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Created: Oct 20, 2007
Updated: Nov 04, 2008

Jo-Shing Yang

watercrises
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watercrises 14 days ago

This article appeared in Counterpunch (an online journal) on June 21-22, 2008 (link: http://www.counterpunch.org/yang06212008.html). One correction: Instead of "In early 2008, the UN Environment Programme published a rather grim world irrigation map to illustrate unsustainable water withdrawals on all continents," should read "In 2005...."

 

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Weekend Edition
June 21 / 22, 2008

 

The Converging Food and Water Crises

 

 

Dying of Hunger, Dying of Thirst


By JO-SHING YANG

 

In recent months worldwide food crises and food riots have dominated newspaper headlines and captured the attention of global media and political leaders as soaring food and commodities prices plunge an estimated 1 billion people worldwide deeper into poverty and on brink of malnourishment and even starvation—then forcing these masses of distressed people onto the streets to protest. Finally world leaders are paying attention to the plight of the chronically poor and now talk of “food crises” that ravage the lives of the desperately poor. By now, most people know that the reasons for higher food prices are higher petroleum prices (which affect oil-based agricultural inputs such as fertilizers, pesticides), higher food-transport prices, diversion of corn and other food crops to produce ethanol and other biofuel, more food demand from the emerging middle class of China and India (and their desires to move up the food chain, to eat more meats, eggs, and dairy), and extreme weather events associated with global warming.  Few people have linked the food shortages to the water shortages—that is, aside from a few articles written by water analysts and experts (for example, Fred Pearce linking water scarcity to food crises).

 

After big investment banks and speculators on Wall Street have hiked up food, oil, and other commodity prices, they are eyeing the next major commodity: water. Goldman Sachs is urging investors to focus on high-tech end of the $425 billion global water industry because water is the “petroleum for the next century.” Potential areas of investment for Wall Street include manufacturers or servicers of water-filtration equipment, ultraviolet disinfection, membrane-based desalination technology, automated water meters, and other specialized niches in wastewater reuse (The Telegraph, June 6, 2008). Goldman Sachs also published a graph called “Water sector outperformance relative to S&P500” showing trends from 2000 to 2008, with water-sector index soaring to 400 while S&P500 stagnated at or below the 100 level (values rebased to 100).

 

There is a converging food and water crisis in the making, with eight extremely troubling and interrelated trends in water, as follows:

 

  • Global warming: extreme weather events and their destructive consequences, climate uncertainties, and volatilities in precipitation

  • Depleting groundwater and aquifers all over the world due to population growth, increasing and wasteful agricultural irrigation, and largely irreversible groundwater pollution

  • Increasing surface water pollution worldwide which makes existing groundwater unusable without substantial treatment (including global increase in chemical usage, from farm chemicals to industrial chemicals and household products)

  • Privatization, corporatization, and globalization of water resources (the so-called water grab by large multinational corporate interests)

  • Crumbling water infrastructure, poor water management by municipalities, and lack of public investment in water and wastewater treatment globally

  • Global inflation of commodities’ prices and their effects on municipal water and wastewater treatment worldwide

  • Rising demand for water in agriculture through consumer demand for water-intensive foods higher on the food chain (e.g., meats, eggs, and dairy). It has been estimated that the total global meat supply was 71 million tons in 1961 and 284 million tons in 2007…and rising (the New York Times, 2008).

  • Declining and weakening of governments’ environmental regulations and enforcement to address the issue of pollution, which means that treating the polluted water to make it potable and usable in agriculture will be costly

 

Depending on the region being examined, any one or a combination of these factors will affect fresh water supplies, delivery, and treatment in the coming years. They will also affect agriculture and food production for billions of people worldwide. Just focusing on two factors of global warming and aquifer depletion, as follows, gives us enough worries about sustainability and the future of agricultural production.

 

Some facts:

 

  • To produce 1 ton of grain, it takes 1,000 tons of water. Producing chicken takes approximately 32 times more water than growing the same amount of wheat; the pork-to-wheat ratio is 65:1, and beef-to-wheat ratio is somewhere between 100:1 to 200:1.

  • By 2015, almost half of the world’s population, more than 3 billion people, will live in country that are “water-stressed” and have access to less than 1,700 cubic meters of water per capita per year, according to the CIA. Back in 2001, the CIA also predicted that an estimated 80% of water is allocated to agriculture in developing countries, an unsustainable proportion, and by 2015, many countries will be unable to maintain their levels of irrigated agriculture—resulting in a steep reduction of agricultural production.  We are already witnessing this trend currently in China and India.

  • In early 2008, the UN Environment Programme published a rather grim world irrigation map to illustrate unsustainable water withdrawals on all continents.

  • Worldwide, an estimated 4,400 children under the age of five die each day due to drinking dirty water and poor sanitation, and diarrhea kills five times more children annually than HIV/AIDS, according to the United Nations. With the coming water crises, significantly higher childhood mortality rates can be expected worldwide.

Water is the basis of agriculture—not just in growing food, but also in processing food. Water is the foundation of modern cities and urban sanitation systems—from our indoor plumbing to centralized wastewater-treatment plants. Water is the basis of industries and manufacturing. Water sustains nature and wildlife. In essence, humanity can live without oil—albeit more primitively—but humanity cannot survive without water. Despite its importance, rarely has the issue of water been integrated into our discussions of food crises, except when we briefly talk about global warming and extreme droughts that affect crop-growing regions. Interviewed for the New York Times (June 2, 2008), Barbara Helferrich, a spokeswoman for the European Union’s Environment Directorate, said, “Water will be the environmental issue this year — the problem is urgent and immediate. If you already have water shortages in spring, you know it’s going to be a really bad summer.” A UK-based environment writer Fred Pearce recently wrote that water shortages are a major cause of faltering crop production which results in food shortages: for example, Ukraine, Australia, China, India, and Egypt have been depleting their rivers and groundwater to the point that farmers can no longer irrigate their crops—thus, agricultural output will be reduced. Well-known analyst Lester Brown has been predicting that water shortages will further exacerbate food shortages in many countries.



Goldman Sachs announced water to be the “petroleum for the next century”

So we need to ask the question: what about water in the midst of this precarious global economy and increasingly fragile natural world? How will the shortage and supply volatility of water affect food production and food crises? One similarity between oil and water is that of diminishing supply and rapidly growing demand. With shortages, conflicts and wars arise—this point has been made clear in Michael Klare’s 2002 book Resource Wars. Moreover, many other analysts—from those working for the CIA to those in the United Nations and Forbes magazine—have long predicted water as the major resource in which nations will fight wars over. The Dutch Crown Prince Willem-Alexander said, “Water could become the new oil as a major source of conflict,” during the 2001 World Water Forum in Stockholm. The Crown Prince Willem-Alexander was the previous chairman of the 2001 World Water Forum; he is also the oldest grandson of Prince Bernhard of the Netherlands who was the founder of the elite, highly secretive policy group called the Bilderberg in the 1950s; his mother, Queen Beatrix, is also a member of the Bilderberg and a principal shareholder of the Royal Dutch Shell. The former UN Secretary General Boutros Boutros-Ghali also said, “Water will be more important than oil this century” and that water is the next oil over which nations will fight wars. The late U.S. Senator Paul Simon said, “Nations go to war over oil, but there are substitutes for oil. How much more intractable might wars be that are fought over water, an ever scarcer commodity for which there is no substitute?”

 

The link between water and food is clear: without water, there can be no irrigated agricultural. According to the Telegraph in June 2008, “A catastrophic water shortage could prove an even bigger threat to mankind this century than soaring food prices and the relentless exhaustion of energy reserves, according to a panel of global experts at the Goldman Sachs ‘Top Five Risks’ conference.”

It is widely known that the genocide in Darfur has been exacerbated by competition over water and land resources by Arab nomads and African farmers as global warming-induced droughts aggravated desertification in northern Darfur for two decades. In the near future, will we see “water riots” and “water wars”—or even genocides and conflicts which masqueraded as ethnic/tribal or religious when the real conflict actually erupted over water? What should we be concerned about and what should we do now to avert the coming water crises?  Let’s focus on two troubling water crises, that of global warming and depleting aquifers.

 

Extreme Weather, Climate Uncertainties, and Volatilities in Precipitation

Regardless of the current scientific debates on global warming of whether it is man-made or a natural planetary cycle, one thing is certain among scientists: this climate change is not a temporary anomaly. Global warming will worsen in the next decades. Weather will become more extreme and unpredictable in many parts of the world: for example, in June, we have witnessed catastrophic flooding in Iowa and elsewhere in the Mideast, which devastated the corn planting of 2008. Glaciers will melt at even faster rates, further lowering fresh water supplies in many regions. Precipitation will become more unpredictable—while some parts of the world will get more water through floods and storms, others will suffer reduced groundwater supply and even drought. While analysts have cited “temporary weather anomalies” (Washington Post, May 30, 2008, referring to droughts in Australia) as one reason for the sharp spike in food prices, global warming is not a temporary weather phenomenon afflicting the crop-producing regions of the world. In short, the droughts, floods, storms, hurricanes, and extreme weather patterns all over the globe are not short-term events. Globally, the extreme weather will be further exacerbated by the intensification of global warming in the coming decade. The wild and extreme weather patterns are here to stay—in turn, limiting fresh-water supply and food production in many food-growing regions. 

 

In January 2005, the National Center for Atmospheric Research (NCAR) published new analyses linking rising global temperature to extreme weather, saying that the area on Earth hit by serious droughts more than doubled from the 1970s to the early 2000s and that widespread drought occurred in western and southern Africa, eastern Australia, much of Asia and Europe, and Canada (Journal of Hydrometerology, 2005). "Droughts and floods are extreme climate events that are likely to change more rapidly than the average climate," says NCAR’s Aiguo Dai. "Because they are among the world's costliest natural disasters and affect a very large number of people each year, it is important to monitor them and perhaps predict their variability."

