November 2007: Continental Water Follies

Claim that Canada can share “surplus" water is a myth
November 1, 2007

The “Big idea” that Canada can generously share its water the same way it now shares energy on a continental scale is generally based on four false assumptions: 1) that Canada has lots of “surplus” water; 2) that Canada has no water problems; 3) that Canada maintains excellent water data; and 4) that Canada can get fabulously rich selling its water.

These myths are debunked below.

1. Canada has an average supply of water for its size.

The media often repeat the myth that Canada has a quarter to half of the world’s water resources. This statement is grossly inaccurate. First, it fails to distinguish the difference between ecological capital (the amount of water Canada inherited from ancient glaciers that is non-renewable) and ecological interest (the amount of water annually replaced by rainfall that is available for use). Ninety-nine percent of the water in the Great Lakes, for example, is a glacial inheritance and a non-renewable resource.

Second, economists tend to reduce water needs to per capita availability and forget that fish, trees and ducks drink water too. Given that Canada has 7% of the world’s land mass, Canada has but a fair share of renewable global water supplies: 7%. That’s slightly more than the United States with 6.5%. (In contrast, Mexico has 1% of the world’s supply.) Russia and Brazil have nearly twice as much renewable water as Canada. By global standards, then, Canada has an average supply of freshwater and no surplus.

General A.G.L. McNaughton, who co-chaired the International Joint Commission in the 1950s, expressed it best: “It is nonsense to talk about a surplus and it’s dangerous folly to even contemplate selling water. All our water resources can be translated into growth somewhere. Let that growth take place here in Canada.”

In addition, more than half of Canada’s water flows north into semi-arid Arctic regions and is inaccessible. Water resources along the U.S. border, where most Canadians live, account for only 2.6% of the world’s renewable supply. Many of these rivers and lakes are now over-allocated and in some cases are grossly polluted.

2. Canada has mismanaged its water capital.

Canadians may revere their water resources as national icons, yet in reality their governments (and arguably the Canadians who elected them) have actively abused them. Due to sustained federal, provincial, and municipal neglect, Lake Winnipeg and the St. Lawrence River, for example, are on the verge of ecological collapse from agricultural pollution and climate change.

Blue-green algae erupted on one-quarter of Quebec’s lakes this year (2007) due to pollution. Drought, population growth, and disappearing glaciers have reduced summer flows in many western rivers by 40-to-70%. In 1999, one in four Canadian municipalities reported having experienced water shortages in the previous five years.

Canadian enforcement of water laws has become a source of international embarrassment. In 2000, the Ontario Ministry of Environment recorded 1,900 pollution violations by 200 corporations, yet laid only four charges. Environment Canada noted 3,000 documented violations of federal laws by pulp mills, but proceeded with only seven prosecutions. An exhaustive 390-page investigation by the North American Commission for Environmental Cooperation (an agency under NAFTA) found that Environment Canada repeatedly failed to enforce the pollution prevention provisions of the Fisheries Act and the provisions of the Pulp and Paper Effluent Regulations against 10 pulp and paper mills in Ontario, Quebec, and the Atlantic provinces.

“If there is a chasm between environmental laws and their enforcement in the United States, then in Canada there is a Grand Canyon,” wrote David Boyd recently.

3. Canada has kept poor records on its water bank and has no water policy.

Canada hasn’t had a coherent water policy since the 1987 Federal Water Policy, which actually banned water exports, but was tabled and then abandoned. Due to financial cutbacks to Environment Canada’s water program, the department failed to release national estimates of water use for 2001, breaking a five-year reporting cycle established in 1971. Funding for federal and provincial water research, once a source of national pride, has declined so dramatically in the last 30 years that water ecologist David Schindler told the Canadian Senate in 2005 that “no one is minding the store.”

Government documents acquired under the Freedom of Information Act by Ottawa researcher Ken Rubin and dated January 2006 confirm that Canada maintains poor water records and has an incoherent policy. Although Natural Resources Canada (NRCan) documents reveal that “Canadians are currently facing serious groundwater quality and availability issues... there is no visible federal water policy agenda nor a common agenda for the whole country.” These classified documents also confirm that “the absence of a common strategic federal vision for freshwater” is a “limiting factor for ensuring the long-term sustainable development of the resource.”

