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Page added on March 8, 2018

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Will water ever be worth more than oil?

Enviroment
Cape Town, in South Africa, has been declared a natural disaster. Credit: Phillip Gardner/University of Melbourne

Nature has declared that the world’s supply of water is fixed. As a means of keeping humanity alive, it has no substitute.

Recently, Cape Town has become painfully aware of the value of water.

The unwelcome combination of a once-in-a-century drought, a booming population and a relatively inflexible water supply, means the South African city will have its taps turned off on 9 July. The dreaded Day Zero will mean people will be forced to queue for their water under police or military supervision.

Experts say that Cape Town could be the first of many cities around the world to experience the brutal reality of far outstripping supply.

It raises a particularly dystopian question: could water, one of the world’s most abundant resources, ever be more expensive than one of its rarest, oil?

“It already is,” says Dr Brian Cook, a researcher in Development Geography.

He’s right.

In Australian supermarkets, a bottle of Mount Franklin Spring Water costs around $3.33 a litre. At the pumps in mid-February 2018, the average cost of a litre of unleaded petrol is less than half that, at $1.38.

The end of days already stalks our supermarkets.

Of course, Dr Cook stresses, it is more complicated and less alarmist than that. Unlike petrol, is available from a drinking fountain or a tap, in some instances for free.

“My point is that context matters,” he says. “In certain contexts, water is already more expensive than gas or petrol. It has to do with where you are, how much you are purchasing, and whether your country subsidises that resource.”

And it depends how a country values that resource: is it a commodity or a right? Most countries seem to agree that water is a right, keeping it cheap or free to access.

For example, during the current crisis in Cape Town, now officially decreed a natural disaster, the price of bottled water has remained at the same levels as it was before the drought.

India’s six biggest cities are among those most affected by water shortages. Credit: Getty Images

“If we want things to be cheap, society has pretty good ways of doing that,” says Dr Cook. Politicians can use economic levers such as tax breaks, subsidies and tariffs to do this.

“Some might suggest it is the that drives this, but the value of things is a social construction.”

However, market forces could soon test our commitment to cheap water as a human right.

Economist Dr David Byrne says that political sensitivities around water keep the cost low to ensure universal access. “However,” he adds, “the bigger question becomes, in the long run, how hard do we stick to those beliefs?”

The temptation for water-rich countries is the creation of an international water market.

Unlike valuable commodities like oil and gold, there is no explicit global market for water and therefore no agreed universal price for trading.

But should one arise, says Dr Byrne, this could cause the domestic price of water to escalate rapidly.

“Areas such as China and India, or in the longer term, Africa are developing rapidly,” he says. “They have booming populations that require to live and they might be willing to pay exorbitant amounts for fresh water from places like Canada, even though it is regulated.

“That asks the question: do governments need to secure water resources for their own countries, and then exploit their for economic benefit just like any other resource like oil or minerals? There’s no reason why that wouldn’t happen in the case of water and the price overseas could go through the roof.”

However, even if governments try to keep water prices low for its own citizens, Dr Byrne says an international water market could still overheat domestic prices.

He cites the example of gas prices in Australia, which are tied to international demand. Despite having the second biggest reserves of natural gas in the world, domestic prices in Australia are high because it is being sold at a premium to gas-poor countries.

“Why? Because there was a signal to the market,” says Dr Byrne. “We have cheap gas here, huge demand elsewhere, we have invested in expensive new gas platforms, and all of a sudden the international market has a say.”

The international water market may still be unrealised, but Australia is one of the few places in the world where there is an agreed price of water.

Some water-rich countries could be tempted to create an international water market. Credit: Phillip Gardner/University of Melbourne

A limited water market began in the 1980s in rural Victoria, tightly regulated by the Department of Agriculture and Water Resources, allowing water to be moved to its most economically productive areas.

It was eventually expanded across the Murray-Darling basin, with water moving among rivers and catchment lines to the irrigators, farmers, and environments with greatest need. Its annual turnover is now worth between A$1 and A$3 billion.

