First Climate,
Now Water

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thomas healey, a former assistant secretary of the Treasury and partner at Goldman Sachs, is a senior fellow at the Kennedy School of Government at Harvard University.

Published January 21, 2014.


If you doubt that the world is on the brink of life-altering shortages of fresh water, consider this example. In Yemen, 25 million people face the specter of a whole country running bone dry. Already, water supplies in this arid environment are so low that households are permitted to run their taps for only brief periods once or twice a week. The rest of the time they must rely on trucks that roam their neighborhoods, selling water like heating oil or vegetables. Streams and natural aquifers are dwindling by the day, and the water table in the capital, Sana, has dropped below sustainable levels. In rural areas, where access to clean water is most severely limited, the water crisis is morphing into a public health crisis: dengue fever, diarrhea and cholera have spread at alarming rates.

Not surprisingly, water is increasingly a source of deadly conflict among ethnic groups in Yemen, which zealously protect the meager supplies they control. And the phenomenon hardly respects borders. Indeed, tensions over the ownership and use of water are exacerbating international tensions – notably in flashpoints like southern Asia.

To be sure, the phrase "water crisis"has a faraway feel, something that happens on the other side of the world – in places like Yemen. In truth, though, water is in disturbingly short supply in developed countries, too. Think of the western United States and Australia, both of which are in the grips of devastating decades-old droughts. Unless steps are taken soon to improve the way water is managed, local shortages could cascade into a global catastrophe, reducing food supplies and undermining the health of billions.

©George Steinmetz/Corbis
Water, Water Everywhere…

How can we be short of water when there's so much? The great bulk, of course, is salty. But vast quantities of fresh water are inaccessible because they are locked in glaciers, icecaps and permanent snow cover, or are remote from human settlement. Only 0.007 percent of it is both sweet and readily accessible.

Stark signs of the global water scarcity abound. As the result of rapid, ill-planned economic development, there isn't enough water in China today to satisfy the demands for drinking, sanitation, irrigation and industrial uses like cooling power plants. Some 60 percent of China's cities are seriously short of water; water tables around Beijing and other major northern metros have dropped so low that existing wells are unable to tap them.

In Brazil and South Africa, households and businesses suffer frequent brownouts because there isn't enough water to drive the turbines of hydroelectric plants at full capacity. Arguably most ominous, the glaciers of the Himalayas and Tibetan Plateau, which cover parts of five countries and provide the melt each spring that swells the great rivers of the region, are imperiled. Almost one-fifth of the Indian Himalayas' ice coverage has disappeared since 1960. And computer models predict that glaciated areas across the Himalayas will shrink by another two-fifths over the next half century.

Americans will certainly not be spared from serious shortages. Tim Barnett, a geophysicist with the Scripps Institution of Oceanography, estimates that Lake Mead, the great reservoir formed by the Hoover Dam that supplies water to millions of desert farmers and residents in Nevada and Arizona, could be dry by 2021.

Why Now?

As the world's population more than doubled over the past half century (to 6.7 billion), water use roughly tripled. Population growth is clearly slowing and may peak as early as 2050 at eight billion, rather than topping 10 billion in 2100, as the United Nations projected two years ago. But even in the most optimistic projections, most of the growth will be concentrated in countries that are already water-starved and can ill afford to develop new sources.

In any event, the demand for food – in particular, for animal products produced with grain – is bound to rise more rapidly than the population, putting disproportionate pressure on water supplies. Already, farmers account for more than 70 percent of water use (compared with less than a fifth by industry and a tenth for household use).

Another disaster in the making is inextricably linked to water scarcity: global warming. Climate models are not sufficiently fine-tuned to predict the precise impact of atmospheric warming on complex (and delicate) hydrological systems. We know with near certainty, though, that the resulting changes in weather patterns will alter rainfall, river flows and freshwater reserves significantly. Some areas of the world will grow wetter as a result of climate change, increasing the prospect of flooding; others will become dryer and serve as possible flashpoints for drought, crop failure and widespread famine. It's also safe to conclude that those areas of the world where water is already scarce, like the densely populated countries cradling the Himalayas, are going to be subject to the most traumatic changes.