Nearly a third of all Canadians (10 million people) depend on groundwater as their primary source of drinking water. Yet only three of eight key regional aquifers have been mapped. Canada does not even know to what degree aquifers in Saskatchewan are connected to the depleted Ogallala Aquifer. One NRCan memo notes that “the current state of knowledge of the resource is inversely proportional to its importance.” NRCan now estimates that only 11 of the 30 key aquifers will be assessed for “volume, vulnerability and sustainability by 2010.”

At this current rate of progress, it will take another 28 years to develop a basic National Inventory of our groundwater resources. Such data poverty raises a basic question: how can Canada even contemplate sharing water resources on a continental scale when the federal government doesn’t even know what’s in the national water bank account?

4. Canada won’t get rich exporting water.

Exporting water is a money-losing game, for the simple reason that it would subtract from existing economic and ecological services that are provided by freshwater. “Canada’s freshwater resources are less available than we think,” according to Gilles Rheaume, vice-president of policy for the Conference Board of Canada.

Canada’s trade economy is deeply dependent on the quality and quantity of its water. Almost every Canadian product exported abroad (cattle, grain, hogs, automobiles, aluminum, electricity, wood or oil) contains enormous volumes of embedded water or what economists call “virtual water.” Canada now exports more virtual water than either China or India in its trade goods. (About 15% of the water used in the world is exported in virtual form, largely because of cheap oil.) In addition, two out of every three litres of the nation’s freshwater withdrawals are used for the generation of electric power, an economic venture that is already threatened by climate change.

Given the current volume of Canada’s virtual water exports (272.5 x 109 m3), exports of real water can only adversely affect the economy. University of Western Ontario engineer Slobodan Simonovic has calculated that “water export” from the St. Lawrence River Basin, for example, would reduce “the available water for consumption by different water use sectors.” Exporting water simply means less water at home to create jobs and less water to sustain ecological services provided by rivers and lakes necessary for life.

Peter Gleick, one of the world’s foremost experts on water issues, recently noted that “water availability and quality will be increasingly a significant driver of national/regional competitive growth in coming years.” Nations and regions that allow water exports would be losing this critical advantage.

The issue of royalties or public rent from water sales also demands attention. A 2005 analysis by the federal government concluded that Canada wouldn’t get rich trading water. Because of the high cost of transporting bulk water by supertanker, water royalties would “have to be small.” The number of jobs created would be minimal and would be largely confined to the maintenance of ships or pipelines.

Water, in other words, could become another cheap raw resource give-away, much like oil. No one would argue that oil exports are not a profitable venture for Canada. But so far the benefits have largely accrued from investment activity in the tar sands as opposed to direct royalties from the resource, bitumen. Unless it is upgraded, bitumen has half the value of conventional oil. By industry standards, Alberta and Canada have priced the tar sands resource at 13% of global norms. The U.S. General Accounting Office recently noted that Canada’s oil royalties in the tar sands are lower than those in Alaska and Louisiana.

Last year, Murray Smith, Alberta’s representative to the United States, told a high-profile oil-patch audience that “the royalty structure for oil sands is we ‘give it away’ at a 1% royalty structure.” Roland Priddle, former chair of the National Energy Board, promoted this “give-it-away” approach to finite resources at a Texas energy gathering sponsored by the Canadian Consulate-General last year: “Where else can you purchase in place oil (well, bitumen) for one cent a barrel?”

Water and the SPP

The tri-partite North American Security and Prosperity Partnership (SPP) has established a continental agenda for political integration that is slowly changing the lives of every Canadian. The SPP, largely driven by the interests and needs of its dominant player, the United States, has already embarked on an ambitious agenda to integrate the continent’s customs, transportation and security networks. In the absence of domestic Canadian policy, the SPP has also accelerated energy integration and undermined national action on climate change, for the benefit of the dominant trade partner. To date, successive Canadian governments have actively sacrificed water resources in the name of rapid tar sands development and North American energy integration.

Many SPP documents assume that a continental water policy is just as desirable as a continental energy policy, which is now a fait accompli. This explicit assumption raises two questions:

  • Has the move towards a continental energy policy jeopardized our own energy security?
  • And can continental water policy, including bulk water exports, be far behind?

