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July 15, 2009

15 July 2009

Northern Waters: A project to develop Quebec's blue gold in an ecologically responsible way

Even more important, according to the author of a study titled Northern Waters, this engineering project would enable Canada to export an equivalent amount of water to the United States from the Great Lakes without modifying the flow of the St. Lawrence, for potential yearly revenues of about $7.5 billion.

In an Economic Note published by the Montreal Economic Institute (MEI), Pierre Gingras, a specialist in industrial engineering who worked at Hydro-Québec for 31 years, concludes that "the profitability of this project is not in doubt because it is largely ensured by hydroelectric production before water export revenues are even considered."

MEI president Michel Kelly-Gagnon adds that "this project looks very serious to us at first sight and deserves at least a credible independent economic and environmental impact study rather than a back-of-the-hand rejection for strictly ideological reasons or irrational political fears."

A realistic project

When the issue of bulk water exports is raised, what often comes to mind are images of gargantuan projects or the drying up of rivers. The Northern Waters project looks instead to a third option that involves accumulating surplus water generated by seasonal flooding on the Broadback, Waswanipi and Bell rivers that flow into James Bay and then pumping this water and sending it to the Ottawa River and the St. Lawrence through engineering works of modest scope. Power plants added to existing dams along the route would provide a net quantity of 14 TWh of hydroelectric energy after subtracting the energy used in operating the pumping stations further upstream. By way of comparison, the four-dam La Romaine project on the North Shore would add 8 TWh of production.

Exporting water from the Great Lakes would help meet growing needs for potable water south of the border without a drop of water having to leave Quebec. Water retention facilities between Montreal and the Great Lakes would be used to keep water levels high in the lakes. The new flow from the Ottawa River would maintain levels in the St. Lawrence, the flow of which is governed by the Joint International Commission.

A profitable project

The total cost of carrying out the project would come to about $15 billion. In comparison, the cost of the La Romaine complex is evaluated at $6.5 billion. Minimum annual income from the sale of electricity on the Quebec market in 2018 is estimated at nearly $2 billion, or 14% of the amount invested. Selling it on export markets is not taken into account and could bring in even more.

How much would the exported water be worth? If we use an estimate based on the current cost of desalination (85 cents per cubic metre), we get an amount of $20 billion for the 25 billion cubic metres derived from the Northern Waters project. Another way of calculating the value of the water exported is to assume that the 150 million people whose water needs could be met would pay a unit rate of $50 a year. Annual water export revenues would then come to $7.5 billion. All along the Mississippi, where the water could be exported, higher prices could be offered by the various states.

Mr. Kelly-Gagnon notes that "if this project were to be implemented some day, it would not only generate enormous income for Canada but would also strengthen its geopolitical position in relation to its southern neighbour, something that is far from negligible."

A project that respects the environment

This project would have a limited impact on the environment, including that of the Ottawa River, which would have a stable flow, without natural flooding. About 860 of the 1,200 kilometres that the water would travel consist of lakes and reservoirs that would remain unchanged. The rivers to be developed would not be dried up, and only a small land surface would be submerged. The hydroelectric facilities would produce renewable, non-polluting energy. Moreover, highly profitable pollution credits could be added if some of this hydroelectricity were exported to replace energy from thermal power plants.

The author

The Economic Note titled Northern Waters was prepared by F. Pierre Gingras, a specialist in industrial engineering. He worked for 31 years in the construction of hydroelectric facilities for Hydro-Québec, including 17 years in charge of the planning and estimation unit for major projects. He collaborated in the building of the Manicouagan, Outardes and James Bay projects. Since retiring, Mr. Gingras has stayed active in this field and has been involved in studies on about 50 projects with various consultants, developers and native councils. He also takes part in presenting briefs at environmental hearings.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and education organization. Through studies and speeches, the MEI contributes to debate on public policy in Quebec and across Canada, suggesting reforms for wealth creation based on market mechanisms.

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Information and interview requests: André Valiquette, director of communications, Montreal Economic Institute Tel.: (514) 273-0969 ext. 2225 / Cell: (514) 574-0969 / E-mail: avaliquette (@iedm.org)

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