 

A few examples of how global warming has affected food production and resource conflicts worldwide are as follows:

 

  • One of the most cited examples is Australia, which suffered six straight years of devastating drought and had 98% of its rice production cut and its agricultural production slashed by one-quarter within the past year. In contrast, at the same time American corn and soybean farmers in the Midwest are suffering from floods and too much rain in the planting seasons of spring and summer 2008.

  • Scientists working with the United Nations have also projected that Australia’s agricultural and forestry production will decline significantly by 2030 due to increases in fires and droughts.

  • The Horn of Africa is also being crippled by severe droughts, with the poorest in Somalia and Ethiopia facing imminent famine and mass starvation. On the African continent, more than 300 million people already face water scarcity, and water shortages in Sub-Saharan Africa are expected to rise by almost one-third by 2050.

  • Darfur suffered droughts and conflicts over water and land resources before the conflicts turned lethally ethnic and tribal in nature, from a local resource conflict into a full-blown genocide. In June 2007, UN Environmental Prpgramme (UNep) said that peace in Darfur is nearly impossible unless the issues of environmental destruction were addressed. A lobbying group Justice Africa told the BBC in July 2007 that “the root cause of the conflict [between Arab nomads and black African farmers] is resources—drought and desertification in North Darfur.”

  • In early June 2008, Governor Arnold Schwarzenegger proclaimed a statewide drought in California, stating that the 2008 spring was the driest on record and saying, “We must recognize the severity of this crisis we face.” California is a major food-production region of the world with its agricultural exports exceeding $9 billion in 2005.

Desertification is one of the more neglected environmental issues today, which is aggravated by global warming. Desertification is a critical issue because it affects arable land’s productivity and consequently, food production. The United Nations has estimated that more than 250 million people are directed affected by desertification in 110 countries occupying one-third of earth’s surface (this figure includes 135 million in danger of being driven from their land), and one billion people’s livelihood at risk. As 70% of all agricultural drylands are being degraded, they are at risk of desertification, which carries a price tag of U.S.$42 billion a year. Desertification further exacerbates water scarcity and degrades the land to the point that it is no longer productive.

 

Scientists have forecasted that as global warming heats the planet, the climate will be wetter in some places and drier in others. The worst part of that changing weather and volatile precipitation patterns will leave millions of people without dependable fresh-water supplies for drinking, agricultural irrigation, and hydropower. Global warming spells devastation for most countries’ water and agricultural future. It is clear then that we should expect global warming to decrease long-term freshwater availability, which in turn will also simultaneously lower food production and worsen the food and hunger situation in many developing countries.

 

A Hungrier Future Due to Our Unsustainable Withdraw of Groundwater

It typically takes 1,000 tons of water to produce 1 ton of grain. It is estimated that almost 10% of the global food supply (160 million tons of grain) is currently produced using unsustainable practice of overdrawing groundwater according to the USAID. But depleting groundwater is not only a threat to future food production—it is a contributor to sea-level rise. For example, publishing in Hydrogeology Journal, researchers found that the estimated global groundwater withdrawals to be at 750-800 km3/year, and that this massive amount of aquifer depletion may result in seal-level rise:

 

Worldwide, the magnitude of groundwater depletion from storage may be so large as to constitute a measurable contributor to sea-level rise. For example, the total volume depleted from the High Plains aquifer equates to about 0.75 mm, or about 0.5%, of the observed sea-level rise during the 20th century. Reducing future groundwater depletion (and increasing groundwater storage) can help in a small way to reduce future sea-level rise.  (Konikow and Kendy, 2005)

Unsustainable groundwater withdrawal and aquifer depletion will exacerbate the effects of volatile precipitation patterns on agriculture. Aquifer depletion in a few key grain- and food-producing countries with large populations—namely, the United States, Mexico, China, and India—is briefly summarized as follows:

 

  • United States — the most well-known one is the Ogallala/High Plains aquifer (depleting at an estimated 12 billion cubic meters per year, with some areas dropping by more than 100 feet), but aquifer depletion is widespread across the country. In the Pacific Northwest, Columbia River Basalt aquifer of Washington and Oregon has declined by more than 100 feet in several areas. In Tucson and Phoenix areas, water-level declines of between 300 and 500 feet occurred in much of the area. In California, the Antelope Valley’s groundwater level plummeted by more than 300 feet in some areas since the early 1900s, and the southwestern part of the Mojave Desert have seen land subsidence between 1992 and 1999 and past land subsidence linked to water-level reduction of more than 100 feet between the 1950s and the 1990s. Before its real estate boom, Las Vegas had already suffered a water-level plunge of 300 feet in 1999. In Chicago-Milwaukee area, groundwater levels sank by as much as 900 feet under Chicago and eastern Wisconsin. In Houston, Texas, underground water levels fell by some 400 feet, leading to land subsidence of up to 10 feet. The Sparta aquifer under Arkansas, Louisiana, Mississippi, and Tennessee has seen declines of up to 70 feet in some areas. In Baton Rouge, Louisiana, there was a tenfold rise in groundwater pumping between 1930s and 1970, sinking the groundwater level by 200 feet and leading to saltwater intrusion from the Gulf of Mexico into several aquifers. Let’s put the importance of U.S. aquifers in context: agricultural export for the United States is estimated at a record-setting $108.5 billion in 2008 (including approximately 63 million tons of corn) according to the USDA.

 

  • Mexico — the well-known example is the Mexico City Aquifer (the central section of the metropolitan area has fallen by as much as 8.5 meters, and the city could run out of water in the next decade), but a third of all water used in Mexico comes from aquifers. All grain crops (such as winter wheat and sorghum) in Mexico rely on irrigation using aquifer water. In Guanajuato, an agricultural state, the water table is plummeting by more than 2 meters a year. According to the USAID, Mexico is depleting its groundwater reserves exceeding 3 meters a year in many of its main agricultural areas. Mexico is located along the same latitudes as the Sahara Desert; half of the country is so arid that on average, Mexico has less drinking water per capita than Egypt and 60% less water than it did 50 years ago.

  • China — China has many serious water problems and they have been well-documented by numerous analysts. A decade ago, analysts have reported that China’s Yellow River went from not reaching the sea for 15 days in 1972 to 226 days in 1997. The Yellow River supplies water to 15% of China’s agricultural land and more than 150 million people; the river is so polluted that an estimated one-third of fish species in the river have gone extinct. Groundwater is another major problem: According to researchers, the Quaternary Aquifer of the North China Plain is one of the largest aquifer systems in the world and occupies extensive tracts of Hai River and catchments of Huai and Yellow river systems and beyond; but it, like other aquifers in northeastern China, has many problems: (1) falling groundwater table in shallow aquifers; (2) declining water levels in deeper aquifers; (3) saltwater intrusion and aquifer salination attributable to overpumping; and (4) aquifer pollution from uncontrolled and reckless dumping of sewage and industrial wastewater (Foster et al., Hydrogeology Journal, 2004). Lester Brown and most China analysts take an extremely grim view of China’s water situation—thus China’s food-production capability and its need to import large amounts of grains and other foodstuffs from the global market.

  • India — Like China, India also faces a long list of water problems, from supply and demand to access and quality. India’s falling harvests can be attributable to droughts and falling groundwater levels. Daniel Pepper wrote a goods article linking Asia’s food crisis to the lack of water and the millions of farmers in India that overdraw the groundwater: one example he cited was that in the 1970s, Indian farmers had only 200,000 electric water pumps, today they own 12 million electric water pumps and 8 million diesel water pumps. Lester Brown also wrote about Tamil Nadu have more than 62 million people but with 95% of wells going dry due to rapidly falling water tables. Additionally, water tables in India are dropping by 1 to 3 meters annually in some parts, with water tables in Punjab, India’s breadbasket, plummeting by a whopping 1 meter per year.

  • Bangladesh — the groundwater levels have plunged almost 3 meters due to upstream dams and diversions of the Ganges River. Bangladesh is simultaneously afflicted by rising sea level, catastrophic floods, and depleting aquifers—all three severely affect its agricultural productivity (its existing production is already less than the global average and there are worries that its food production is not sustainable even at the current level).

Water is integral to highly productive irrigated agriculture. Without an adequate water supply, crop production will be diminished globally. With global warming-associated extreme weather, agriculture will be adversely affected as well. This week, as we hear the daily news of the catastrophic floods of Iowa, Illinois, Wisconsin, and elsewhere along the Mississippi River, that farmers will miss this corn-planting season due to flood-soaked land, corn prices reached record-high, stratospheric price levels.

 

So far we haven’t begun to discuss the serious problems of surface-water and groundwater pollution, privatization of water rights, water-resource grabbing by corporations, the collapsing water infrastructure, poor water management by municipalities worldwide, rising global inflation of chemicals and inputs of drinking-water and wastewater treatment, the rising demand and increasing pressure on existing water sources via soaring consumer demands for water-intensive foods (i.e., meats, dairy, eggs), and weakening governmental regulations to address water quality and water access.  By analyzing the state of water, we can see a rather grim future—that of a hungrier one—for the world’s poor.

 

Jo-Shing Yang is the author of “Ecological Planning, Design, and Engineering. Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment. Small and On-Site Systems for Community Water Self-Sufficiency and Sustainability.” E-mail: jsyang@alum.mit.edu">jsyang@alum.mit.edu">jsyang@alum.mit.edu

 
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watercrises 14 days ago
Germán Leyens translated my article into Spanish and published it in Rebelion (http://www.rebelion.org/noticia.php?id=69413) on June 26, 2008. Thank you, Germán!

