Our blue gold

Today marks the United Nations’ International World Water Day, held annually on March 22 to direct attention to the importance of fresh water, and advocate for the sustainable management of freshwater resources. As the world gets thirstier, attention has turned to the viability of bulk water exports, in particular from Canada.

In the past few years, several domestic think-tanks have researched this issue, and concluded that there is a potentially lucrative market for Canadian water. The Montreal Economic Institute has determined that Quebec could earn up to $65-billion annually by exporting 10% of its renewable freshwater resources. The Frontier Centre for Public Policy estimates that Manitoba could earn US$1.33-billion annually by exporting just 1% of the fresh water flowing into Hudson Bay, via a pipeline to American markets, thereby ending Manitoba’s status as a have-not province.

A variety of bulk water projects have been proposed from both sides of the border over the past 50 years, none of which has come to fruition. These include NAWAPA, the North American Water and Power Alliance, which would have diverted water from the Yukon through the Rocky Mountains to the southwestern United States; the Central North American Water Project (CeNAWAP), which would have linked Great Bear Lake and Great Slave Lake to Lake Athabaska, Lake Winnipeg and then the Great Lakes; and the Great Recycling And Northern Development (GRAND) Canal, which would have dammed and rerouted northern Quebec rivers to bring water to the American Midwest. More recently, smaller scale Canadian proposals have included a plan to export water by tanker from northern Quebec, a proposal to transport water to the United States from Lake Gisborne in Newfoundland, and from the Great Lakes to Asia. All these projects foundered due to lack of profitability, protests by environmentalists, public outcry and/or the withdrawal of initial government support.

In fact, governments at various levels have intervened to prevent bulk water exports. As of 2003, all provincial governments with the exception of New Brunswick had passed laws banning bulk water transfers. Several governments, including most recently Quebec, introduced legislation to declare groundwater a resource “common to all.” As a 2009 study by the Fraser Institute concluded, such laws effectively abolish private property rights and transfer wealth from citizens to government, with no corresponding improvement in conservation.

Federally, the response has been more cautious. Despite pledges to ban bulk water sales by both the governments of Jean Chretien and Stephen Harper, no supporting legislation has been introduced. Of concern is article 315 of the North American Free Trade Agreement (NAFTA), which maintains that once a commodity is traded between signatories, it cannot be withdrawn from commerce. In other words, once it started selling water, the Canadian government could not intervene to “turn off the tap” at a future date. Furthermore, as noted by author Frederic Lasserre in a recent issue of Policy Options magazine, a legislated ban would effectively recognize water’s commercial status and bring it under the ambit of NAFTA, which is what the federal government wishes to avoid in the first place.

But Canadians are well aware of the value of our “blue gold.” A recent Nanos poll on water issues revealed that 61.6% of respondents cited fresh water as our nation’s most important natural resource for the future, compared with 21.7%who named oil and gas; among water-related concerns, respondents cited water pollution as their main worry at 39.8%, while only 17.2% named bulk water exports as their primary concern. In the past 20 years, however, when questioned solely about whether our country should export bulk water, Canadians have consistently demonstrated high levels of opposition, in the range of 60%-70%.

Why the hesitation when it comes to selling water, if it could prove lucrative in the long run? One hears the same arguments that are made in the context of Canada’s health-care system. Water, like health care, has become tied to the Canadian identity. Groups such as the Council of Canadians have mobilized public opinion against the bulk sale of water as far back as the debate on the Canada-U.S. Free Trade Agreement, claiming that water sales would represent a loss of sovereignty. Like health care, water is also deemed to be a right, not a commodity, which cannot be left to market forces, but must be under public – a.k.a. government – control. Canadians are told time and again that water is different from other resources; that it is the “staff of life,” not a good to be sold.

These are false arguments. There are many goods as essential to our modern society as water: food, oil, hydroelectric power. Without them life as we know it would grind to a halt, just as surely as if our aquifers ran dry. Yet we manage to trade these commodities without endangering our sovereignty, and without fear of running out; in fact, they have become our economic mainstays. Ironically, none are as renewable as water, which is constantly naturally replenished.

While in the opinion of some experts, bulk water exports will never become a reality because they are uneconomical (the costs involved in either trucking or piping massive quantities are high), as the price of desalination rises, and other sources dry up, Canadian water exports will become more attractive. Just as the oil sands were too expensive to exploit when oil was $25 a barrel, so water exports will only become profitable when other sources become too expensive.

The reality is that water is a commodity, and one which represents great economic potential for Canada. Our country boasts 20% of the world’s freshwater supply, and enjoys geographic proximity to one of the largest markets in the world. In the end, unless governments interfere, economics will trump fear mongering. The law of supply and demand dictates that if a resource becomes scarce enough, then its price will warrant development. For a country awash in blue gold, it would be a costly mistake to take water off the table.

F. Pierre Gingras is Associate Researcher at the Montreal Economic Institute.

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