Tag Archives: water wars

How to Manage Water Like Money and Fail: Australia

Australia’s Darling River…provided fresh water to farmers seeking to tame Australia’s rugged interior.  No longer. The Darling River hasn’t flowed for eight months, with long stretches completely dried up. A million fish died there in January 2019.  Kangaroos, lizards and birds became sick or died after drinking from toxic pools of stagnant water.  Australia’s water-trading market is drawing blame. The problems with the system, created more than a decade ago, have arisen as similar programs are being considered in the U.S.

Water crises are unfolding across the world as surging populations, industrial-scale farming and hotter temperatures deplete supplies.  Australia thought it had the answer: a cap-and-trade system that would create incentives to use water efficiently and effectively in the world’s driest inhabited continent. But the architects of water trading didn’t anticipate that treating water as a commodity would encourage theft and hoarding.   A report produced for a state resources regulator found the current situation on the Darling was caused by too much water being extracted from the river by a handful of big farmers. Just four license holders control 75% of the water extracted from the Barwon-Darling river system.

The national government, concerned that its water-trading experiment hasn’t turned out as intended, in August 2019 requested an inquiry by the country’s antitrust regulator into water trading.  Anticorruption authorities are investigating instances of possible fraud, water theft and deal making for water licenses. In one case, known as Watergate, a former agriculture minister allegedly oversaw the purchase of a water license at a record price from a Cayman Islands company co-founded by the current energy minister. The former agriculture minister said he was following departmental advice and had no role in determining the price or the vendor. The energy minister said he is no longer involved with the company and received no financial benefit from the deal.

Since 2007, Australia has allowed not only farmers but also investors who want to profit from trading to buy and sell water shares. The water market is now valued at some $20 billion.    But making water valuable had unintended consequences in some places. “Once you create something of real value, you should expect people to attempt to steal it and search for ways to cheat,” says Mike Young, a University of Adelaide professor. “It’s not rocket science. Manage water like money, and you are there.”  Big water users have stolen billions of liters of water from rivers and lakes, according to local media investigations and Australian officials, often by pumping it secretly and at night from remote locations that aren’t metered. A new water regulator set up in New South Wales investigated more than 300 tips of alleged water thefts in its first six months of operation.  In 2018, authorities charged a group of cotton farmers with stealing water, including one that pleaded guilty to pumping enough illegally to fill dozens of Olympic-size swimming pools.  Another problem is that water trading gives farmers an incentive to capture more rain and floodwater, and then hoard it, typically by building storage tanks or lining dirt ditches with concrete. That enables them to collect rain before it seeps into the earth or rivers.

The subsequent water shortages, combined with trading by dedicated water funds and corporate farmers, have driven up prices. Water in Australia’s main agricultural region, the Murray-Darling river basin, now trades at about $420 per megaliter, or one million liters, compared with as low as $7 in previous years.  David Littleproud, Australia’s water-resources minister, says 14% of water licenses are now owned by investors. “Is that really the intent of what we want this market to be?” he asks. “Water is a precious commodity.”

Excerpts from Rachel Pannett , The U.S. Wants to Adopt a Cap-and-Trade Plan for Water That Isn’t Working, WSJ, Sept. 4, 2019

Not Sharing, even a Glass of Water: the Water Crisis in India

The southern city of Chennai—India’s fifth largest with a population of around 10 million—has been meeting only two-thirds of its water needs for weeks, the product of years of drought and decades of failure to manage the region’s water resources.   Residents have been scrambling around the clock to get water—spending hours chasing government tankers or paying private companies to deliver water.  Recent light rains broke a 200-day streak without rain. But the first month of India’s annual monsoon brought one-third less rain than the 50-year average, the driest June in five years, according to the India Meteorological Department.

The acute water shortage in one of India’s largest cities has been building for decades through a mix of population growth, poor planning and increasingly erratic monsoon rains….

The situation in Chennai reflects a larger water crisis spreading across India. Half the country’s population—600 million people—live in areas where water resources are highly or extremely stressed. About 100 million people living in 21 of India’s biggest cities may see their groundwater exhausted by the end of next year, according to a 2018 study by NITI Aayog, an Indian government policy think tank.  By 2030, demand for water will be double the country’s supply, the report said. And the impact will go far beyond the areas actually affected by water shortages: Almost one-third of the country’s agricultural output comes from areas most affected by water shortages…

The scarcity has led to clashes between neighbors. “No one is ready to share even a glass of water,” she said.

Excerpts from Vibhuti Agarwal and Krishna Pokhare Indians Hunt Through the Night for Water as a Megacity Runs Dry, WSJ, July 6, 2018

Dams on Nile: winners and losers

Egyptian politicians discussed sabotaging the Grand Ethiopian Renaissance Dam in 2013, they naturally assumed it was a private meeting. But amid all the scheming, and with a big chuckle, Muhammad Morsi, then president, informed his colleagues that their discussion was being broadcast live on a state-owned television channel.