Morir de hambre, morir de sed
Las crisis convergentes de los alimentos y del agua

Jo-Shing Yang
CounterPunch

Traducido del inglés para Rebelión por Germán Leyens


En los últimos meses, crisis alimentarias y disturbios por alimentos en todo el mundo han dominado los titulares de los periódicos y capturado la atención de los medios de información y de los dirigentes políticos del globo. Aumentos de precios de los alimentos y de las materias primas hunden a unos mil millones de personas en todo el mundo cada vez más profundo en la pobreza y las llevan al borde de la desnutrición e incluso la inanición – forzando a esas masas de gente angustiada a protestar en las calles. Por fin los dirigentes del mundo están prestando atención al sufrimiento de los crónicamente pobres y hablan ahora de ‘crisis alimentarias’ que hacen estragos en las vidas de los desesperadamente pobres. A estas alturas, la mayoría de la gente sabe que los motivos para los mayores precios de los alimentos son los mayores precios del petróleo (que afectan a los insumos agrícolas basados en el petróleo, tales como fertilizantes, pesticidas), mayores precios del transporte de alimentos, el desvío de maíz y otros productos agrícolas para producir etanol y otros biocombustibles; más demanda de alimentos de la clase media emergente de China e India (y sus deseos de subir por la cadena alimentaria, de comer más carne, huevos, y productos lácteos), y sucesos climáticos extremos asociados con el calentamiento global. Poca gente ha asociado la escasez de alimentos con la escasez de agua – es decir, aparte de unos pocos artículos escritos por analistas y expertos en agua (por ejemplo, la relación establecida por Fred Pearce entre la escasez de agua y las crisis alimentarias).

 

Después que los grandes bancos de inversión y especuladores de Wall Street han hecho subir los precios de alimentos, petróleo y otras materias primas, están apuntando al próximo recurso de importancia: el agua. Goldman Sachs insta a los inversionistas a concentrarse en el sector de alta tecnología de la industria global del agua de 425.000 millones de dólares, porque el agua es el “petróleo del próximo siglo.” Áreas potenciales de inversión para Wall Street incluyen a los fabricantes o prestadores de servicios de equipos de filtración de agua, desinfección ultravioleta, tecnología de desalinización basada en membranas, medidores de agua automatizados, y otros nichos especializados en la reutilización de aguas servidas (The Telegraph, 6 de junio de 2008). Goldman Sachs también publicó una gráfica llamada “Mayor rendimiento del sector del agua en relación con S&P 500,” mostrando tendencias de 2000 a 2008 en las que el índice del sector del agua subió a 400 mientras S&P 500 se quedó en, o por debajo de, el nivel de 100 (valores rebasados a 100).

 

Existe una crisis convergente en ciernes de los alimentos y del agua, con ocho tendencias extremadamente inquietantes e interrelacionadas en el agua, como sigue:

 

  • Calentamiento global: fenómenos climáticos extremos y sus consecuencias destructivas, inseguridades climatológicas, y volatilidades en las precipitaciones.

  • Baja del agua subterránea y de los acuíferos en todo el mundo debido al crecimiento de la población, al aumento y derroche en la irrigación agrícola, y la contaminación, en gran parte irreversible, de las aguas subterráneas.

  • Aumento de la contaminación de las aguas superficiales en todo el mundo, lo que hace que el agua subterránea sea inutilizable sin un tratamiento sustancial (incluyendo un aumento global en el uso químico, de productos químicos agrícolas a químicos industriales y productos para el hogar).

  • Privatización, corporatización y globalización de los recursos acuíferos (la así llamada apropiación del agua por grandes intereses corporativos multinacionales)

  • El derrumbe de la infraestructura para el agua, pobre administración del agua por municipalidades, y falta de inversión pública en el agua y en el tratamiento de las aguas servidas en todo el mundo.

  • La inflación global de los precios de las materias primas y sus efectos sobre el agua municipal y el tratamiento de aguas servidas en todo el mundo.

  • La creciente demanda de agua para la agricultura debida al deseo del consumidor de recibir alimentos que requieren uso intensivo de agua en la cadena alimentaria (por ejemplo, carnes, huevos, y productos lácteos). Se ha calculado que el suministro total de carne en el mundo fue de 71 millones de toneladas en 1961 y de 284 millones de toneladas en 2007... y sigue aumentando (New York Times, 2008).

  • La disminución y el debilitamiento de las regulaciones y de los controles medioambientales de los gobiernos para encarar el problema de la contaminación, lo que significa que el tratamiento del agua contaminada para que sea potable y utilizable en la agricultura será costoso.

Según la región bajo estudio, cualquiera, o una combinación, de estos factores afectará los suministros, la entrega, y en tratamiento de agua fresca en los próximos años. También afectarán a la producción agrícola y de alimentos para miles de millones de personas en todo el mundo. Basta la concentración en solo dos factores de calentamiento global y de la disminución de acuíferos, como sigue, para darnos suficientes preocupaciones sobre la sostenibilidad y el futuro de la producción agrícola.

 

Algunos hechos:

 

  • Para producir una tonelada de trigo, se necesitan 1.000 toneladas de agua. La producción de pollos requiere aproximadamente 32 veces más agua que el cultivo de la misma cantidad de trigo; la ratio de cerdos a trigo es de 65:1, y la de vacunos a trigo es algo entre 100:1 y 200:1.

  • En 2015, casi la mitad de la población del mundo, más de 3.000 millones de personas, vivirá en países que sufren de “estrés acuático” y tienen acceso a menos de 1.700 metros cúbicos de agua per capita por año, según la CIA. En 2001, la CIA también predijo que aproximadamente un 80% del agua es asignada a la agricultura en los países en desarrollo, una proporción insostenible, y en 2015, muchos países no podrán mantener sus niveles de agricultura irrigada – resultando en una profunda reducción de la producción agrícola. Ya estamos viendo actualmente esa tendencia en China e India.

  • A comienzos de 2008, el Programa de Naciones Unidas para el Medio Ambiente (PNUMA) publicó un mapa bastante sombrío de la irrigación del mundo para ilustrar retiros insostenibles de agua en todos los continentes.

  • En todo el mundo, se estima que 4.400 niños bajo cinco años mueren cada día debido al consumo de agua sucia y pobres condiciones de higiene, y que la diarrea mata cinco veces más niños cada año que VIH/SIDA, según Naciones Unidas. Con la próxima crisis del agua, se esperan tasas significativamente más elevadas de mortalidad infantil en todo el mundo.

El agua es la base de la agricultura – no sólo en el cultivo de alimentos, sino también en su elaboración. El agua es el fundamento de las ciudades modernas y de sistemas de saneamiento urbanos – desde nuestra fontanería doméstica hasta plantas centralizadas de tratamiento de aguas servidas. El agua es la base de las industrias y de la manufactura. El agua sustenta la naturaleza, la fauna y la flora. En esencia, la humanidad puede vivir sin petróleo – aunque de manera más primitiva – pero no puede sobrevivir sin agua. A pesar de su importancia, el tema del agua ha sido integrado con poca frecuencia en nuestras discusiones de las crisis alimentarias, excepto cuando hablamos brevemente del calentamiento global y de las sequías extremas que afectan a las regiones donde hay cultivos. Entrevistada por el New York Times (2 de junio de 2008), Barbara Helferrich, portavoz del Directorado del Medioambiente de la Unión Europea, dijo: “El agua será el tema ecológico de este año – el problema es urgente e inmediato. Si ya hay escasez de agua en la primavera, se sabe que va a ser un verano realmente malo.” Un escritor sobre el medio ambiente basado en el Reino Unido, Fred Pearce, escribió recientemente que la escasez de agua es una causa importante para las fallas en la producción agrícola que resulta en escasez de alimentos: por ejemplo:
Ucrania, Australia, China, India, y Egipto han estado agotando sus ríos y aguas subterráneas hasta el punto que los agricultores ya no pueden irrigar sus cultivos – por lo tanto, la producción agrícola será reducida. El conocido analista Lester Brown ha estado prediciendo que la escasez de agua agravará aún más la escasez de alimentos en numerosos países.

 

Goldman Sachs anunció que el agua será el “petróleo del próximo siglo”


Por lo tanto tenemos que preguntar; ¿qué hay respecto al agua en medio de esta precaria economía global y la creciente fragilidad del mundo natural? ¿Cómo afectará la escasez y la volatilidad del suministro de agua a la producción de alimentos y a las crisis alimentarias? Una similitud entre el petróleo y el agua es la de la disminución del suministro y el rápido crecimiento de la demanda. Con la escasez, aparecen conflictos y guerras – este punto lo dejó en claro el libro de Michael Klare publicado en 2002 “Resource Wars” [Guerras por recursos]. Además, muchos otros analistas – desde los que trabajan para la CIA a los de Naciones Unidas y de la revista Forbes – han predicho hace tiempo que el agua es el principal recurso por el que las naciones irán a la guerra. El príncipe heredero holandés Willem-Alexander fue el anterior presidente del Foro Mundial del Agua en 2001; también es el nieto mayor del príncipe Bernardo de Holanda, fundador del grupo elitista, altamente secreto, llamado los Bilderberg en los años cincuenta; su madre, la reina Beatriz, es también miembro de los Bilderberg y principal accionista de Royal Dutch Shell. El antiguo Secretario General de la ONU, Boutros Boutros-Ghali también dijo: “El agua será más importante que el petróleo en este siglo” y que el agua es el próximo petróleo por el que las naciones librarán guerras. El difundo senador estadounidense, Paul Simon dijo: “Las naciones van a la guerra por el petróleo, pero hay sustitutos para el petróleo. ¿Cuánto más difíciles de resolver podrán ser guerras que sean libradas por el agua, un recurso aún más escaso para el que no hay sustituto?”

 

El vínculo entre el agua y los alimentos es evidente: sin agua, no puede haber una agricultura irrigada. Según el Telegraph en junio de 2008: “Una escasez catastrófica de agua podría ser una amenaza aún mayor para la humanidad en este siglo que los aumentos de los precios de los alimentos y el agotamiento implacable de las reservas de energía, según un panel de expertos globales en la conferencia ‘Los cinco principales riesgos’ de Goldman Sachs.”

 

Es ampliamente conocido que el genocidio en Darfur ha sido agravado por la competencia por recursos de agua y tierra entre nómadas árabes y agricultores africanos ya que sequías inducidas por el calentamiento global agravaron la desertificación en el norte de Darfur durante dos décadas. ¿Veremos en el futuro cercano, “disturbios por agua” y “guerras por agua” – o incluso genocidios y conflictos que se enmascaran como étnicos/tribales o religiosos cuando el conflicto real estalló por el agua? ¿Qué debiera preocuparnos y qué deberíamos hacer ahora para prevenir las crisis futuras por el agua? Concentrémonos en dos crisis inquietantes por el agua, la del calentamiento global y la de los acuíferos que se agotan.

