Water crisis: how the market economy is sucking us dry

February 8, 2007

As with other environmental issues, Australia's water crisis has reached such an extent that mainstream media and politicians are being forced to abandon their traditional policy of denial. However, true to form, politicians are proposing solutions that are a mixture of the half-hearted, the irrelevant and the destructive. In common with the debates on global warming and Third World poverty, there is an underlying assumption that the water crisis can be overcome by the very thing that created it — the market economy.

Interestingly, if the Australian continent is taken as a whole, 2006 was a fairly average year for rainfall. However, this average hides the fact that in the north and west of the continent rainfall was at a record high while in the south and east it was at a record low. This points to one of the causes of the drought — climate change due to carbon emissions from burning fossil fuels.

The term global warming describes the overall trend of climate change. It is manifested in extreme and atypical weather conditions all over the world. In the Caribbean this means hurricanes of increased frequency and strength. In southern and eastern Australia it means drought. The role of global warming in the drought means that it cannot be seen as cyclical — strategies for dealing with the water crisis that are based on the assumption that rainfall will return to normal are doomed to fail.

This also underlines the necessity to reduce carbon emissions. While this needs to happen on a global scale, Australia has the highest per capita carbon emissions in the world. Another factor in the Australian drought is the importation and development, since the British invasion, of agricultural and industrial practices inappropriate for a naturally dry continent.

The February 1 Herald-Sun reported that based on current daily usage, Melbourne had enough water in its reservoirs to last just 18 months. It would take 7 years of average rainfall for the city's nine reservoirs to be refilled. Last year rainfall in the region was 31.5% below average. Other urban centres such as Perth, Brisbane and Sydney have even less water in their reservoirs while rural towns such as Goulburn in NSW are on the point of running out of water.

Governments have proposed a number of measures to deal with the crisis. In Brisbane there are moves to recycle sewage. While use of recycled waste-water and stormwater is essential (three-quarters of Sydney's water use ends up in ocean outfalls), there are questions regarding the safety of recycling sewage into drinking water. The most serious of these concern micropollutants from pharmaceuticals, on which there is currently insufficient scientific data.

More irrational, but consistent with the pro-big business policies of federal and state governments, are proposed desalination plants. The NSW government is planning a $1.2 billion desalination plant for Sydney. For the same cost, hundreds of thousands of rainwater tanks could be supplied to households free of charge. Desalination plants consume vast amounts of energy. In terms of carbon emissions, the Sydney plant would be equivalent to putting a quarter of a million extra cars on the road! Furthermore, the desalination process puts a toxic chemical brine into the ocean.

The most common response to the urban water crisis is household water use restrictions. These have some merit but are flawed. Subsidies and rebates are used to encourage the installation of water-efficient appliances by households, but these market mechanisms are no substitute for the provision of such appliances free of charge.

Furthermore, as domestic households are responsible for only about a tenth of water usage, the draconian enforcement of water restrictions, complete with hotlines to encourage dobbing in neighbours, cause resentment and cynicism when industry is given a free reign to squander water. In Victoria, the government has refused to name the top 200 industrial water users. The Melbourne Cricket Ground, Coca-Cola Amatil, Visy Industries and two of packaging company Amcor's sites have admitted to being on this list.

While households pay $960 per megalitre (million litres) of water, bottled water manufacturer Sunkoshi Ltd is charged $2.40 per megalitre — to put it another way, households pay 400 times as much. When one considers the retail price of bottled water it becomes apparent that this is a highly profitable business! Meanwhile, Australia's biggest profit-maker, mining and steel-making giant BHP-Billiton, uses undisclosed megalitres for free.

How much water is used by heavy industry is not on the record. However, an indication is given by the Victorian government's "Eastern Water Recycling Proposal", which will divert treated waste-water away from the Gunnamatta Beach ocean outfall to the Latrobe Valley's brown coal-fired power stations, allowing the 135 gigalitres (135 billion litres) of drinkable water that they currently use to be returned to the general water supply.

Diverting water from ocean outfalls is a positive measure. However, even if it is not used for drinking water, there are better uses for it than keeping "dirty coal" power stations in operation. Their staggering water usage and the contribution to climate change from their massive carbon emissions provide strong arguments for phasing them out, replacing them with renewable energy sources such as solar, wind and tidal power. Market forces, however, dictate that they remain until the last coal remains.

Market forces are also the reason why all the mainstream hype about the water crisis has not stopped logging in water catchment areas. The cessation of logging in the catchment area of just one of Melbourne's nine dams would add an extra 20 gigalitres annually to the city's water supply.

The biggest users of water are in agriculture. The current wrangling over the federal government's proposed takeover of the management of the Murray-Darling Basin has highlighted some of these issues and seen promises of some small steps in the right direction. For example, the federal government has pledged to replace open irrigation channels with covered pipes. Currently, evaporation and other wastage through inefficient irrigation means that only 10% of water taken from rivers actually makes it onto the fields.

However, more is needed than just increased efficiency. Over 80% of the Murray's total volume is diverted, mostly for irrigation. This is despite the devastating effect on the riverine environment, the draining of wetlands and the fact that every second year the Murray stops flowing to its mouth. "Environmental flows" take lower priority than irrigation in a market economy. The beneficiaries of this are not small farmers, but export agribusiness such as cotton, rice and beef. Indeed, as dwindling flows and over-exploitation of aquifers cause salination due to the watertable rising, small farmers lose out.

Whether these water-intensive agro-industries need to exist in Australia should be questioned. Being export-oriented they are not necessary to feed people in Australia, and, paradoxically, they actually increase poverty overseas. This is because the cheap water given to Australian agribusiness amounts to a subsidy that peasant farmers in the Third World are not able to compete with. Many of the world's 2 billion peasant rice farmers are being driven to destitution or forced to leave the land for a precarious existence in the Third World's growing communities of urban poor. According to an Oxfam Australia fact sheet, the depression of cotton prices by First World exports cost Sub-Saharan African cotton farmers an estimated US$304 million in 2001.

The inability of market forces to solve the water crisis is demonstrated by water trading, whereby ownership of water rights can be alienated from land ownership, allowing farmers to sell their water rights. The theory is that the market will direct the water to where it will be most efficiently used. However, this confuses what is most efficient with what is most profitable. Small farmers, stricken by drought and salination, will sell their water to agribusiness and urban industry. Far from resulting in the water being used most efficiently, the most profitable uses are generally the most destructive.

What is needed is a rejection of the ideology of allowing the market — that is, the profit motive of big business — to determine how water is used. This means all water use should be publicly disclosed and society having the right to democratically determine how water is used. More is needed than simply demanding that industry and agriculture use water more efficiently. Society needs the right to decide what forms of agricultural and industrial production should exist. While this would involve radical restrictions on corporate property rights the alternative is that Australia will literally run out of water.

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