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Sustainable water exports possible with reformed Canadian water policies

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Release Date: June 16, 2010

VANCOUVER, BC—Canada should look closely at the benefits and opportunities presented by bulk water exports and move beyond the fear mongering and protectionism that has long tainted the issue, concludes a new report from the Fraser Institute, Canada’s leading public policy think-tank.

“Canada is blessed with abundant supplies of unspoiled surface water and groundwater, and bulk exports can be undertaken in an environmentally sustainable way,” said Diane Katz, Fraser Institute director of risk, environment, and energy policy and author of Making Waves: Examining the Case for Sustainable Water Exports from Canada.

According to the study, misconceptions about water supply and water quality have inhibited a fact-based consideration of the economic and public health benefits that could result from water export, not only for Canadians, but also for water-starved people around the world.

“Opponents argue that commoditization of water violates human rights. But if that’s the case, what possible justification can there be for keeping a portion of Canada’s surplus water from those in need?” Katz said.

Making Waves: Examining the Case for Sustainable Water Exports from Canada provides an overview of global water supplies and Canada’s hydrology, including current patterns of water use, as well as a review of the laws and regulations that govern the resource. Water diversions and transfers, both past and present, are summarized, as are the benefits of and challenges to water exports. The study concludes with recommendations for policy reforms.

Of particular importance is the study’s finding that the rates most Canadians currently pay for water fail to cover the actual costs of supplying the water, including the operation and maintenance of water lines and wastewater treatment.

“Canada has the third largest reserves of renewable fresh water, after Russia and Brazil. But artificially low residential and industrial water rates do not encourage conservation or the best use of this resource,” Katz said.

“International trade in bulk water would lead to responsible pricing, encouraging conservation and increasing the overall sustainability of Canada’s water supplies.”

The report also highlights the extensive inefficiencies of Canada’s water infrastructure, the majority of which is government owned and operated. For example, up to 30 per cent of total water entering supply lines is lost through leaks; in older systems, the loss can be up to 50 per cent.

Although the profit potential for bulk water sales remains slim at present, largely due to the high costs of transport, easing export restrictions would increase investment in new technologies. Consequently, water exports would stimulate economic growth for both the private and public sectors with royalty and tax payments, as well as job creation. The added export revenues could help cover the burgeoning costs of fixing Canada’s deteriorating municipal water systems, the repair estimates for which routinely exceed $80 billion.

The study also notes that natural resource development is already a mainstay of the Canadian economy, generating 12 per cent of GDP—$147.5 billion—in 2008.

“There are both humanitarian and economic grounds for Canada to consider water exports,” said Katz.

“Where clean water is scarce, the human toll is tragic. Experience elsewhere suggests a variety of means by which water exports can be undertaken in sustainable ways.”

The report makes several recommendations:

  • Improve public understanding of water issues. Government web sites, curriculum materials, and other documents containing inaccuracies about Canada’s water resources should be removed and replaced with science-based facts.
  • Repeal prohibitions against water exports. Myriad federal and provincial statutes and regulations effectively bar water export. These should be eliminated and replaced with institutional mechanisms for assigning private water rights.
  • Conduct groundwater mapping and freshwater inventories. An accurate assessment of surface water and groundwater locations and volumes is needed to determine the sustainable allocation of water for trade and/or export. The availability and reliability of water inventories vary across the provinces. A centralized private-sector database should be funded by reprioritizing current expenditures and imposing user fees.
  • Determine sustainable water levels. Establish a process by which water rights are defined as a portion of water volume based on specific environmental standards, and adjusted periodically for natural variations in water yields. The calculations should account for both in-stream and out-stream uses and historical variations, and be determined by an independent third party.
  • Reform public subsidies of water use. Artificially low residential and industrial rates should be phased out in favour of full-cost recovery. As for agriculture, irrigation subsidies should require adoption of water conservation measures such as water-sensor technology.

“Bulk water exports can improve water valuation and conservation in Canada, as well as help people in water-poor regions around the world. Canadian governments need to enact water policies based on facts, not on the basis of protectionism or unfounded claims of environmental destruction,” Katz said.



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