 

Clima extremo, incertidumbres climáticas, y volatilidades en las precipitaciones

A pesar de los actuales debates científicos sobre si el calentamiento global es causado por el hombre o si es un ciclo planetario natural, una cosa es segura para los científicos: este cambio climático no es una anomalía temporal. El calentamiento global se agravará en las próximas décadas. El clima se hará más extremo e imprevisible en muchas partes del mundo: por ejemplo, en junio, hemos visto catastróficas inundaciones en Iowa y en otros sitios del Medio Oeste de EE.UU., que devastaron la siembra de maíz de 2008. Los glaciares se derretirán aún más rápido, reduciendo aún más los suministros de agua fresca en muchas regiones. Las precipitaciones se harán aún más imprevisibles; mientras algunas partes del mundo recibirán más agua mediante inundaciones y tormentas, otras sufrirán un suministro reducido de aguas subterráneas e incluso sequías. Mientras los analistas han citado “anomalías climáticas temporales” (Washington Post, 30 de mayo de 2008, refiriéndose a sequías en Australia) como una razón para el agudo aumento de los precios de los alimentos, el calentamiento global no es un fenómeno climático temporal que afecta a las regiones productoras agrícolas del mundo. En breve, las sequías, inundaciones, tormentas, huracanes, y los modelos climáticos extremos en todo el globo no son eventos a corto plazo. Globalmente, el clima extremo será agravado aún más por la intensificación del calentamiento global en la próxima década. Los modelos climáticos descontrolados y extremos serán algo permanente – limitando a su vez el suministro de agua fresca y la producción de alimentos en muchas regiones productoras de alimentos.

 

En enero de 2005, el Centro Nacional de Investigación Atmosférica de EE.UU. (NCAR) publicó nuevos análisis vinculando la creciente temperatura global al clima extremo, diciendo que el área afectada por serias sequías en la Tierra se ha más que duplicado desde los años setenta y comienzos de los años dos mil y que sequías generalizadas ocurrieron en el oeste y el sur de África, el este de de Australia, gran parte de Asia y Europa, y Canadá (Journal of Hydrometerology, 2005). “Las sequías y las inundaciones son eventos climáticos extremos que probablemente cambien más rápido que el clima promedio,” dice Aiguo Dai de NCAR. “Porque son de los desastres naturales más costosos del mundo y afectan a cantidades muy grandes de personas cada año, es importante monitorearlos y tal vez predecir su variabilidad.”

Unos pocos ejemplos de cómo el calentamiento global ha afectado la producción de alimentos y conflictos por recursos en todo el mundo, son los siguientes:

  • Uno de los ejemplos más citados es Australia, que sufrió seis años seguidos de devastadora sequía y cuya producción de arroz fue eliminada en un 98% y su producción agrícola reducida en un cuarto durante el año pasado. En cambio, al mismo tiempo los agricultores del maíz y la soja en el Medio Oeste de EE.UU. sufren por inundaciones y demasiada lluvia en las temporadas de siembra de primavera y verano de 2008.

  • Científicos que trabajan con Naciones Unidas también han extrapolado que la producción agrícola y forestal de Australia disminuirá significativamente en 2030 debido a aumentos en fuegos y sequías.

  • El Cuerno de África también está siendo afectado por severas sequías, y los más pobres en Somalia y Etiopía enfrentan inminentes hambrunas y una masiva mortandad por hambre. En el continente africano, más de 300 millones de personas enfrentan la escasez de agua, y se espera que la escasez de agua en África subsahariana aumente en casi un tercio en 2050.

  • Darfur sufrió sequías y conflictos por el agua y recursos de tierras arables antes de que los conflictos se volvieran mortalmente étnicos y tribales en su naturaleza, de un conflicto local por recursos a un genocidio hecho y derecho. En junio de 2007, PNUMA dijo que la paz en Darfur es casi imposible a menos que se encaren los problemas de la destrucción del medio ambiente. Un grupo de presión, Justice Africa, dijo a la BBC en julio de 2007 que “la causa de fondo del conflicto [entre nómadas árabes y agricultores africanos negros] son los recursos – la sequía y la desertificación en el Norte de Darfur.”

  • A principios de junio de 2008, el gobernador Arnold Schwarzenegger declaró la sequía en todo el Estado en California, señalando que la primavera de 2008 era la más seca que conste y diciendo: “Tenemos que reconocer la severidad de esta crisis que enfrentamos.” California es una importante región productora de alimentos del mundo, sus exportaciones agrícolas excedieron 9.000 millones de dólares en 2005.

La desertificación es uno de los temas medioambientales más desatendidos de la actualidad, agravada por el calentamiento global. La desertificación es un problema crítico porque afecta la productividad de tierra arable y, consecuentemente, la producción de alimentos. Naciones Unidas ha estimado que más de 250 millones de personas son afectadas directamente por la desertificación en 110 países que ocupan un tercio de la superficie de la Tierra (esta cifra incluye a 135 millones de personas en peligro de ser expulsadas de sus tierras) y el sustento de mil millones de personas está en peligro. El que se esté degradando un 70% de las tierras secas agrícolas, en peligro de desertificarse, conlleva un precio de 42.000 millones de dólares por año. La desertificación además agrava la escasez de agua y degrada la tierra hasta el punto que ya no es productiva.

 

Los científicos pronostican que mientras el calentamiento global calienta el planeta, el clima será más húmedo en algunos lugares y más seco en otros. La peor parte de esos cambios del tiempo y de modelos volátiles de precipitación dejará a millones de personas sin suministros fiables de agua fresca para beber, la irrigación agrícola, y la energía hidráulica. El calentamiento global significa devastación para el futuro del agua y la agricultura de la mayoría de los países. Es obvio en consecuencia que tenemos que contar con que el calentamiento global disminuirá la disponibilidad de agua fresca a largo plazo, lo que a su vez reducirá también simultáneamente la producción de alimentos y empeorará la situación alimentaria y el hambre en muchos países en desarrollo.

 

Un futuro de más hambre debido a nuestra extracción insostenible de aguas subterráneas

Habitualmente cuesta 1.000 toneladas de agua para producir 1 tonelada de cereal. Se estima que casi un 10% del suministro global de alimentos (160 millones de toneladas de cereales) es producido actualmente mediante la práctica insostenible de extraer aguas subterráneas según USAID. Pero el agotamiento del agua subterránea no es sólo una amenaza para la futura producción de alimentos – contribuye al aumento del nivel del mar. Por ejemplo, investigadores que publican en Hydrogeology Journal, establecieron que las extracciones estimadas de aguas subterráneas en el mundo son entre 750 y 800 km3/año, y que esta masiva cantidad de agotamiento de acuíferos puede resultar en un aumento del nivel del mar:

 

“En todo el mundo, la magnitud de la extracción de aguas subterráneas de su depósito puede ser tan grande que llegue a constituir un causante cuantificable del aumento del nivel del mar. Por ejemplo, el volumen total extraído del acuífero de High Planes equivale a cerca de 0,75 mm. o sea un 0,5% del aumento observado del nivel del mar durante el Siglo XX. La reducción de la futura extracción de aguas subterráneas (y el aumento del acopio de agua subterránea) pueden ayudar en pequeña escala a reducir futuros aumentos del nivel del mar.” (Konikow and Kendy, 2005)

 

La extracción insostenible de las aguas subterráneas y del acuífero agravará los efectos de modelos volátiles de precipitaciones sobre la agricultura. El agotamiento de acuíferos en unos pocos países productores de cereales y alimentos con gran población a saber: EE.UU., México, China, e India – es brevemente resumida como sigue:

  • EE.UU. – el más conocido es el acuífero Ogallala/High Plains (se calcula que es consumido a unos 12.000 millones de metros cúbicos por año, y algunas áreas descienden más de 30 metros), pero el agotamiento de acuíferos es generalizado en todo el país. En el Noroeste del Pacífico, el acuífero Columbia River Basalt de Washington y Oregon ha bajado más de 30 metros en varias áreas. En las áreas de Tucson y Phoenix, descensos del nivel del agua de entre 90 y 150 metros ocurrieron en gran parte de la zona. En California, el nivel del agua subterránea en Antelope Valley cayó en más de 90 metros desde comienzos de los años 1900, y la parte sudoeste del Desierto Mojave ha visto una subsidencia de la tierra entre 1992 y 1999 y subsidencia pasada de la tierra vinculada a la reducción del nivel del agua de más de 30 metros entre los años cincuenta y los noventa. Antes de su auge inmobiliario, Las Vegas ya había sufrido una baja del nivel del agua de 100 metros en 1999. En el área de Chicago-Milwaukee, los niveles del agua subterránea descendieron hasta 274 metros bajo Chicago y Wisconsin este. En Houston, Texas, los niveles de agua subterránea cayeron unos 121 metros, llevando a subsidencias de suelos de hasta 3 metros. El acuífero Sparta bajo Arkansas, Luisiana, Mississippi, y Tennessee ha sufrido bajas de hasta 21 metros en algunas áreas. En Baton Rouge, Luisiana, ha habido un aumento de diez veces en el bombeo de agua subterránea entre los años treinta y 1970, hundiendo el nivel del agua subterránea en 60 metros y llevando a la intrusión de agua salada del Golfo de México a varios acuíferos. Pongamos en contexto la importancia de los acuíferos de EE.UU.: La exportación agrícola de EE.UU. es calculada en una cifra récord de 108.500 millones de dólares en 2008 (incluyendo aproximadamente 63 millones de toneladas de maíz) según el Departamento de Agricultura de los Estados Unidos (USDA).

