According to NASA, 70% of the world’s surface is covered in water. Even though this seems to be a lot, it turns out that it isn’t enough because of all that water, only 2.5% is freshwater and fit for human consumption. With the combined challenges of climate change and population growth, it is clear that there is not enough water for the future. So much so that the United Nations projects that by the year 2050, two-thirds of the world’s population will be affected by water scarcity.
Generally, water has been regarded as a natural resource, subject to common ownership by all people. This means that whoever wants water should have access to it. You might say that you already buy bottled water and it’s not owned by all people. This is true. In reality, what you bought is the liquid the brand put in a bottle and sold to you. The water at its source, as a natural resource remains free and you have as much right to it as say Nestle. So, Nestle can refuse to sell you a bottle of water. However, they cannot stop you from fetching from the river where they source their water.
This is reasonable given how important water is to us as individuals and the planet as a whole. It is reasonable to expect that one should get access to water when you turn on the tap or any other time you need it. It is this belief that there is water and it is reasonable that everyone should have access to it that makes the average person unaware that there are people who think otherwise. Enter “commodification” of water; an attempt to put a value on water.
Commodification means putting an economic value on something. Therefore, the commodification of water refers to the process of transforming water, especially freshwater, from a public good into a tradable commodity also known as an economic good. This means that water stops being a natural resource and becomes a product from which the owners can extract maximum profit. Australia has led the world in this with the introduction of limited water trading in Victoria, and the National Competition Policy in the early 1990s. The adoption of nationally agreed water reform packages in 1994 and 2004 further facilitated the expansion of water markets across connected valleys and eventually state borders and now more countries are geared to follow suit.
In theory, commodification makes sense. It tries to tap into the human drive for self preservation. Water cannot be well preserved because it belongs to everyone and no one, therefore wants takes care of it. However, if you remove it and give it to specific people, they have the motivation to protect it so as to protect their interests for survival or profit. In theory at least.
This move towards commodification started with the privatisation of water utilities in some parts of the world. This of course was not enough. The ultimate goal is to privatise the water itself. So, with commodification, water can be traded such as the likes of oil and gold. In practical terms, an investment bank buys the water rights to a region which may include all rivers and water reserves in that region. This becomes an investment for the company. This investment is bought and sold on the commodities exchange like the stock exchange or in the case California, a water index exchange. This means that water becomes subject to market forces such as supply and demand. Now, as outlined earlier, water is getting scarcer and of course will always be in demand. Therefore, the prices can only go in one direction; up. Farmers who want access to water would have to buy it from the company. Any farmer who can’t afford it simply fails to get water or hopes for rain. That way, water grows in value and waste is eliminated.
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Our reality though is that we already value water; so much that we equate water with life. What economists and bankers argue is that for something so precious and valuable, we don’t treat it so. In my opinion, this is simply capitalist-speak for what they really mean which is “…for something so valuable, why are we not making profits from it?”, an immoral argument that can only be made by greedy criminals in suits.
The stated argument here is that putting a price on water and trading it will show areas which need water the most and allocation will be optimised thus solving our looming water crisis. I believe that these people are not interested in a solution. A solution means abundance of water and that is not the goal here. The goal is profit from control of a commodity, and control can only come from scarcity. This is why we find ourselves in the year 2021 fighting to stop greedy bankers from controlling water assets instead of discussing how to create abundant water for everyone.
When I first read about the attempts at commodification of water, my knee-jerk reaction was to condemn it in its entirety. However, I took the time and read the arguments and research on the matter. Having done this and having understood all sides to the argument better, I still unequivocally condemn it in its entirety. I am a believer in the power of capitalism and profit to drive innovation, but I also understand the infinite capacity of man for greed. This is one of those times where capitalism is an extremely bad idea.
Now as much as I hold this view, I also believe it is important for us all to face the reality of the looming water crisis. As we battle the greedy hordes at the gate who seek to make our water their riches, it is crucial for us to accept and begin to do better. Water use and management at present is nothing to write home about. Household leaks can waste approximately nearly 900 billion gallons of water annually, and this equals the annual household water use of nearly 11 million homes. The global water footprint is estimated at nine trillion tons per year. That’s almost 300,000 tons of water used a second. To put this into perspective, an average U.S. citizen uses 100 gallons (375 liters) per day with tons of waste and sewage equally being produced. If we continue with business as usual, then water will grow more scarce and economists and financiers will gain more ground in their argument.
So it is important that we start taking steps to change our lifestyles appropriately and conserve as much water as possible. This more than anything will increase water abundance and moot the idea of “putting a price on water”. For instance, in 2019, the South African city of Cape Town, became one of the first cities close to Day Zero; the day where they would have to turn off the city’s water and start rationing. With that prospect looming over the heads of all residents, water use and management by Cape Town’s citizens changed drastically. Partly as a result of this, Day Zero was pushed back and the countdown has stopped permanently.
On this issue of water sacricty and commodification, our world is approaching Day Zero. For you and I, the best time to act was yesterday.
The second best time is now.
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Cover image of women collecting water manually from a well. Photo by Albert Gonzalez Farran/UNAMID.