present, international trade in water is not conducted on a large scale –

unless virtual water is considered

Increased pressures on water supply from climatic and demographic change will make trading water between countries economically and politically

attractive

Predicted higher energy prices will favour water import rather than desalination

However, conservation measures may also become more economic:

• Improved irrigation techniques could reduce agricultural consumption, currently representing 70% of fresh water use

• Scenarios of ‘contraction and convergence’ could apply to domestic and industrial water use as well as carbon emissions