According to Dr Angus Webb, from the Environmental Hydrology and Water Resources in the Department of Infrastructure Engineering, the market is “revolutionary on a world scale”.

By following classic supply and demand principles, he says, the price of water in rural Australia accurately reflects its value. It is expensive in years of drought, cheap in years of plenty.

“The price fluctuates widely, but not quickly, depending how much water is in the system,” says Dr Webb. “I wouldn’t be exaggerating to say it could fluctuate by a factor of ten between the high and low on the temporary water market.”

During the Millennium Drought that hit Australia at the turn of the century, the price of a megalitre (one million litres) of water reached A$1000. In years of abundant rainfall, the price hovers around A$80.

At the height of the drought, in 2006-07, it meant that water was more valuable to farmers than another day-to-day commodity: milk.

Dairy farmers in the Goulburn catchment, part of the Murray-Darling basin, mothballed their operations when their water quota became more valuable than the operational costs and sale of their milk.

They sold their allowance on the water market to producers of more expensive, water-hungry products, such as almond horticulture, giving the dairy farmers an income. Once water became more abundant and the price fell again, the dairy farms resumed operations.

Some experts believe that without the water markets, both the dairy and the horticulture industries in the area would have collapsed.

Yet some are uncomfortable with market forces leaking into water management.

Dr Cook warns that treating water as a commodity threatens its future as a resource available to all.

“I just hope that we debunk the notion that we need to commoditise something to conserve it,” he says. “That argument is lovely but simplistic. Almost all the research shows that as soon as you put a value on something, people want to use it.

“But the truth is, if you live in a capitalist society, water is already a commodity. But, I hope that we don’t swing too far and abandon the aspiration that is a human right.”

Read more at: https://phys.org/news/2018-03-worth-oil.html#jCp

 

phys.org



14 Comments on "Will water ever be worth more than oil?"

  1. DerHundistlos on Thu, 8th Mar 2018 2:43 pm 

    Kunt’s 2015 Forecast:

    Markets tanking in Q3 destroy the illusion of “recovery.” It becomes obvious that the story was a lie and the public mood grows much more surly.

    WRONG

    2014 proves to be the year of peak shale oil. After the shakeout of 2015 due to low oil prices, production never returns to previous levels. The fairy tales of “energy independence” and “Saudi America” fall apart, deeply demoralizing a gulled public and adding yet another layer of discredit to the people in charge of things.

    DITTO WRONG

    Different kinds of political revolt break out around the country among varied groups, left, right, and center. Some of it revolves around life-and-death struggles for the souls of the floundering major parties. Some of it is organized violence against the government and especially against the US security state apparatus, including overly militarized local police forces.
    Low-grade racial warfare erupts across the US. Flash mobs, knock-out games, lootings, and hammer attack type outrages generate counter-attacks. By summertime the conflict heats up. Firefights become routine and casualties mount. President Obama proves to be tragically ineffectual in restoring peace.

    DITTO…NOT JUST WRONG BUT TOTALLY DELUSIONAL

    Anti-immigration sentiment in Europe spreads to the US as falling oil prices produce political disorder in Mexico prompting tens of thousands to try to flee north.

    DITTO…. NOT EVEN CLOSE, AGAIN

    Bank of America is the first of the Too Big To Fails to enter the event horizon of failure. Obama can’t get congress to go along with a bailout. By Thanksgiving, there is turmoil among the banks as they scramble to cover losses. A public furor over using taxpayer money to cover derivatives losses leads to an unprecedented concerted action by states to attempt “nullification” campaigns. Citibank applies for a bail-in of account holders. Ditherting, frightened federal authorities are too slow to respond, permitting a run on deposits.

