Steven Solomon

by Power;Civilization Water: The Epic Struggle for Wealth

  The result, compounded over time, is a colossal underpricing of water’s full economic and environmental worth. This sends an insidious, illusory economic signal that water supply is endlessly plentiful, promoting wasteful use on purposes with low productive returns. The twentieth century’s most breathtaking example was the former Soviet Union’s inadvertent destruction of central Asia’s Aral Sea—its hydraulic Chernobyl—and a symbol of the failure, after less than a century of existence, of its state experiment with communism. What started as a well-intentioned, decades-long effort to transform arid central Asia into a cotton belt that rendered the nation self-sufficient in water-thirsty “white gold” ended as an object lesson in the catastrophic side effects of misguided ecosystem reengineering, and politically, how wretchedly off course unchecked, price-insensitive industrial state planning could go.

  In the late 1950s, Soviet engineers began efforts to divert the waters from the two great rivers, the Syr Darya and the Amu Darya, the Jaxartes and Oxus of ancient history, feeding the Aral Sea, the fourth-largest freshwater lake in the world. River flows soon began to decline sharply. By the early 2000s, the Aral Sea had lost fully two-thirds of its volume and had shriveled into two small lakes so saline that its once flourishing fishing industry was decimated. The former lake bed, strewn with abandoned ships and bordered by ghost fishing villages, became a salty dust bowl whose toxic residue was swept up in windstorms over the irrigated cotton fields, crippling yields and corroding the critical infrastructures of production. Worse still, the shrinking of the lake reduced its watery capacity to moderate the local climate, which grew more extreme. Summers were hotter, winters bitterer. Reduced evaporation lessened local precipitation and shrank snowpacks. The volume of water in the two arterial rivers was thus permanently diminished, creating a self-reinforcing pattern of growing desiccation and eroding soil fertility. In the end Soviet planners’ stubborn unresponsiveness to environmental signals and misvaluing of water resulted in the loss of everything—drastically reduced cotton output, decimated fishing industry, and a badly depleted environment less habitable by productive society.

  A similar fate befell sub-Saharan Africa’s immense Lake Chad from the 1970s when uncoordinated dam building, irrigation diversions, and land clearance by bordering countries dried out the lake’s nourishing river flows, wetlands, and groundwater. This both accelerated and exaggerated natural climate cycles and resulted in the shocking disappearance of 95 percent of the lake’s surface area within only two generations and its replacement by widening desertification. Myriad other locations today are suffering less-pronounced microclimatic changes as a result of upsetting the natural rhythms of their local water ecosystems.

  By far, man’s most egregious waste of water came from the distortions caused by the chronic underpricing of water for irrigation. Irrigation farmers in Mexico, Indonesia, and Pakistan paid little more than 10 percent of the full cost of their water. Because Islamic tradition held that water should be free, many Muslim countries charged little or nothing except partial delivery costs in some of the driest parts of the world. American government dam water subsidies were grandfathered upon a small number of farmers who cultivated a quarter of the irrigated cropland in the arid lands of the West. Inefficient flood irrigation is still subsidized in many water poor regions, even where sprinkler and drip methods are viable alternatives. These subsidies were so lavish that the farmers grew water-thirsty, low-value crops like alfalfa in the middle of the desert, while more productive, fast-growing industries and municipalities alongside them paid eye-popping premiums to obtain enough water. China’s postwar state planners misplaced many water-intensive industries and urban metropolises in the water-short north, where they eventually were forced to compete for water with the region’s vital grain farming.

  Underpriced water is also a disincentive to urban conservation. Through leaky infrastructure, thirsty Mexico City loses enough water every day—some two-fifths of its total supply—to meet the needs of a city as large as Rome. The world faces a trillion-dollar-plus water infrastructure deficit in the years immediately ahead just to patch the leaks.