Even if global warming doesn't reduce average rainfall, it will put tremendous pressure on water management by intensifying drought-flood cycles. On the one hand, reservoirs don't have the storage capacity to get people through prolonged droughts. On the other, megastorms overwhelm flood control systems. Moreover, global warming is forcing glaciers around the world to recede at an alarming rate. This increases the prospect of more extreme drought-flood episodes since snow and ice have served through the ages as natural regulators, storing water in high-precipitation winters and releasing it in low-precipitation summers.

Decaying Infrastructure

For 1.1 billion people around the globe – most of them in poor countries – the issue of water scarcity is dwarfed by the issue of water safety. At the root of the problem of securing access to potable water is inadequate infrastructure for storage, treatment and distribution. Even in countries with well-developed distribution and sanitation infrastructures, deteriorating systems waste staggering amounts. Britain, for example, squanders almost 200 million gallons of water a day because of aging water mains and frequent raw sewage overflows from antiquated treatment systems. In the United States, hundreds of thousands of miles of underground water pipes laid generations ago are in disrepair and will require an investment of $250 billion to $500 billion over the next 20 years to be brought up to standard.

The problem is most acute in countries that are rapidly urbanizing – and lack the capital and technical capacity to build large-scale infrastructure to bring clean water to population centers. And when these facilities are built, governments too often lack the money to maintain them. In New Delhi, fully a third of the city's water supply is lost to cracked and aging pipes.

Aging infrastructure is becoming a public health hazard even in some places that have the financial resources (if not the foresight) to keep up infrastructure. According to the EPA, more than 3.5 million people became ill from microorganisms and toxins released by faulty sewage systems in the United States in 2006.

One hopeful sign in the United States: financially struggling local governments are turning to the private sector for help in repairing decaying water systems. Globally, cooperation between the public and private sectors, as well as between national and regional authorities, could play the same role.

Water Pollution as a Global Threat

Even sound distribution and treatment infrastructure, however, is no guarantee of safe water. Too often, watersheds become polluted with industrial chemicals, pesticides, microbes and heavy metal salts leeched from soil by agricultural runoff. Some two million tons of human and industrial waste are dumped daily, and a portion of it threatens aquifers and surface-water sources. Indeed, nearly 80 percent of the world's population lives near rivers in which pollution is a clear and present danger to both human and aquatic life.

Startlingly, rivers in the developed world are experiencing some of the highest threat levels, at least in part because of strategic missteps. "We know it is far more cost-effective to protect these water systems in the first place,"said Charles Vorosmarty of the City University of New York. "The current emphasis on treating the symptoms rather than the underlying causes makes little sense from a water security standpoint, a biodiversity standpoint or even an economic standpoint."

The metaphoric rubber hits the road where potable water and sanitation converge. Without adequate supplies of water for waste disposal, cross-contamination of drinking and bathing water by untreated sewage can occur. According to the Water Supply and Sanitation Collaborative Council, a multinational donor, lack of sanitation is the world's biggest cause of infection; 88 percent of cases of diarrhea worldwide are attributable to inadequate isolation of potable water and sanitation systems.

Ian Dagnall/Alamy
Left: Hoover Dam, November 1998. Right: Hoover Dam, July 2013
Conflict Trigger

Dwindling or disappearing reserves of freshwater are creating flashpoints both between nations and within them, raising strategic security concerns. Maude Barlow, the chair of the nonprofit Food and Water Watch advocacy group, estimates that 200-plus rivers and 300 groundwater basins and aquifers are shared by two or more countries. Examples abound:

  • Israel, Jordan and Palestine all rely on the Jordan River, which is controlled by Israel;
  • Turkey's plans to build dams on the Euphrates River brought it to the brink of war with Syria in 1998;
  • The Brahmaputra River has been a constant source of friction between China and India;
  • Flooding along the Ganges River caused by melting glaciers in the Himalayas is precipitating the contentious migration of displaced citizens of Bangladesh to India.
Is It Fixable?

Even a cursory look suggests that the water crisis is in part a crisis of management: those who control access have inadequate incentives to use it in ways that reflect its highest value. And because agriculture is by far the world's biggest consumer of water, it provides the most fertile opportunities for low-cost gains. Indeed, modest investments in more efficient irrigation practices could yield vast savings. For example, more than half the irrigated agricultural land in the United States is served via gravity-flow systems, which result in water loss of up to 50 percent through evaporation, inefficient water delivery to the crop-root zone and runoff at the edge of fields.

