Believing in free water and Father Christmas

There seems to be a widespread belief that water – like oil – is running out, and that this is the cause of the global water crisis. Of course it is wrong – water is endlessly renewable, and we currently use only a tiny fraction of what is available, but it does beg the question, what is this global water crisis that people seem to talk about?

I have been thinking about this as we pull together our mammoth Global Water Market 2011 report for publication next month. Although the core of the report is 50 in-depth country profiles which look at the unique challenges and opportunities in each country, it does give an interesting overview of the world, and my job has been to write some essays about the general themes.

The conclusion that I have come to is that this sense of a “water crisis” is really about the political realisation in many parts of the world that we cannot continue to live as if water availability were not a restraint on our activities. It is a bit like coming to terms with the fact that Santa Claus does not exist. For years, politicians and engineers have worked to create the illusion that abundant water is part of nature’s bounty, wherever in the world it is required. It was easier to maintain the pretence of plentiful water in the past. In the US, for example, large dams and water transfer projects could be financed through federal government borrowing, paid off through taxation over the decades, and hardly noticed by the general populace. In the Middle East, governments turned to thermal desalination plants, but generally avoided passing on the cost to the customer. In India, the illusion of cheap and plentiful water was created by the provision of free electricity to pump groundwater.

The illusion is becoming much more difficult to maintain. There are a number of factors. Firstly, the cost of making more water available is rising. New locations for dams are becoming difficult to find; water transfer schemes are becoming more complex; and groundwater levels are falling, requiring additional pumping.

Secondly, the switch from conventional resources to unconventional resources such as desalination and water reuse entails a switch from large capital projects with low operating costs, to projects which require less capital, but entail much greater opex. The problem is that while capital costs can be met through debt, operating costs have to be met through increased taxation or tariffs.

Thirdly, the need to spend more money on water infrastructure is coming at a time when public finances are in increasing disarray. Governments the world over are finding it more difficult to issue additional debt or raise taxes. The final – and most important – factor in dispelling the illusion, is that it is becoming increasingly difficult to keep the lid on the demand for water, while promoting the illusion that water is cheap and plentiful everywhere in the world.

What the rest of the world understands as a global water crisis is in fact the pains experienced as a result of a forced change of habit. For urban water users, the change is about moving from a world in which the consumer is shielded from the cost of infrastructure, to one in which the consumer not only has to contribute directly to the additional cost of infrastructure through higher tariffs, but furthermore, where these higher tariffs are also used as a means of managing demand. For agricultural water users, it is more difficult to charge realistic tariffs for water. This makes it less likely that new infrastructure will receive finance. The myth of plentiful water will give way to the reality of rationing, and increased constraints on water usage. It is a change of habit which should have happened years ago, but which is all the more painful because it was not addressed earlier.

Of course not everyone really believed in Santa Claus, but it was convenient to think that someone else provided the presents, and that the glittering packages beneath the tree would not some day have to be paid for out of pocket money. It is nice to think that water is simply nature’s bounty, a generous gift to us all, even if we choose to live in Dubai or farm in California’s Central Valley. The reality is that we have long since exploited all of the water which could reasonably be considered to be “freely” available, and now we are either going to have to pay more or use less.