  • México – el conocido ejemplo es el del acuífero de Ciudad de México (la sección central del área metropolitana ha descendido hasta 8,5 metros, y a la ciudad podría acabársele el agua en la próxima década), pero un tercio de toda el agua usada en México proviene de acuíferos. Todas las cosechas de cereales en México (tales como el trigo de invierno y el sorgo) dependen de irrigación que usa agua de acuífero. En Guanajuato, un Estado agrícola, el nivel freático cae más de 2 metros por año. Según USAID, México está agotando sus reservas de agua subterránea en más de 3 metros por año en muchas de sus principales áreas agrícolas. México está ubicado a lo largo de las mismas latitudes que el desierto del Sahara; la mitad del país es tan árida que, en promedio, México tiene menos agua potable per capita que Egipto y un 60% menos agua que la que tenía hace 50 años.

  • China – China tiene muchos problemas serios de agua y han sido bien documentados por numerosos analistas. Hace una década, analistas informaron que el río Amarillo de China pasó de no llegar al mar durante 15 días en 1972 a 226 días en 1997. El río Amarillo suministra agua a un 15% de la tierra agrícola de China y a más de 150 millones de personas; el río está tan contaminado que se estima que un tercio de las especies de peces han desaparecido. El agua subterránea es otro problema importante. Según investigadores, el acuífero Cuaternario de la Llanura del Norte de China es uno de los mayores sistemas acuíferos del mundo y ocupa amplios trechos del Río Hai y cuencas de recepción de aguas de los sistemas fluviales Huai y Amarillo y más allá; pero, como otros acuíferos en el noreste de China, tiene muchos problemas: (1) la baja del nivel freático en los acuíferos poco profundos; (2) niveles freáticos en descenso en acuíferos profundos; (3) intrusión de agua salada y salinización de acuíferos atribuible a sobrebombeado; y (4) contaminación de acuíferos por descarte incontrolado e irresponsable de aguas servidas y aguas negras industriales (Foster et al., Hydrogeology Journal, 2004). Lester Brown y la mayoría de los analistas de China adoptan una visión extremadamente sombría de la situación del agua en China – lo que afecta la capacidad de producción de alimentos de China y su necesidad de importar grandes cantidades de cereales y otros alimentos del mercado global.

  • India – Como China, India también enfrenta una larga lista de problemas de agua, que van del suministro y la demanda al acceso y la calidad. Las cosechas en disminución de India pueden ser atribuibles a sequías y a la baja de los niveles freáticos. Daniel Pepper escribió un buen artículo que relaciona la crisis de alimentos de Asia con la falta de agua y con los millones de agricultores en India que extraen demasiada agua subterránea: un ejemplo que citó es que en los años setenta, los agricultores indios tenían sólo 200.000 bombas eléctricas, actualmente tienen 12 millones de bombas de agua eléctricas y 8 millones de bombas de agua a diesel. Lester Brown también escribió que [el Estado] Tamil Nadu tiene más de 62 millones de habitantes, pero un 95% de los pozos se secan debido a niveles freáticos en rápido descenso. Adicionalmente, los niveles freáticos en India están bajando entre 1 y 3 metros por año en algunas partes; los niveles freáticos en el Punjab, la gran región productora agrícola de India, bajan 1 metro por año.

  • Bangladesh – los niveles del agua subterránea han bajado casi 3 metros debido a represas ubicadas aguas arriba y desviaciones del río Ganges. Bangladesh se ve afectada simultáneamente por el aumento del nivel del mar, catastróficas inundaciones, y acuíferos en agotamiento – tres factores que afectan severamente su productividad agrícola (su producción existente ya es menos que el promedio global y existen preocupaciones de que su producción de alimentos no sea sostenible ni siquiera al nivel actual).

El agua es parte integral de una agricultura irrigada altamente productiva. Sin un suministro adecuado de agua, la producción de cosechas aumentará en todo el globo. Ante el calentamiento global asociado con el clima extremo, la agricultura también será adversamente afectada. Esta semana los precios del maíz llegaron a niveles de precio récord, estratosféricos, al conocerse las noticias diarias de las catastróficas inundaciones de Iowa, Illinois, Wisconsin, y en otros sitios a lo largo del río Mississippi River, y que los agricultores perderán la temporada de siembra debido a la tierra empapada por las inundaciones.

 

Hasta ahora ni siquiera hemos comenzado a discutir los serios problemas de la contaminación del agua de superficie y del agua subterránea, la privatización de los derechos sobre las aguas, la apropiación de recursos acuáticos por corporaciones, la infraestructura acuática que se derrumba, la mala administración del agua por municipalidades en todo el mundo, el aumento de la inflación global de los productos químicos y los insumos para el tratamiento del agua potable y de las aguas servidas, la creciente demanda, y el aumento de la presión sobre las fuentes existentes de agua a través de crecientes demandas de los consumidores de alimentos intensivos en su uso de agua (es decir carnes, productos lácteos, huevos), y el debilitamiento de las regulaciones gubernamentales para tratar la calidad del agua y el acceso al agua. Al analizar la condición del agua, vemos un futuro bastante sombrío – de más hambre – para los pobres del mundo.

 

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Jo-Shing Yang es autor de “Ecological Planning, Design, and Engineering. Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment. Small and On-Site Systems for Community Water Self-Sufficiency and Sustainability.” Correo electrónico: jsyang@alum.mit.edu">jsyang@alum.mit.edu

(http://www.counterpunch.org/yang06212008.html)
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watercrises 14 days ago

Recently published article on AlterNet.org (October 31, 2008)


(http://www.alternet.org/workplace/105083/why_big_banks_may_end_up_buying_your_city%27s_public_water_system/)

 

 

Why Big Banks May End up Buying Your City's


Public Water System

 

By Jo-Shing Yang, AlterNet. Posted October 31, 2008.



In uncertain economic and environmental times, big banks and financial groups are buying public water systems as safe investments.


Water is the new oil for global financial powerhouses and water is being commoditized and traded in global stock exchanges.

 

Today in addition to being able to buy water rights and purchase lakes on private land, an individual or a corporation can invest in water-targeted hedge funds, index funds and exchange-traded funds (EFTs), water certificates, shares of water engineering and technology companies, shares of multinational private water utilities, shares of multinational banks and investment banks that own water companies, and a host of other newfangled water investments in this U.S.$425 billion industry which is expected to become a U.S.$1 trillion industry within five years. And if one happens to be a tycoon, one can also create his or her own private water districts and water utilities.  

 

The recent media coverage on water has centered on individual corporations and super-investors seeking to control water by buying up water rights and water utilities. But paradoxically the hidden story is a far more complicated one. The real story of the global water sector is a convoluted one involving "interlocking globalized capital": Wall Street and global investment firms, banks, and other elite private-equity firms -- often transcending national boundaries to partner with each other, with banks and hedge funds, with technology corporations and insurance giants, with regional public-sector pension funds, and with sovereign wealth funds -- are moving rapidly into the water sector to buy up not only water rights and water-treatment technologies, but also to privatize public water utilities and infrastructure.  

 

"Water" and "water sector" are used broadly to refer to water rights (i.e., the right to tap groundwater, aquifers, and rivers), land with bodies of water on it or under it (i.e., lakes, ponds, and natural springs on the surface, or groundwater underneath), water-purification and treatment technologies (e.g., desalination, treatment chemicals and equipment), irrigation and well-drilling technologies, water and sanitation services and utilities, water infrastructure maintenance and construction (from pipes and distribution to all scales of treatment plants for residential, commercial, industrial, and municipal uses), water engineering services (e.g., those involved in the design and construction of water-related facilities), and retail water sector (such as those involved in the production, operation, and sales of bottled water, water vending machines, bottled water subscription and delivery services, water trucks, and water tankers).  

 

The story is multifaceted: In the midst of a recessionary economy with a blistering financial and economic crisis, declining employment, and a shrinking tax base, many financially strapped and debt-ridden local governments are beginning to relinquish public infrastructure (including water) and municipal services (including water and sewage utilities) to privatization by Wall Street and other global investors.

 

At the same time, Wall Street and multinational banks are seeing water, food, energy, and public infrastructure as safe investment havens with stable returns and financially liquid assets. Simultaneously, they are waking up to the golden opportunity presented by the current reality of a thirstier, water-scarcer world caused by global climate change (and its extreme weather), rapidly depleting groundwater and aquifers, increasing water pollution, soaring water demand exerted by population increases, fast-rising agricultural and industrial uses, and crumbling water infrastructure worldwide requiring billions of dollars annually in maintenance and upgrade.  

 

Often, the picture painted by mainstream media and water-rights activists is too simple -- that of a single corporation (such as Coca-Cola in India or Bechtel in Bolivia) "corporatizing water;" the real story is not just of flamboyant tycoons (such as U.S.'s billionaire and former oil tycoon T. Boone Pickens, or more recently, Hong Kong's real-estate billionaire Li Kai-shing, or Britain's magnate Vincent Tchenguiz) single-handedly grabbing water rights or individual corporations (e.g., Coca-Cola and Nestlé) sucking dry springs and groundwater to the detriment of poor subsistence farmers or slum-dwellers, but vastly complex global networks and partnerships of investment banks and private-equity firms linking together with other institutions (such as public-sector pension funds in Australia, Canada, and Europe; and sovereign wealth funds in the Middle East and Asia) and multinational corporations elsewhere to buy up and control water worldwide.  

 

Not only are individual corporations buying up water but a deluge of globalized capital are also rapidly buying up water and consolidating their foothold in the water sector; these capital entities are investment powerhouses such as Goldman Sachs, JPMorgan Chase, Merrill Lynch (before it was sold to Bank of America), Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, Macquarie Bank, Allianz SE, UBS AG, HSBC Bank, Alinda Capital, The Carlyle Group, Barclays Bank, Nomura Holdings, and many others. In fact, Wall Street and their global banking and corporate partners are aggressively buying up water all over the world.   

 

Given this recent liquid-gold rush by private (also several public pension-funds) capital, it will be extremely difficult for environmental activists and human rights advocates who called water a basic human right and a public good which should be under public control to reverse this privatization trend. Naturally, when governments are financially strained by revenue shortfalls and tightening municipal-bond markets, calls for privatization of existing public infrastructure and utilities will be louder and harder to resist.  

 

These banks and investment funds are aggressively entering the water sector, and they have raised billions of dollars for their water and infrastructure specialty investment funds (i.e., index funds, hedge funds) -- and they can recruit more money (in euro, pound sterling, dollar, RMB/yuan, yen, Australian or Canadian dollar, and whatever currency needed) within a short period of time from anywhere in the world, transcending all boundaries (whether national, ideological, political, linguistic, religious).