But there is clearly some low-hanging fruit to be gathered in other environments, too. Capital-starved countries, for example, can engage low-cost technologies like rainwater-harvesting systems, which capture water from roofs and store it in underground tanks. And repairing aging urban distribution systems could postpone the day when rapidly growing cities are forced to compete with farmers for limited supplies. In wealthier countries, improved water management could mean far more ambitious investments to offset greater weather volatility – for example, mass storage facilities that could be filled when water is episodically plentiful and tapped when it wanes.

Technology could also provide effective, longer-term solutions for managing scarcity. Australia, which recently suffered the worst drought in its history, is a case in point. The government has launched a five-year $1.3 billion project in northern Victoria state (home to Australia's capital, Melbourne) to refurbish the region's century-old irrigation system with computer-controlled channels that are expected to curtail waste, currently as high as 30 percent.

Note a constant, if implicit, theme here: coming to grips with growing water scarcity will require changes in the government's role – in some cases increasing intervention, in others decreasing it in order to allow private markets to determine allocation. For one thing, water markets are riddled with "externalities": my use of water raises the cost of water to you. And in many cases, those affected are hundreds or thousands of miles away.

Efficiency gains will thus require greater cooperation across political jurisdictions and greater regulation within jurisdictions. In many places, for example, there is no regulation of the use of aquifers: anybody is welcome to tap into a common underground source. In many places, for that matter, aquifers are poorly mapped and little is known about their sustainable supply capacity.

Cross-border regulation can be maddeningly difficult, but the prize is often worth it. The Indus Waters Treaty was signed in 1960 between India and Pakistan with the goal of adjudicating conflicts over the allocation of water between two deeply hostile nations. Since then, the joint Indus River Commission has provided an effective mechanism for consultation and conflict resolution. The key here seems to be taking cross-border disputes out of the abstract nationalist context and focusing on practical resolutions that fit the needs of the direct stakeholders on both sides.

But the cases for deregulation and/or privatization can be equally compelling. Water is all too often priced according to its historic cost. Thus, farmers in the California and Arizona desert, who pay almost nothing for water, find it profitable to grow low-value animal fodder as well as "monsoon"crops like rice that are best left to Vietnam and Thailand. In a better world, water prices would be determined by supply and demand, leaving it to the market to decide what crops are grown where and with what sort of water-conserving technologies.

Of course, market-based reforms produce losers as well as winners, at best complicating the politics of change, at worst preventing it entirely. But there are ways around the problem. For example, rather than charging more to farmers as a means of changing their behavior to reflect the market value of water, one can approach the same outcome by making it both legal and easy for farmers to sell their rights to the water to the highest bidders. That's an injustice in some people's view (why should the windfall go to the farmers?), but is surely better for society than the status quo stalemate, in which the farmers waste much of their bounty.

By the same token, one can tinker a bit with price incentives to produce relatively efficient outcomes that seem fair and generate less political pushback. In water-starved Las Vegas, for example, officials were eager to create market-based incentives for encouraging conservation. But to give those with modest incomes a break, they increased prices for low-volume users by just 17 percent, while raising prices for greater use by some 30 percent.

©Nai Jihui/Xinhua Press/Corbis
Out of Mind…

Managing water deficits requires political will and policy flexibility – no small challenge. Indeed, the challenge may not be possible to meet without greater public awareness of both the stakes and the implications of alternative policy approaches. Getting from here to there is plainly an uphill battle because most people in the developed world have no experience with the risks of shortages in terms of health and economic dislocation.

Public debate with the intensity of what is now taking place around global warming will be needed to give the crisis the sense of urgency required to produce the momentum for action. What's needed, I suspect, is an initiative for water akin to that of the Intergovernmental Panel on Climate Change, one that is science-based and highly credible. After all, as with climate change, the alternatives to broad-based reform are unthinkable: if the world continues to treat water as a costless resource, there will be big trouble ahead.

main topic: Environment
related topics: Economy: Global, Policy & Regulation