Lawrence Solomon
National Post
November 30, 1999

Farm conservation, desalination make shipments unlikely

Canadians have good reason to fear large scale water exports. The cost required to reroute rivers or build pipelines can run into tens and even hundreds of billions of dollars. Because the water is no longer needed south of the border, the Americans could cut off our exports at any time. And the ventures would be controlled by the very same people who have plundered our oil, forestry, fisheries and other natural resources — the politicians in Ottawa and in our provincial capitals.

Despite the solemn pledges spouting forth from Canada’s environment ministers yesterday in their meeting at Kananaskis, Alta., for two decades our political leaders have been ready and willing to sell off our water. Take the Grand Canal, which then prime minister Brian Mulroney and Quebec premier Robert Bourassa backed in the 1980s. This Soviet-scale public works project involved damming the mouth of James Bay to turn it into a fresh water lake, then annually pumping 20% of its runoff to the Great Lakes, whose water could then be redirected to dry regions of the United States and Canada. The Grand Canal — estimated in 1994 to cost $100-billion to build and another $1-billion a year to operate — envisaged a string of nuclear reactors and hydro dams to pump water uphill, and nine interbasin transfer locations. All told, 17% of the fresh water in Quebec and Ontario would have been captured and reversed.

Preposterous as the Grand Canal was, it’s dwarfed by its Western counterpart, the North American Water and Power Alliance. Estimated to cost between $300-billion and $1-trillion, and to take 40 years to build, NAWAPA would divert British Columbia and Alaskan waters via Canada to the United States and Mexico through 240 dams and reservoirs, 112 water diversions, and 17 aqueducts and canals. Smaller government-backed diversion schemes — generally subsets of either Grand Canal or NAWAPA — also abound. There isn’t an honest dollar to be made from any of them. The average cost of a large-scale water export would be about 12 times what the United States would likely pay.

Bulk water exports can be profitable, but only for short periods, and only in extraordinary circumstances, such as California’s five-year drought a decade ago. Because many of its jurisdictions were unprepared, water costs soared — in some places water fetched 10 to 20 times current prices — creating the illusion that a wave of profits could easily be had by shipping water south via obsolete crude oil carriers. Even under drought conditions, in the end the deals collapsed when the rains came. Prices plunged, sometimes by 90%. And thanks to new developments, no export deals are likely to occur in future.

Like Canada, the United States is a water-rich country that has been wasting its water for decades. But unlike us, it’s starting to tighten the taps by charging customers more. U.S. water rates have risen 43% in the last five years, spurring a revolution in conservation, not unlike the energy efficiency improvements that occurred in the aftermath of the 1970s OPEC oil crises.

While fewer than one million of the United States’ 35 million apartments are individually submetered for water today, virtually all new apartment-building construction includes individual water meters. According to the National Submetering and Utility Allocations Association, in California — one of the presumed markets for Canadian water — meters could be installed in four million of the state’s 5.5 million apartments, saving 85 billion gallons a year. That’s 35 times the amount that B.C. almost sold to California during the drought.

While residential consumers can do much to curtail wasteful consumption, the biggest savings lie in the agricultural sector, where farmers and irrigation districts hold most of the water rights in the arid and semi-arid West. Farmers pay nothing for the water itself and little to have it delivered to their farms, leading them to squander it. But during the California drought, farmers parted with their water — for a price — and with today’s rising water prices, they are increasingly willing to sell again. As subsidized farming shrinks, vast inexpensive water supplies become available — California, for example, consumes 80% of its water irrigating subsidized, low-value crops.

These growing U.S. water markets have effectively killed prospects of Canadian water exports in the short term, and there won’t be a long term. Over the last decade, desalination costs have been plummeting, giving the enormous U.S. population on the shores of the Atlantic, Pacific and Gulf of Mexico access to reasonably priced water. Early this year, engineering giant Stone & Webster won the contract to supply Tampa Bay Water for 30 years. Its offer: to finance, build and operate a system providing desalinated drinking water at a cost of 0.2¢ (US) per gallon — about the cost of shipping free Canadian water by tanker.

But why should anyone get our water for free? Despite its apparent abundance, Canadian cottagers, fishermen, farmers, municipalities, power producers, industrialists and tourist operators increasingly compete for this essential resource. Like the United States and other industrialized countries, Canada should remove subsidies from water. Once we pay full value for its use, export deals will never again be a threat, for our water will truly be too precious for any exporter to ever want to touch.