 

All this water-market reshaping is occurring in the midst of a global frenzy over privatization of public infrastructure -- considered to be low-risk investments -- such as roads, bridges, tunnels, ports, airports, gas, and water and sewage treatment. Water is one of the critical infrastructures, and Wall Street knows it. For Wall Street and global capital, water is also so much more -- it is the new petroleum of this century, an essential commodity to be invested, owned, controlled, and speculated upon to maximize profit.  

 

Unfortunately, for water users everywhere, a likely consequence of Wall Street and multinational corporations' ownership and control of water in the midst of a global financial and economic crisis is that they will attempt to recapture their massive losses in their risky investments in the financial and housing/real estate sectors and elsewhere at the expense of water users.

 

For example, U.K. water customers are being squeezed by their private water utilities, to the tune of 17.5 percent to 62.2 percent increases in water rates, and could be paying as much as £1,000 in annual water bill per household within five years. Predictably, when Merrill Lynch boasts that its ML China Water Index yields a 102.2 percent returns, outperforming the benchmark by 70.7 percent during a 12-month period from 2006 to 2007, other multinational banks will also rush to invest in the water sector because they see it as a haven with rich rewards and expect these stratospheric returns. One possible outcome is the squeezing of water end-users.   

 

Private water utilities are monopolies and they are able to set prices at will (or exert monopolistic pricing) due to a lack of competition and governmental regulations. Additionally, water itself is an essential good without a substitute; demand for water is also inelastic relative to price: regardless of its cost, one must have minimal amount of freshwater for maintaining daily life -- for drinking, washing and hygiene, crop production, and food preparation. (Goldman Sachs sees water consumption doubling every 20 years.)

 

If the history of U.K.'s water privatization is a guide, then water users all over the world -- not just households, but also businesses, industries, and agriculture -- are in serious trouble because they will be held hostage to high prices exerted by the monopolistic private water corporations and water utilities, many of which are owned by multinational banks and investment banks, and in turn these banking institutions have their shareholders, private investors, and even public pension funds demanding and expecting high returns on their water investments.  

 

Water is more important than oil: it takes some 1,800 gallons to produce a barrel of crude oil, some 4,000 liters of water to produce a liter of ethanol, and 900 liters of water to make a liter of biodiesel. Several people have already made the statement about water being the new oil of the 21st century; recognizing its importance, Wall Street has rushed into global water markets to cash in on this liquid gold. The former heads of state, United Nations chiefs, CIA and Pentagon analysts, CEOs, tycoons, analysts with the world's largest investment banks and private-equity firms, and oil companies' executives have agreed on this.

 

Multinational and Wall Street banks and investment banks often disguise their investment in the water sector as a part of the so-called green, sustainable, environmentally friendly, socially responsible, clean-technology, climate friendly or global warming-reducing investments. They see "rich rewards" in water and infrastructure: Indeed, the European Union requires an investment of between U.S.$150 billion to U.S.$215 billion in sanitation infrastructure; more than U.S.$700 billion (incidentally, this is also the amount just given to bail out Wall Street) is needed to maintain and upgrade its water and sanitation infrastructure in the next 20 years. In Australia, an estimated AUD$5 billion is needed just to replace aging water assets in cities over the next five years and that AUD$30 billion is required to build new water infrastructure in the next decade.

 

Emerging economies such as China and India also have such serious water shortages and pollution problems that they both require at least a trillion dollars of investment to solve their respective water problems. Water-sector investment opportunities are also immense in Mexico, Egypt, the Middle East, Brazil, several African countries, and many other water-stressed nations.  

 

Why Water Is the "Petroleum for the 21st Century"  

 

Only 2.5 percent of the earth's water is freshwater -- and of that 2.5 percent, 70 percent is locked in the glaciers, ice caps, and aquifers, so less than 1 percent of world's freshwater (or 0.007 percent of world's water) is accessible and potable for humanity, to be shared by the world's 6.7 billion people, the myriads of wildlife and ecosystems, and humans' agriculture and industries.  

 

Back in 2001, the CIA had already estimated that by 2015, almost half of the world's population will live in water-stressed countries. Worldwide, 1.1 billion people lack adequate water and 2.6 billion people don't have adequate sanitation. By 2025, the United Nations forecast that 3 billion people will lack clean water. The Organization for Economic Corporation & Development (OECD) predicts that nearly 50 percent of the world's population will face severe water shortages by 2030. In China, some 360 out of 600 cities are facing water shortages, with 100 facing severe shortages, according to China Institute for Geo-Environment Monitoring. The first person to serve as China's Minister of State Environmental Protection Agency, Qu Geping, said, "The ideal population for China's limited water resources is no more than 650 million people." China's population is 1.3 million in 2008.  

 

Water is often dubbed "the new oil" because of its similarity to oil: diminishing supplies and rapidly growing demand worldwide. The world has already seen many oil wars in the 20th century over supposed dwindling supplies of natural commodities and resources. This century, the world has already witnessed the genocide in Darfur, which was initially brought about by climate-induced droughts and desertification lasting more than 20 years (since the 1980s), which led to tribal competition over water and grazing land between Arab nomads and black African farmers; these small-scale resource conflicts eventually exploded into a full-blown genocide backed by a racist, genocidal ideology.

 

Indeed, lobbying group Justice Africa told BBC in July 2007 that "the root cause of the conflict is resources -- drought and desertification in North Darfur." In June 2007, UN Environmental Programme (UNEP) said that peace in Darfur is nearly impossible unless the issues of environmental destruction were addressed.

 

Water is the basis of agriculture -- not just in growing food, but also in processing food. Water is the foundation of modern cities and urban sanitation systems -- from our indoor plumbing to centralized wastewater-treatment plants. Water is the basis of industries and manufacturing. Water is also used to generate electricity. Water sustains nature and wildlife. In essence, humanity can live without oil -- albeit more primitively -- but humanity cannot survive without water.

 

Simply put, without water, there's no agriculture and food production, no industries, no viable ecosystems, and no life. Major multinational banks and corporations around the world are waking up to the reality of water's emerging scarcity, which can disrupt national economies and lead to social and political chaos. In the midst of global climate change which brings extreme droughts and in the midst of a chaotic global financial and economic environment, water is a commodity likened to gold: it is liquid gold that sustains life. Hence, in the recent few years we have witnessed a mad rush by Wall Street and multinational banks and super-investors elsewhere to buy up and control this commodity.  

In the past few years, multinational and Wall Street investment firms and banks have launched water-targeted investment funds. Several well-known specialized water funds include Pictet Water Fund, SAM Sustainable Water Fund, Sarasin Sustainable Water Fund, Swisscanto Equity Fund Water, and Tareno Waterfund. Several structured water products offered by major investment banks include ABN Amro Water Stocks Index Certificate, BKB Water Basket, ZKB Sustainable Basket Water, Wagelin Water Shares Certificate, UBS Water Strategy Certificate, and Certificate on Vontobel Water Index.

 

One often-heard reason for the investment banks' rush to control of water is that, "Utilities are viewed as relatively safe assets in an economic downturn so [they] are more isolated than most from the global credit crunch, initially sparked by concerns over U.S. subprime mortgages," according to a 2007 Reuters article. A London-based analyst at HSBC Securities told Bloomberg News that water is a good investment because, "You're buying something that's inflation proof and there's no threat to earnings really. It's very stable and you can sell it any time you want.''

 

The Coming Tidal Wave of Privatization of Public Infrastructure and Municipal Services

 

Privatization of public infrastructure -- including water utilities -- has been gaining more mainstream media scrutiny recently. For example, the New York Times recently reported on cities debating the issue of privatization of public infrastructure: Wall Street investment banks and investors -- such as Goldman Sachs, Morgan Stanley, Credit Suisse, Kohlberg Kravis Roberts, and the Carlyle Group -- are amassing an estimated U.S.$250 billion "war chest -- much of it raised in the last two year -- to finance a tidal wave of infrastructure projects in the United States and overseas," the New York Times reported.

 

As the New York Times pointed out correctly, U.S. federal, state, and local governments are financially strained with "mounting deficits that have curbed their ability to improve crumbling roads, bridges and even airports with taxpayer money," hence both the voting public and the governments are increasingly open to the idea of privatizing public infrastructure; the crumbling infrastructure is estimated to require at least U.S.$1.6 trillion investment in the next five years to maintain and upgrade according to the American Society of Civil Engineers.

 

Currently, approximately 8 percent of water utilities worldwide are in private hands; this figure is expected to double by 2015, according to several investment-banking analysts. As for water corporations (e.g., those in technology and engineering, materials and equipment, vending and private distribution via water trucks), all are in private hands. According to data compiled by Bloomberg, the rate of infrastructure privatization for all types of infrastructure almost doubled to U.S.$340 billion between 2005 and 2007.

 

The New York Times also reported that many cities suffering severe financial strains after having been shut out of the municipal bond markets are cutting back infrastructure upgrade and maintenance projects. Cities are also facing revenue shortfalls attributable to unprecedented housing foreclosures (shrinking property-tax base), decreased employment base, dwindling sales taxes, and reduced funding from state and federal governments. For example, Athens-Clarke County in Georgia delayed a U.S.$221 million bond issue for upgrading its three sewage-treatment plants after Lehman Brothers filed for bankruptcy.

 

Given the current state of economy in the United States and elsewhere in the world, we can expect more municipal infrastructure and services privatization. Goldman Sachs, Citigroup, the Carlyle Group, AIG Highstar Capital, Credit Suisse (also partnering with GE), UBS AG, JPMorgan Chase, Deutsche Bank, and other multinational banks are amassing "war chests" of several billions of dollars in anticipation of this "tidal wave" of infrastructure (including water) privatization around the world.

 

 

Jo-Shing Yang is the author of Ecological Planning, Design, & Engineering, Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment, Small and On-Site Systems for Water Self-Sufficiency and Sustainability and can be reached at jsyang@alum.mit.edu">jsyang@alum.mit.edu.