  Water’s peculiar treatment in economic society was famously contemplated in the eighteenth century by Adam Smith. In The Wealth of Nations, he pondered, “Nothing is more useful than water; but it will purchase scarce anything; scarce anything can be had in exchange for it.” Smith sought an explanation for the “diamond-water paradox,” one of the well-known dilemmas so beloved by economists as a means to explore the boundaries of economic theory: Why was water, despite being invaluable to life, so cheap, while diamonds, though relatively useless, so expensive? Smith’s answer was that water’s ubiquity and the relatively easy labor required to obtain it accounted for its low price. His theory was superseded within mainstream economics in the late nineteenth century by a more refined explanation. Water’s price was determined by a sliding scale based upon its availability for its least valued uses, say, for example, watering lawns, filling swimming pools, quenching the thirst of wildlife, or, until the environmental awakening of contemporary times, recharging ecosystems; its premium rose as it became scarce for its most precious uses, reaching its zenith as priceless drinking water. A half century before Smith, Benjamin Franklin, with his characteristic pragmatism, had cut through the theoretical musings to the essence of the water dilemma in his Poor Richard’s Almanac: “When the well is dry, we learn the worth of water.” In the new age of water scarcity, in effect, the global well is starting to go dry. The worth of water is rising to its highest marginal utility value and to reflect Smith’s original observation that nothing is more useful.

  For the first time in history, the fundamental economic and political rules governing water are starting to be transformed by the power of market forces. Under the duress of scarcity, the iron laws of supply and demand graphically described by Franklin are propelling the market economy’s expansive, profit-seeking mechanisms to colonize the realms of water. Beckoning bonanza profit opportunities have set off a worldwide scramble to control water resources and infrastructures, and to commercialize water as an ordinary commodity like oil, wheat, or timber. Bottled water is by far the world’s fastest-growing beverage, with global sales of over $100 billion increasing at 10 percent per year and reaping handsome profits for corporate giants Nestlé, Coca-Cola, and Pepsi-Cola; the two latter in the United States sell high-tech filtered and treated common tap water from Queens, New York, and Wichita, Kansas, and elsewhere under the Dasani and Aquafina brand names, respectively, at a 1,700 times markup over public tap costs, more than their famous water-based, sugared soft drinks. Privatized management of water utilities is another huge global sector, as is wastewater services, dominated by corporate multinationals. In total, water is a fast-growing, highly fragmented, competitive, $400 billion per year industry. Specialized water investment funds have been launched on Wall Street. Before its ignominious collapse in 2001, Enron had been promoting a scheme to trade water rights as it traded energy in California. Many cities, such as New York, which had never curtailed water service for nonpayment, have been considering ways to turn off the faucet to force collection of many millions of dollars in delinquent water bills.

  Subjecting water to the discipline and productive investment of market forces has enormous capacity to stimulate badly needed efficiency gains and innovations. But water is too precious to human life—and too politically explosive—to be left to the merciless logic of market forces alone. Indeed, warning shots have been fired in high-profile conflicts in India, China, Bolivia, and elsewhere in which international corporations have been compelled to close or make costly modifications to their local operations. Whether the commodification of water ultimately leads to efficiency gains that ease water scarcity or results instead in an unregulated regime of water pricing and allocation that condemns the water poor to choose between desiccated, unhealthy lives and desperate remedies, depends on the terms by which societies choose to inject market forces into t
he traditional, public realm of water.

  The age of water scarcity poses a special threshold challenge for Western liberal democracy: whether such societies can artificially graft a new, effective mechanism that fully prices in the economic costs of maintaining sustainable water and other environmental ecosystems onto the market economy’s historically prodigious processes of wealth creation. Adam Smith described how the market’s unseen “invisible hand” caused individuals’ self-interested, competitive pursuit of profit to simultaneously, as a wholesome by-product, maximize wealth creation for the entire society. Yet the market has glaringly failed to evolve any corresponding invisible green hand to automatically reflect the cost of depleting natural resources and sustaining the total environmental health upon which an orderly, prosperous society ultimately depends. Twice in the twentieth century Western democracies had successfully adjusted to catastrophic market failings through state-led interventions—the trust-busting of Teddy Roosevelt and the progressive movement in the early 1900s, and the New Deal, welfare state response to the Great Depression in the 1930s. Each intervention altered the rules governing the relationship between the private and public realms. In each instance, the market economy’s productive power was reinvigorated, helping sustain the West’s global leadership. A third adaptation in the unspoken liberal democratic compact between markets and governments is needed for such a new mechanism to thrive.

