Political, Environmental and Business Aspects of Bulk Water Exports: A Canadian Perspective

Article excerpt

Abstract

The issue of exporting water in bulk raises debate among political, economic, environmental, and nationalist groups, particularly in Canada. This research examines bulk water exports by investigating their feasibility as businesses. A hypothetical project was devised for the Annapolis Valley in western Nova Scotia, Canada. The Valley's demographics, climate, and economy were analyzed and its watersheds were studied to better choose a water extraction site. A potential target market was chosen-Brownsville, Texas. Then, a design for the project was proposed using very large crude carriers (VLCC) and the relevant costs were identified. Next, the costs were analyzed in a breakeven analysis. The calculations determined that such a venture is unprofitable by a factor of four times which explains the scarcity of such projects.

JEL Classifications: Q21, Q25

Keywords: Water, Cost-benefit analysis, Government Policy, Natural Resources, Domestic and International Conflicts, Environment and Trade

Résumé

La question de à exportation de l'eau en gros soulève discussion dans les milieux politiques, économiques, écologiques et nationalistes, surtout au Canada. Cette étude en examine la faisabilité commerciale. Un projet hypothétique est conçu, avec pour site la Vallée d'Annapolis, située dans l'ouest de la Nouvelle-Ecosse, au Canada. Les données démographiques, le climat et l'économie de la Vallée sont analysés et sa ligne de partage des eaux étudiée dans le but de mieux choisir le site d'extraction. La ville de Brownsville au Texas est le marché hypothétique retenu. Un plan contenant un devis estimatif est proposé. Pour exporter l'eau, on se servira de grands transporteurs de brut (VLCC). Les calculs indiquent qu'une telle entreprise est quatre fois peu rentable, d'où la rareté de tels projets.

Mots clés : Eau, analyse coûts-avantages, Politique de gouvernement, Ressources naturelles, Conflits domestiques et internationaux, Environnement et commerce

Many hydrologists expect the demand for water to continue to increase with the world's rapidly growing population (GIeick, 2003). Engelman, Halweil, and Nierenberg (2002) predicted that in the year 2025, between 2.4 and 3.5 billion people will be living in water stressed or water scarce countries, compared to 505 million people in 2002. Water resource scarcity is also exacerbated as peoples' lifestyles become more industrialized and thus more consumptive (Rosegrant, Cai, & Cline, 2002).

Many solutions have been suggested to manage this problem, such as altering the flow of waterways, conservation, and desalination (de Villiers, 2003). Another suggested solution is to move water from areas with abundant supplies to areas experiencing shortages, in other words, transferring the water. The term water exports will be used in this paper to refer to bulk transfers of water from one location to another using tankers. This kind of transfer is generally considered a type of medium scale export, as opposed to sales of bottled water (small scale) and watershed diversions (large scale).

The aim of this paper is to concentrate on one aspect of the complex issue of water exports: namely, the feasibility and practicality of a water export business and its impacts. The case study investigates the basic economics of establishing such a business and operating it, as well as describing the potential implications on the surrounding watershed, both biophysically and socio-economically. The issue of water exports will be put in perspective because if such exports are not attractive from a business point of view it is unlikely that the exports will ever take place (Brooks & Miljan, 2003; de Villiers, 2003).

The Controversy Associated with Water Exports

In Canada, the idea of moving and selling water has been one of the great environmental and political controversies of the past three decades (Boyd, 2003; de Villiers, 2003; Linton, 1997; Rothfeder, 2001). …