 
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watercrises 14 days ago

Talking about the economics and business of water: Major banks and elite private equity firms are seeing water as the next oil, and they're aggressively entering the water sector buying up everything related to water.  They have amassed several billion dollars in their "infrastructure war chests" in preparation for the next tidal wave of infrastructure privatization (including water utilities).  This is my most article on this subject matter.

 

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

 

 

New article published on AlterNet.org (October 31, 2008)


(http://www.alternet.org/workplace/105083/why_big_banks_may_end_up_buying_your_city%27s_public_water_system/)

 

 

Why Big Banks May End up Buying Your City's


Public Water System

 

By Jo-Shing Yang, AlterNet. Posted October 31, 2008.



In uncertain economic and environmental times, big banks and financial groups are buying public water systems as safe investments.


Water is the new oil for global financial powerhouses and water is being commoditized and traded in global stock exchanges.

 

Today in addition to being able to buy water rights and purchase lakes on private land, an individual or a corporation can invest in water-targeted hedge funds, index funds and exchange-traded funds (EFTs), water certificates, shares of water engineering and technology companies, shares of multinational private water utilities, shares of multinational banks and investment banks that own water companies, and a host of other newfangled water investments in this U.S.$425 billion industry which is expected to become a U.S.$1 trillion industry within five years. And if one happens to be a tycoon, one can also create his or her own private water districts and water utilities.  

 

The recent media coverage on water has centered on individual corporations and super-investors seeking to control water by buying up water rights and water utilities. But paradoxically the hidden story is a far more complicated one. The real story of the global water sector is a convoluted one involving "interlocking globalized capital": Wall Street and global investment firms, banks, and other elite private-equity firms -- often transcending national boundaries to partner with each other, with banks and hedge funds, with technology corporations and insurance giants, with regional public-sector pension funds, and with sovereign wealth funds -- are moving rapidly into the water sector to buy up not only water rights and water-treatment technologies, but also to privatize public water utilities and infrastructure.  

 

"Water" and "water sector" are used broadly to refer to water rights (i.e., the right to tap groundwater, aquifers, and rivers), land with bodies of water on it or under it (i.e., lakes, ponds, and natural springs on the surface, or groundwater underneath), water-purification and treatment technologies (e.g., desalination, treatment chemicals and equipment), irrigation and well-drilling technologies, water and sanitation services and utilities, water infrastructure maintenance and construction (from pipes and distribution to all scales of treatment plants for residential, commercial, industrial, and municipal uses), water engineering services (e.g., those involved in the design and construction of water-related facilities), and retail water sector (such as those involved in the production, operation, and sales of bottled water, water vending machines, bottled water subscription and delivery services, water trucks, and water tankers).  

 

The story is multifaceted: In the midst of a recessionary economy with a blistering financial and economic crisis, declining employment, and a shrinking tax base, many financially strapped and debt-ridden local governments are beginning to relinquish public infrastructure (including water) and municipal services (including water and sewage utilities) to privatization by Wall Street and other global investors.

 

At the same time, Wall Street and multinational banks are seeing water, food, energy, and public infrastructure as safe investment havens with stable returns and financially liquid assets. Simultaneously, they are waking up to the golden opportunity presented by the current reality of a thirstier, water-scarcer world caused by global climate change (and its extreme weather), rapidly depleting groundwater and aquifers, increasing water pollution, soaring water demand exerted by population increases, fast-rising agricultural and industrial uses, and crumbling water infrastructure worldwide requiring billions of dollars annually in maintenance and upgrade.  

 

Often, the picture painted by mainstream media and water-rights activists is too simple -- that of a single corporation (such as Coca-Cola in India or Bechtel in Bolivia) "corporatizing water;" the real story is not just of flamboyant tycoons (such as U.S.'s billionaire and former oil tycoon T. Boone Pickens, or more recently, Hong Kong's real-estate billionaire Li Kai-shing, or Britain's magnate Vincent Tchenguiz) single-handedly grabbing water rights or individual corporations (e.g., Coca-Cola and Nestlé) sucking dry springs and groundwater to the detriment of poor subsistence farmers or slum-dwellers, but vastly complex global networks and partnerships of investment banks and private-equity firms linking together with other institutions (such as public-sector pension funds in Australia, Canada, and Europe; and sovereign wealth funds in the Middle East and Asia) and multinational corporations elsewhere to buy up and control water worldwide.  

 

Not only are individual corporations buying up water but a deluge of globalized capital are also rapidly buying up water and consolidating their foothold in the water sector; these capital entities are investment powerhouses such as Goldman Sachs, JPMorgan Chase, Merrill Lynch (before it was sold to Bank of America), Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, Macquarie Bank, Allianz SE, UBS AG, HSBC Bank, Alinda Capital, The Carlyle Group, Barclays Bank, Nomura Holdings, and many others. In fact, Wall Street and their global banking and corporate partners are aggressively buying up water all over the world.   

 

Given this recent liquid-gold rush by private (also several public pension-funds) capital, it will be extremely difficult for environmental activists and human rights advocates who called water a basic human right and a public good which should be under public control to reverse this privatization trend. Naturally, when governments are financially strained by revenue shortfalls and tightening municipal-bond markets, calls for privatization of existing public infrastructure and utilities will be louder and harder to resist.  

 

These banks and investment funds are aggressively entering the water sector, and they have raised billions of dollars for their water and infrastructure specialty investment funds (i.e., index funds, hedge funds) -- and they can recruit more money (in euro, pound sterling, dollar, RMB/yuan, yen, Australian or Canadian dollar, and whatever currency needed) within a short period of time from anywhere in the world, transcending all boundaries (whether national, ideological, political, linguistic, religious).

 

All this water-market reshaping is occurring in the midst of a global frenzy over privatization of public infrastructure -- considered to be low-risk investments -- such as roads, bridges, tunnels, ports, airports, gas, and water and sewage treatment. Water is one of the critical infrastructures, and Wall Street knows it. For Wall Street and global capital, water is also so much more -- it is the new petroleum of this century, an essential commodity to be invested, owned, controlled, and speculated upon to maximize profit.  

 

Unfortunately, for water users everywhere, a likely consequence of Wall Street and multinational corporations' ownership and control of water in the midst of a global financial and economic crisis is that they will attempt to recapture their massive losses in their risky investments in the financial and housing/real estate sectors and elsewhere at the expense of water users.

 

For example, U.K. water customers are being squeezed by their private water utilities, to the tune of 17.5 percent to 62.2 percent increases in water rates, and could be paying as much as £1,000 in annual water bill per household within five years. Predictably, when Merrill Lynch boasts that its ML China Water Index yields a 102.2 percent returns, outperforming the benchmark by 70.7 percent during a 12-month period from 2006 to 2007, other multinational banks will also rush to invest in the water sector because they see it as a haven with rich rewards and expect these stratospheric returns. One possible outcome is the squeezing of water end-users.   

 

Private water utilities are monopolies and they are able to set prices at will (or exert monopolistic pricing) due to a lack of competition and governmental regulations. Additionally, water itself is an essential good without a substitute; demand for water is also inelastic relative to price: regardless of its cost, one must have minimal amount of freshwater for maintaining daily life -- for drinking, washing and hygiene, crop production, and food preparation. (Goldman Sachs sees water consumption doubling every 20 years.)

 

If the history of U.K.'s water privatization is a guide, then water users all over the world -- not just households, but also businesses, industries, and agriculture -- are in serious trouble because they will be held hostage to high prices exerted by the monopolistic private water corporations and water utilities, many of which are owned by multinational banks and investment banks, and in turn these banking institutions have their shareholders, private investors, and even public pension funds demanding and expecting high returns on their water investments.  

 

Water is more important than oil: it takes some 1,800 gallons to produce a barrel of crude oil, some 4,000 liters of water to produce a liter of ethanol, and 900 liters of water to make a liter of biodiesel. Several people have already made the statement about water being the new oil of the 21st century; recognizing its importance, Wall Street has rushed into global water markets to cash in on this liquid gold. The former heads of state, United Nations chiefs, CIA and Pentagon analysts, CEOs, tycoons, analysts with the world's largest investment banks and private-equity firms, and oil companies' executives have agreed on this.

 

Multinational and Wall Street banks and investment banks often disguise their investment in the water sector as a part of the so-called green, sustainable, environmentally friendly, socially responsible, clean-technology, climate friendly or global warming-reducing investments. They see "rich rewards" in water and infrastructure: Indeed, the European Union requires an investment of between U.S.$150 billion to U.S.$215 billion in sanitation infrastructure; more than U.S.$700 billion (incidentally, this is also the amount just given to bail out Wall Street) is needed to maintain and upgrade its water and sanitation infrastructure in the next 20 years. In Australia, an estimated AUD$5 billion is needed just to replace aging water assets in cities over the next five years and that AUD$30 billion is required to build new water infrastructure in the next decade.

 

Emerging economies such as China and India also have such serious water shortages and pollution problems that they both require at least a trillion dollars of investment to solve their respective water problems. Water-sector investment opportunities are also immense in Mexico, Egypt, the Middle East, Brazil, several African countries, and many other water-stressed nations.  

 

Why Water Is the "Petroleum for the 21st Century"  

 

Only 2.5 percent of the earth's water is freshwater -- and of that 2.5 percent, 70 percent is locked in the glaciers, ice caps, and aquifers, so less than 1 percent of world's freshwater (or 0.007 percent of world's water) is accessible and potable for humanity, to be shared by the world's 6.7 billion people, the myriads of wildlife and ecosystems, and humans' agriculture and industries.  

 

Back in 2001, the CIA had already estimated that by 2015, almost half of the world's population will live in water-stressed countries. Worldwide, 1.1 billion people lack adequate water and 2.6 billion people don't have adequate sanitation. By 2025, the United Nations forecast that 3 billion people will lack clean water. The Organization for Economic Corporation & Development (OECD) predicts that nearly 50 percent of the world's population will face severe water shortages by 2030. In China, some 360 out of 600 cities are facing water shortages, with 100 facing severe shortages, according to China Institute for Geo-Environment Monitoring. The first person to serve as China's Minister of State Environmental Protection Agency, Qu Geping, said, "The ideal population for China's limited water resources is no more than 650 million people." China's population is 1.3 million in 2008.  