Embarrassment apart, it was already no secret that Egypt wanted to stop the largest hydroelectric project in Africa. When Ethiopia completes construction of the dam in 2017, it will stand 170 metres tall (550 feet) and 1.8km (1.1 miles) wide. Its reservoir will be able to hold more than the volume of the entire Blue Nile, the tributary on which it sits. And it will produce 6,000 megawatts of electricity, more than double Ethiopia’s current measly output, which leaves three out of four people in the dark…

This boon for Ethiopia is the bane of Egypt, which for millennia has seen the Nile as a lifeline snaking across its vast desert. The river still provides nearly all of Egypt’s water. Egypt claims two-thirds of that flow based on a treaty it signed with Sudan in 1959. But even that is no longer enough to satisfy the growing population and sustain thirsty crops. Annual water supply per person has fallen by well over half since 1970. The UN warns of a looming crisis. Officials in Egypt, while loth to fix leaky pipes, moan that the dam will leave them high and dry.,,

Only recently has the Egyptian government adopted a more conciliatory tone. In March of last year Abdel-Fattah al-Sisi, who ousted Mr Morsi in a coup, joined Hailemariam Desalegn, Ethiopia’s prime minister, and Omar al-Bashir, Sudan’s president, to sign a declaration that tacitly blesses construction of the dam so long as there is no “significant harm” to downstream countries. The agreement was affirmed in December. 2015, when the three countries settled on two French firms to study the dam’s potential impact. The impact studies were meant to be completed last year, but bickering over the division of labour, and the withdrawal of one firm, caused delays. Many Egyptians believe that Ethiopia is stalling so that the dam becomes a fait accompli. Already half-finished, experts worry that it may be too late to correct any problems. Representatives of the three countries are now meeting to discuss “technical” issues. The contracts for studying the dam are not yet signed.

A sense of mistrust hangs over the dam’s ultimate use. Ethiopia insists that it will produce only power and that the water pushing its turbines (less some evaporation during storage) will ultimately come out the other side. But Egypt fears it will also be used for irrigation, cutting downstream supply.  …A more reasonable concern is over the dam’s large reservoir. If filled too quickly, it would for a time significantly reduce Egypt’s water supply and affect the electricity-generating capacity of its own Aswan Dam. But the Ethiopian government faces pressure to see a quick return on its investment. The project, which is mostly self-funded, costs $4.8 billion….

A potential wild card in the negotiations is Sudan, which long sided with Egypt in opposition to the dam, some 20km from its border. But as the potential benefits to Sudan have become clear, it has backed Ethiopia…Short on energy itself, Sudan will receive some of the power produced by the dam. By stabilising the Nile’s flow, it will also allow Sudan to prevent flooding, consume more water and increase agricultural output (once old farming methods are updated). Currently much of the country’s allocation of water under the 1959 treaty is actually consumed by Egyptians…

The Renaissance Dam is merely the latest test of countries’ willingness to share water. There may soon be more difficulties. Ethiopia plans to build other dams on the river, which could further affect downstream supply. Sudan has promised foreign investors an abundance of water for irrigation…

Sharing the Nile, Economist, January 16, 2016, at 49

Water/Oil/Gas Wars: the Stans of Central Asia

Tajikistan’s president, Emomali Rakhmon, likes things big. He has built the world’s tallest flagpole. Last year he opened the region’s largest library (with few books in it so far). But one gigantic project is proving contentious with the neighbours: building the world’s tallest hydroelectric dam.

Islam Karimov, the strongman who rules downstream Uzbekistan, says the proposed 335-metre Rogun dam, on a tributary of the Amu Darya, will give Tajikistan unfair control over water resources and endanger millions in the event of an earthquake. On September 7th, he said such projects could lead to “not just serious confrontation, but even wars”.  Mr Karimov wasn’t talking only about Tajikistan. Upstream from Uzbekistan on a tributary of the region’s other major river, the Syr Darya, Kyrgyzstan is seeking investment for a project of its own, called Kambarata. The two proposed dams (Rogun at 3.6 gigawatts and Kambarata at 1.9) would theoretically end their respective countries’ frequent power shortages and provide badly needed export earnings.

Both were conceived in the twilight of the communist era and stalled when subsidies from Moscow evaporated at independence. Soviet leaders envisioned managing the region’s water flows, energy trades and competing interests, and their Russian successors still maintain an interest. During a visit to Bishkek on September 20th, Russia’s president, Vladimir Putin, promised help with Kambarata in exchange for, among other things, an extension of military-basing rights in Kyrgyzstan. Tajikistan has sought Russian help for Rogun, too. Mr Putin promised $2 billion for the dam in 2004. But that deal fell apart three years later, when the two countries could not agree about the dam’s height.

Spurring on both projects is Uzbekistan’s bad behaviour, egregious even in a tetchy region. Unlike Uzbekistan, neither Tajikistan nor Kyrgyzstan, the two poorest former Soviet republics, has reliable access to oil or gas. Uzbekistan’s Mr Karimov has a habit of changing gas prices and cutting deliveries during the coldest months. He has prevented electricity supplies to his indigent neighbours from transiting his country’s Soviet-era grid. Uzbekistan has also unilaterally closed most border checkpoints with both upstream countries, set mines along parts of the boundary with Tajikistan, and often holds up commercial traffic. When a rail bridge in southern Uzbekistan mysteriously exploded last autumn, depriving southern Tajikistan of its rail connections, few believed Uzbek claims of a terrorist attack. Indeed, rather than fix the track, the Uzbeks dismantled it. Tajikistan calls the actions a blockade.

Though it seems unlikely Mr Karimov will drive his tanks over the border just yet, shoot-outs on the disputed borders are not uncommon. All of this worries NATO officials. All three countries help supply the war in Afghanistan and will be crucial for NATO’s withdrawal.

Excerpt, Water wars in Central Asia: Dammed if they do, Economist, Sept. 29, 2012, at 44

One the international agreements between states on water and electricity exchanges, see Elli Louka International Environmental Law