Water and energy are inextricably linked on this continent. Yet these critical resources share important differences. Over the years, a majority of Canadian voters have uniformly expressed hostility to water export schemes. The reasons, explains Frank Quinn, one of Canada’s leading experts on the issue, are self-evident: “Water is an economic good, but it is so much more than that: it is the basis of all life, not just human. It is integral to the health and beauty of Canada’s landscape. It is the key to our past and future. If this, the last and greatest natural resource still in Canadian hands, is traded away, we are a lesser people, sovereign in name only.”

In response to public pressure, in 1999 the federal government and its provincial partners adopted what on paper is a credible public position on water exports. The federal government recognized the need to keep water within Canada’s five natural drainage basins for a number of reasons: to sustain flows, to prevent the transport of invasive pests and diseases, to protect biological diversity, and to ensure sustainable use of water for future generations. But concrete action has been limited to the 2002 prohibition on the bulk removal of water from boundary water basins, and provincial legislative bans that probably will not stand up to court challenges.

At the same time that the federal government was prohibiting the bulk removal of water from boundary water basins, it was pursuing a private water agenda. It has rarely condemned water export proposals and has actively investigated the possibilities of pricing water for export. The federal government has also failed to clarify the status of water in its natural state under two free trade agreements. As a consequence, water’s status under liberalized trade, let alone the SPP, remains “uncertain.”

In 2005, former Alberta Premier Peter Lougheed was quoted in the Globe and Mail as saying that “we should not export our freshwater—we need it and we should conserve it. And we should communicate to the United States very quickly how firm we are about it.”

Political scientist Michael Byers recently expressed this sentiment more bluntly: “Unless we stand up for our own interests, Canadian freshwater could soon be irrigating crops, watering golf courses, and filling backyard swimming pools in the southwestern United States. It is time to dissuade Americans of the notion that we’re going to rescue them from the consequences of their short-sighted, profligate ways by allowing them to mess with our environment, too.”

This need not be a confrontational issue. Whenever consulted on the question of inter-basin diversions, both U.S. and Canadian citizens routinely arrive at the same conclusion: over the long term, everyone is better off living within their own water budget, which means keeping water in its natural drainage basins. Local water governance, when done well, protects living rivers and lakes. In 2005, 30 million American and 10 million Canadian inhabitants of the Great Lakes Basin joined together and successfully convinced their state and provincial governments to prohibit removals of water from the Great Lakes Basin, with minor and well-defined exceptions.

Reaching an appropriate accommodation with our largest trading partner will take bold changes in Canadian policy and leadership. We will need to renew our nation’s commitment to water research. We will need to demand transparent debate about water management proposals. We will need institutions and individuals who can bargain effectively with an aggressive neighbour. We will need to work with the American people and their political leaders to show that their own long-term water security is best served by national and local solutions. And we will have to lead by example by managing our waters as though they mattered for future generations of Canadians, as well as for the fish and other creatures that live in or are dependent on them. But at this critical juncture in the debate on deeper North American integration, our water capabilities and policies resemble a rudderless boat.

The issues raised by rapid continental economic integration are complex and cannot be resolved in this essay. But if Canadian water policy is going to be defined in Canada, by Canadians and for Canadians, four specific proposals must be considered:

  1. The SPP process should be opened to full public scrutiny and democratic debate.
  2. The federal government should immediately assess and annually report on the full impact of the continental integration of oil, gas, and electricity on the nation’s water resources (a form of virtual water export).
  3. The Canadian government should immediately inform the governments of the United States and Mexico that bulk water removals from Canada’s major drainage basins will not be permitted and that the topic of water export will be excluded from all future SPP or related discussions.
  4. Finally, the Canadian government should pass federal legislation obliging it to step in and prevent the bulk removal of water from any of Canada’s five major drainage basins in the event that any province is either unable or unwilling to do so.

(Andrew Nikiforuk is a Calgary-based journalist and an award-winning business and environmental reporter. This article was excerpted from a longer and full sourced and referenced paper—On the Table: Water, Energy and North American Integration—which he recently wrote for the University of Toronto’s Munk Centre for International Studies.)