  Every society faces the core question in the age of scarcity of where its increased freshwater supply will come from. Societies have been responding in four general ways, often simultaneously. The first response has been to do little or nothing and await the development of some magic-bullet innovation for extracting more water supply from nature, with the impact of twentieth-century multipurpose dams, and commonly represented by such intriguing processes as seawater desalinization or genetically modified crops that can grow using less water. The second response, most evolved in the mainly water-sufficient industrialized first world, has been to increase effective supply by improving the productivity of existing water use through regulatory and market-oriented methods. The final two responses, while proactive, are mainly expedient postponements by distressed countries of their day of water reckoning. Long-distance water transfer projects that reroute entire rivers and lakes from wet regions to landscapes that are drying up from overuse are prevalent in distressed large countries with severe regional water imbalances. Similarly, many overpump shallow groundwater faster than it naturally replenishes, and if available, drill deeper at great expense and technical difficulty to mine accessible parts of the rocky, geological aquifer reservoirs accumulated by nature over the millennia inside Earth, but that once consumed are gone forever.

  The Water Have–Have-Not continuum can be usefully subdivided into four main types of societies. At the abject bottom of mankind’s water poor are the masses of destitute souls, mainly in sub-Saharan Africa and Asia, who live without effective infrastructure to buffer them against the tyrannical caprices of water’s destructive shocks and without reliable access to adequate clean freshwater to meet their basic domestic and sanitary needs. For the two-fifths of mankind living in such medieval conditions, water represents less of an opportunity for economic development than a daily struggle of life and death. Next are more-modern societies that exist in conditions of such severe scarcity, or water famine, that they typically lack enough freshwater to grow the crops needed to feed themselves, have less than 700 gallons per person each day for all their water needs, and utilize at least one-fifth of their natural runoff. Distressed countries cannot comfortably manage their own food and water needs, average 700 to 1,400 gallons daily per capita, and utilize about 10 to 20 percent of their runoff. Although such borderline nations usually can feed themselves, many are trending toward becoming chronic food importers and face other manifestations of water scarcity as well. Societies that enjoy availability of over 1,400 gallons and have to tap less than 10 percent of their national runoff are typically the world’s major food exporters. Their water shortages, in the main, are manageable through relatively modest improvements in existing water productivity alone.

  Yet as world population soars by 50 percent and world resource demand increases by a far-greater factor because of those nations transitioning from third world to first world living standards, the entire continuum is lurching sharply toward the Have-Not side of the water spectrum—a massive dry shift—that adds to the stress on everyone. Water famines are worsening in countries already in crisis, and more societies, including some of the world’s largest, are joining them. Water scarcity requires nothing less than a comprehensive reevaluation of water’s vital importance as the new oil—a precious resource that has to be consciously conserved, efficiently used, and properly accounted for on the balance sheets across the breadth of human activity, great and mundane: from public health, food and energy production to national security, foreign policy and the environmental sustainability of human civilization. In the age of water scarcity, water’s always paramount, but its usually discreet role in world history is visibly taking its place at center stage.

  CHAPTER FIFTEEN

  Thicker Than Blood: The Water-Famished Middle East

  One of the front lines of the world’s unfolding freshwater crisis is the historically water-fragile Middle East and North Africa—the heartland of Arab Islamic civilization and cradle of the ancient hydraulic irrigation civilizations that arose in the flooding river valleys of the Fertile Crescent. The politically volatile, overpopulated, dry land stretching from Algeria, Libya, Egypt throughout the Arabian Peninsula into Israel, Jordan, Syria, and Iraq, and their regional neighbors, is rife with water tensions, conflicts, and troubled states that hold the potential to combust into a full-fledged water war.