    DITTO…FRUITCAKE WRONG

    Hillary is loudly booed and hectored at campaign stops as “a tool of Wall Street.” Her coffers overflow with TBTF bank contributions. She bows out of the presidential contest as the public mood toward her sours. But not before she generates a lot of resentful opposition and alienates many Democratic Party voters who are also furious over the eight-years of Obama’s “hope” and “change” hand-jive. Elizabeth Warren is dragooned to replace her — dubbed the “Un-Hillary” — rescuing the party from a near-death experience. She openly feuds with party bosses, who plot against her, and undermine her campaign.

    DITTO….CUCKOO BIRD WRONG

    Senator Rand Paul agitates to abolish the Federal Reserve. His senate colleagues are shamed into considering legislative reform of the Fed’s mandate. Debate on the issue is the only thing the Republican dominated congress and senate accomplish in 2015. Paul decides to challenge Jeb Bush for the 2016 nomination. This blows the Republican party apart.

    DITTO….SAD AND PATHETIC

    SCORE: 0/100, CUMULATIVE GPA: 0.00

    Let’s not forget what Thedrich and Davy told us,

    “Kunstler is almost paranormal in his prediction accuracy.”

    The two clowns, Davy and Thedrich, had no idea if Kunt’s forecasts were right or wrong. Instead, they liked the story line so they made stupid statements in support of Kunt’s “uncanny and supernatural ability to predict the future” in the hope that no one would verify the legitimacy of their statements of “truth”, and said I was a Democratic liar and apologist and crook and fake, etc.

    They made the mistake of assuming I did not know what I stated.

    Notice a pattern of behavior?

  2. bobinget on Thu, 8th Mar 2018 3:13 pm 

    On topic reply.

    Water can be recycled, even in the home with no special equipment.

  3. Cloggie on Thu, 8th Mar 2018 3:46 pm 

    The North has more than enough drinking water and so does Brasil. If water is going to be more expensive than oil (in selected areas like SA or Australia) than all these oil tankers could perfectly function as, well, water carriers.

  4. onlooker on Thu, 8th Mar 2018 4:18 pm 

    Scarcity of anything relative to demand will increase ,Eco 101. Maybe the North will end up trading water for Oil with the Middle East and South. As it stands now North has enough water and Oil. Not many other can boast that

  5. onlooker on Thu, 8th Mar 2018 4:19 pm 

    increase price

  6. MASTERMIND on Thu, 8th Mar 2018 4:32 pm 

    I live 20 miles away from Lake Michigan! or as we say around here “No salt, No sharks, No worries”….

  7. DerHundistlos on Thu, 8th Mar 2018 5:58 pm 

    Oh, sure, Bob, shame on me for an “off-topic” reply since we know that each and every post on this site is always “on-topic”.

    Hope I don’t find you making future off-topic replies.

  8. Davy on Thu, 8th Mar 2018 7:34 pm 

    Der, Hund you are worse than off topic you are off reality. What you need is someone to grab the checkbook and car keys and keep you safe inside a locked house.

  9. brough on Fri, 9th Mar 2018 3:13 am 

    Of course water is worth more than oil, always has.
    You can last about a month without traveling to your nearest food distribution point.
    But without water you dead in a week.

  10. deadly on Fri, 9th Mar 2018 3:17 am 

    I have a good well and it can pump out four gallons per minute. I flood the dry ground all day long. Water is the most critical limiting factor.

    24 times 60 equals 1440 minutes per day.

    1440 times 4 equals 5800 gallons per day.

    30 full days of watering is 174,000 gallons.

    Half of the amount required to grow an acre of crop.

    Saves everything.

    If the water isn’t there, nothing grows.

    When you are planting 28 quarters of land, 4480 acres, you want it to rain, and bad. It is the bread and butter. Without rain, it is teats up. At 50 bushels per acre yield, the hopeful average, wheat and barley acres planted, you will have 224,000 bushels of grains. Water is needed in the worst way to get those 224,000 bushels. 50 times 4480 equals 224,000. They just don’t appear like magic, it takes work, whatever that is.

    Those days are long gone, but the memories are good. I’m a stupid old man now and these days these days are a bonus, a treat. Tough to face reality, but it’s the truth.