 

Water is often dubbed "the new oil" because of its similarity to oil: diminishing supplies and rapidly growing demand worldwide. The world has already seen many oil wars in the 20th century over supposed dwindling supplies of natural commodities and resources. This century, the world has already witnessed the genocide in Darfur, which was initially brought about by climate-induced droughts and desertification lasting more than 20 years (since the 1980s), which led to tribal competition over water and grazing land between Arab nomads and black African farmers; these small-scale resource conflicts eventually exploded into a full-blown genocide backed by a racist, genocidal ideology.

 

Indeed, lobbying group Justice Africa told BBC in July 2007 that "the root cause of the conflict is resources -- drought and desertification in North Darfur." In June 2007, UN Environmental Programme (UNEP) said that peace in Darfur is nearly impossible unless the issues of environmental destruction were addressed.

 

Water is the basis of agriculture -- not just in growing food, but also in processing food. Water is the foundation of modern cities and urban sanitation systems -- from our indoor plumbing to centralized wastewater-treatment plants. Water is the basis of industries and manufacturing. Water is also used to generate electricity. Water sustains nature and wildlife. In essence, humanity can live without oil -- albeit more primitively -- but humanity cannot survive without water.

 

Simply put, without water, there's no agriculture and food production, no industries, no viable ecosystems, and no life. Major multinational banks and corporations around the world are waking up to the reality of water's emerging scarcity, which can disrupt national economies and lead to social and political chaos. In the midst of global climate change which brings extreme droughts and in the midst of a chaotic global financial and economic environment, water is a commodity likened to gold: it is liquid gold that sustains life. Hence, in the recent few years we have witnessed a mad rush by Wall Street and multinational banks and super-investors elsewhere to buy up and control this commodity.  

In the past few years, multinational and Wall Street investment firms and banks have launched water-targeted investment funds. Several well-known specialized water funds include Pictet Water Fund, SAM Sustainable Water Fund, Sarasin Sustainable Water Fund, Swisscanto Equity Fund Water, and Tareno Waterfund. Several structured water products offered by major investment banks include ABN Amro Water Stocks Index Certificate, BKB Water Basket, ZKB Sustainable Basket Water, Wagelin Water Shares Certificate, UBS Water Strategy Certificate, and Certificate on Vontobel Water Index.

 

One often-heard reason for the investment banks' rush to control of water is that, "Utilities are viewed as relatively safe assets in an economic downturn so [they] are more isolated than most from the global credit crunch, initially sparked by concerns over U.S. subprime mortgages," according to a 2007 Reuters article. A London-based analyst at HSBC Securities told Bloomberg News that water is a good investment because, "You're buying something that's inflation proof and there's no threat to earnings really. It's very stable and you can sell it any time you want.''

 

The Coming Tidal Wave of Privatization of Public Infrastructure and Municipal Services

 

Privatization of public infrastructure -- including water utilities -- has been gaining more mainstream media scrutiny recently. For example, the New York Times recently reported on cities debating the issue of privatization of public infrastructure: Wall Street investment banks and investors -- such as Goldman Sachs, Morgan Stanley, Credit Suisse, Kohlberg Kravis Roberts, and the Carlyle Group -- are amassing an estimated U.S.$250 billion "war chest -- much of it raised in the last two year -- to finance a tidal wave of infrastructure projects in the United States and overseas," the New York Times reported.

 

As the New York Times pointed out correctly, U.S. federal, state, and local governments are financially strained with "mounting deficits that have curbed their ability to improve crumbling roads, bridges and even airports with taxpayer money," hence both the voting public and the governments are increasingly open to the idea of privatizing public infrastructure; the crumbling infrastructure is estimated to require at least U.S.$1.6 trillion investment in the next five years to maintain and upgrade according to the American Society of Civil Engineers.

 

Currently, approximately 8 percent of water utilities worldwide are in private hands; this figure is expected to double by 2015, according to several investment-banking analysts. As for water corporations (e.g., those in technology and engineering, materials and equipment, vending and private distribution via water trucks), all are in private hands. According to data compiled by Bloomberg, the rate of infrastructure privatization for all types of infrastructure almost doubled to U.S.$340 billion between 2005 and 2007.

 

The New York Times also reported that many cities suffering severe financial strains after having been shut out of the municipal bond markets are cutting back infrastructure upgrade and maintenance projects. Cities are also facing revenue shortfalls attributable to unprecedented housing foreclosures (shrinking property-tax base), decreased employment base, dwindling sales taxes, and reduced funding from state and federal governments. For example, Athens-Clarke County in Georgia delayed a U.S.$221 million bond issue for upgrading its three sewage-treatment plants after Lehman Brothers filed for bankruptcy.

 

Given the current state of economy in the United States and elsewhere in the world, we can expect more municipal infrastructure and services privatization. Goldman Sachs, Citigroup, the Carlyle Group, AIG Highstar Capital, Credit Suisse (also partnering with GE), UBS AG, JPMorgan Chase, Deutsche Bank, and other multinational banks are amassing "war chests" of several billions of dollars in anticipation of this "tidal wave" of infrastructure (including water) privatization around the world.

 

 

Jo-Shing Yang is the author of Ecological Planning, Design, & Engineering, Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment, Small and On-Site Systems for Water Self-Sufficiency and Sustainability and can be reached at jsyang@alum.mit.edu">jsyang@alum.mit.edu.

 
Sm_avatar
View Context | Flag comment for removal
watercrises 14 days ago

Major banks and elite private equity firms all over the world are seeing water as the next oil and they are aggressively entering the water sector.  They have amassed several billions dollars in their "infrastructure war chests" in preparation for the next tidal wave of infrastructure (including water utilities) privatization.  This is my most recent article on this subject matter.

 

 

++++++++++++++++++++++++++++++++++++++++++++++++

 

New article published on AlterNet.org (October 31, 2008)


(http://www.alternet.org/workplace/105083/why_big_banks_may_end_up_buying_your_city%27s_public_water_system/)

 

 

Why Big Banks May End up Buying Your City's


Public Water System

 

By Jo-Shing Yang, AlterNet. Posted October 31, 2008.



In uncertain economic and environmental times, big banks and financial groups are buying public water systems as safe investments.


Water is the new oil for global financial powerhouses and water is being commoditized and traded in global stock exchanges.

 

Today in addition to being able to buy water rights and purchase lakes on private land, an individual or a corporation can invest in water-targeted hedge funds, index funds and exchange-traded funds (EFTs), water certificates, shares of water engineering and technology companies, shares of multinational private water utilities, shares of multinational banks and investment banks that own water companies, and a host of other newfangled water investments in this U.S.$425 billion industry which is expected to become a U.S.$1 trillion industry within five years. And if one happens to be a tycoon, one can also create his or her own private water districts and water utilities.  

 

The recent media coverage on water has centered on individual corporations and super-investors seeking to control water by buying up water rights and water utilities. But paradoxically the hidden story is a far more complicated one. The real story of the global water sector is a convoluted one involving "interlocking globalized capital": Wall Street and global investment firms, banks, and other elite private-equity firms -- often transcending national boundaries to partner with each other, with banks and hedge funds, with technology corporations and insurance giants, with regional public-sector pension funds, and with sovereign wealth funds -- are moving rapidly into the water sector to buy up not only water rights and water-treatment technologies, but also to privatize public water utilities and infrastructure.  

 

"Water" and "water sector" are used broadly to refer to water rights (i.e., the right to tap groundwater, aquifers, and rivers), land with bodies of water on it or under it (i.e., lakes, ponds, and natural springs on the surface, or groundwater underneath), water-purification and treatment technologies (e.g., desalination, treatment chemicals and equipment), irrigation and well-drilling technologies, water and sanitation services and utilities, water infrastructure maintenance and construction (from pipes and distribution to all scales of treatment plants for residential, commercial, industrial, and municipal uses), water engineering services (e.g., those involved in the design and construction of water-related facilities), and retail water sector (such as those involved in the production, operation, and sales of bottled water, water vending machines, bottled water subscription and delivery services, water trucks, and water tankers).  

 

The story is multifaceted: In the midst of a recessionary economy with a blistering financial and economic crisis, declining employment, and a shrinking tax base, many financially strapped and debt-ridden local governments are beginning to relinquish public infrastructure (including water) and municipal services (including water and sewage utilities) to privatization by Wall Street and other global investors.

 

At the same time, Wall Street and multinational banks are seeing water, food, energy, and public infrastructure as safe investment havens with stable returns and financially liquid assets. Simultaneously, they are waking up to the golden opportunity presented by the current reality of a thirstier, water-scarcer world caused by global climate change (and its extreme weather), rapidly depleting groundwater and aquifers, increasing water pollution, soaring water demand exerted by population increases, fast-rising agricultural and industrial uses, and crumbling water infrastructure worldwide requiring billions of dollars annually in maintenance and upgrade.  

 

Often, the picture painted by mainstream media and water-rights activists is too simple -- that of a single corporation (such as Coca-Cola in India or Bechtel in Bolivia) "corporatizing water;" the real story is not just of flamboyant tycoons (such as U.S.'s billionaire and former oil tycoon T. Boone Pickens, or more recently, Hong Kong's real-estate billionaire Li Kai-shing, or Britain's magnate Vincent Tchenguiz) single-handedly grabbing water rights or individual corporations (e.g., Coca-Cola and Nestlé) sucking dry springs and groundwater to the detriment of poor subsistence farmers or slum-dwellers, but vastly complex global networks and partnerships of investment banks and private-equity firms linking together with other institutions (such as public-sector pension funds in Australia, Canada, and Europe; and sovereign wealth funds in the Middle East and Asia) and multinational corporations elsewhere to buy up and control water worldwide.  

 

Not only are individual corporations buying up water but a deluge of globalized capital are also rapidly buying up water and consolidating their foothold in the water sector; these capital entities are investm