  The Middle East is the first major region in modern world history to run out of water. Country after country lacks the freshwater to grow enough crops to feed its population or to provide the basis for long-term rising living standards; per person measures of renewable water availability are widely below the minimum standard measures of scarcity and famine. The desert nations of the Arabian Peninsula and Libya, as well as arid Israel and Palestine, outgrew their internal water resources for sustainable food self-sufficiency in the 1950s. Jordan ran out of water in the 1960s, Egypt in the 1970s, and other regions more recently. The Millennium Ecosystem Assessment reported that in “the Middle East and North Africa, humans use 120% of renewable supplies.” They survive by importing growing volumes of food—virtual water—and, where available, by pumping water out of underground aquifers faster than nature can recharge them. Only the bonanza of surging oil income from the early 1970s has staved off a full-blown crisis. Oil wealth paid for the quadrupling of Middle East wheat flour imports to over 40 million tons within a single generation. For most of Middle Eastern and North African history, exploitation of subsurface water deposits had been limited mainly to the excavation of shallow wells and qanats, the horizontal tunnels of antiquity that conveyed water from inside hillsides. Oil opened a new era by facilitating the large-scale subsidization of modern pumping of deep aquifer water for irrigation.

  Yet if oil built modern Middle East society, water holds the key to its future. In the end the region cannot escape the same water-fragile geography and stream deficit that shaped its ancient and Islamic civilizations, placed a ceiling on its indigenous, sustainable population size, and ultimately influenced Islam’s abrupt decline from glory from the twelfth century. Modern engineering of the region’s surface waters began in earnest in the nineteenth century. Irrigation and cheap oil energy metamorphosed the traditional population-resource equation underlying each society. From 1950 to 2008, the population more than quadrupled to 364 million. But country after country soon began to exceed the productive limits of the region’s water resources and waterworks capabilities. With population forecast to swell another 63 percent to 600 million by 2050, the Islamic Middle East is becoming a demographic volcano. The region’s upsu
rge in violence, radical religious fundamentalism, and terrorism is likely but a foretaste of what potentially lies ahead as its water famine worsens.

  Egypt, the most populous Arab state with 75 million inhabitants in 2006 and projected to reach nearly 100 million within a generation, is being stretched to its breaking point. As it had been since the time of the ancient Pharaohs, the Nile is still by far the paramount factor governing the destiny of Egyptian society. But ever since the completion of the high dam at Aswan in 1971, how the river did so has changed entirely. The giant, multipurpose Aswan Dam utterly transformed the hydrology of the Nile from a miraculous natural phenomenon to a totally managed irrigation channel, and produced copious hydroelectricity for an underpowered nation. The dam fulfilled the dream of 5,000 years by delivering to an Egyptian leader absolute control over the Nile’s domestic flow and the power to insulate Egyptians from the dreaded traumas of the river’s periodic episodes of extreme droughts and floods. Yet for all its majestic power, the Aswan Dam has not been able to alter one other historical feature of the Nile: nearly every drop of it originates outside Egypt’s borders, while the well-being of Egyptian society depends upon consuming a vastly disproportionate share of the Nile basin’s water. Beyond upstream Sudan, the countries of equatorial East Africa’s great lake plateau provide the sources of the White Nile. By far the biggest contributor of Egypt’s water is highland Ethiopia, whose Blue Nile, Atbara, and Sobat rivers supply some 85 percent of the water, and all the silt, that arrives every June at Aswan. Throughout history, impoverished Ethiopia and the White Nile river states have sipped only a tiny fraction of the Nile’s water for their own economic development. To alleviate their grinding poverty, they are now determined to use more. In 1989, then Egyptian foreign minister and later U.N. secretary-general Boutros Boutros-Ghali summed up Egypt’s geopolitical dilemma to the U.S. Congress: “The national security of Egypt is in the hands of the eight other African countries in the Nile basin.”