    When water is needed, it has more value than oil, hands down. You need more of it than oil.

    Maybe ten gallons of fuel to grow one crop on an acre of land.

    If you want corn at 200 bushels per acre, you’ll need 50 inches of rainfall in a year’s time.

    One acre of land that receives one foot of rain in a growing season will grow a corn crop. Down in Louisiana, corn will yield 300 bushels per acre.

    The bare minimum to a mature harvestable crop of corn, you’ll need at least twelve inches of rain during the growing period.

    Rocks and sand won’t do no good, you need nutrient-rich soil that is saturated with water, maybe 75 percent to get the seeds germinated. Some nitrogen, anhydrous ammonia, to green everything up for a healthy beginning for the gmo corn seedlings. You can tell when the plant is short nitrogen, it turns yellow/green, not the verdant hills green. Natural gas to anhydrous ammonia does that, keeps the seedlings green from the get go. Makes all of the difference in the world.

    Can’t start out on dry ground with no water until you dig down a foot, it is a problem then.

    Anyhow, the corn crop is in the ground and the seedlings are at the nascent stage. You’re good to go.

    Then a spray of Roundup herbicide to kill all of the noxious plants so only the corn plants grow, got to do that, saves fuel and cultivating time. Chemical tillage is the bomb. When heavy duty chemicals are sprayed onto a field, the rabbits jump out of their rabbit holes and run for cover. Your eyes burn from the mist of ag chemicals broadcast everywhere you go and see. It is a sight to behold, the rabbit running a rabbit run. All because ag chemicals are going to get the job done. Who cares about hares? Club them to death, they eat everything. Fry them up and eat them. Top of the food chain stuff.

    Modern agriculture that has gotta be done, the banker wants the loan to perform.

    Modern ag practices are really a chimera, but you can’t go there. The banks don’t like it, money talks.

    43,560 square feet per acre, one foot of water, 43,560 cubic feet of water.

    The number of gallons of water in a cubic foot is 7.48. 7.48 times 43,560 cubic feet is 325,828 gallons of water.

    Water is far more valuable than oil if you want to obtain a successful crop of corn.

    Oil can help with the production and completion of harvest, but it cannot grow anything without man’s knowledge and input.

    All water has to do is be there, right there in the ground. When it falls from the sky, it is then worth its weight in gold.

    Just the way it is.

    Have a nice day. Time to start drinking, it’s after midnight.

  11. Shortend on Fri, 9th Mar 2018 4:48 am 

    I KNOW My RIGHTS…Its in my contract…
    Now I want my glass of water

  12. Norman Pagett on Fri, 9th Mar 2018 5:30 am 

    communities evolved close to water—they had to, because we need 2 litres a day of it to survive under average conditions

    it is not possible to carry a weeks water around, so it has to be fetched daily from source.

    that was the case until we invented pumps. Now we can live great distances from water sources, and have it delivered. Unfortunately this needs energy, usually oil. If we desalinate it–the same problem arises, as does the problem when we turn fresh water into sewage

    We are not running out of water, we are running out of the means to move water to where we need it

  13. fmr-paultard on Fri, 9th Mar 2018 6:23 am 

    life is complex so supertards give me safe electricity and water is NOT critical.
    Everything is not critical until it becomes critical.

    If heating is not working in the winter, many things go critical …just give it a couple of days.

  14. Cloggie on Sat, 10th Mar 2018 8:08 am 

    Message to planet: no worries, Holland has the potential to become the water-Saudi-Arabia of the future. If Holland wouldn’t pump the drinking water away into the sea, the country would drown:

    https://www.youtube.com/watch?v=jMQwvR-40WY

    It is not for nothing that our king…

    https://www.youtube.com/watch?v=AYU-n7Ket-c

    … is a water management specialist:

    https://www.youtube.com/watch?v=3XUWV_wIyDw

    “Willem Alexander Water Prince on CNN”

    It is one of the foremost issues in this 21st century.

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