A Thirst for Economic Change?

by Erik Alm

I sincerely hope, for the sake of posterity, that they will be content to be stationary, long before necessity compels them to it. –John Stuart Mill, On the Stationary State

ErikAlm2In the face of global resource shortages and the alarming rate at which we are losing species, many of us share the hope that J.S. Mill so ominously communicates in one of his better-known quotes. But what will it take to catalyze the shift to an economic state that respects our natural boundaries? Perhaps the catalyst could be a life-altering dearth of a critical resource that, until recently, most of us in the United States have taken for granted: water.

The idea that a water shortage like the one California is currently facing could cool the economic engines that have elevated the state to the eighth-largest economy in the world has been discussed in local media and state government offices alike. The Desert Sun, a paper serving the rapidly-growing Coachella Valley in the southern part of the state, recently posed the question of whether water worries will slow development in the valley. The New York Times expressed its worries about California’s continuing economic vigor by stating the drought “. . . is forcing a reconsideration of whether the aspiration of untrammeled growth that has for so long been this state’s driving engine has run against the limits of nature.”

CA Drought - Kevin Cortopassi

Many proposed policies that could stem our water problems are discarded because they are seen as anti-growth. Photo Credit: Kevin Cortopassi

Replying to questions like these, the head of the State Water Resources Control Board, Felicia Marcus, says “We have a long way to go before we have tapped out our resources,” and prospects for economic growth are still as bright as ever. The non-partisan California Legislative Analyst’s Office reinforces this view in a brief report released in mid-April. Citing a recent Wall Street Journal survey of economists, the report concludes “. . . we currently do not expect the drought to have a significant effect on statewide economic activity or state government revenues.”

Many of these rosy economic predictions rely upon hopeful qualifiers such as assuming the drought will be short-lived, that the recently imposed water restrictions will not be expanded, or that water districts will continue to receive adequate allocations from the State Water Project. These assumptions may prove to be overly optimistic.

Surface water, which normally covers 60% of the state’s demand, is predicted to be in even worse shape this year due to the lack of snow in the Sierra Nevada Mountains. California’s State Water Project, which distributes this water throughout the state, supplying drinking water to more than 23 million people and helping to irrigate agricultural lands in the Central Valley, was able to deliver to water districts only 5% of their contracted amounts in 2014. Another important source of surface water, the Colorado River, is also showing the effects of extreme drought with Lake Powell, the system’s biggest reservoir, below 45% of its capacity.

Groundwater, which is used to supply the other 40% of the state’s demands, and up to 60% during times of inadequate surface flows, faces similar stresses. “The withdrawals far outstrip the replenishment. We can’t keep doing this” says Jay Famiglietti, a NASA scientist who studies water supplies in California. The recent well-drilling boom that is providing California farmers with at least a temporary solution to their water woes seems to be adding urgency to his words.

As the search for additional water becomes more desperate, some have been thirstily eyeing the amount allocated to ecosystems. California’s Department of Water Resources estimates that 50% of the state’s water is used by the environment, 40% by agriculture, and 10% by urban users. Even with a quarter of the state’s native freshwater fishes being listed as either threatened or endangered and many more headed in the same direction, some interest groups have advocated reducing environmental water allocations, even at the peril of critical habitats.

This “people versus fish” debate is largely due to a misunderstanding about the way the environmental use statistic is calculated. Most of the water “used by the environment” flows in state and federally protected rivers in the sparsely populated North Coast where there are few alternative uses. In the majority of the state, environmental use of water is far from dominant at 33%, with agriculture accounting for 53% and urban users at 14%. Noting the dramatic devastation that California wetlands have suffered over the last 150 years, including the loss of Tulare and Owens Lakes and the removal of 95% of the native vegetation along Central Valley creeks and rivers, the state appears determined to allocate more water to natural systems. A 2014 bond measure approved up to $200 million to acquire water rights for environmental use and funding mechanisms for restoration of wetlands are also being sought.

Another hope for increased water security is desalination. Plants similar to the one in Santa Barbara, CA, which is being restarted after years of laying idle, have been used to provide a technological solution to water shortages in some parched and energy-rich parts of the world. However, due to high initial capital costs, stringent permitting requirements, huge energy demands, potential environmental harm, and a final product that is more than four-times as expensive as surface water (and nearly double the cost of building a water recycling system), it seems unlikely that desalination will be able to make up for the increasing shortfalls that our current trajectory of growth will bring.

In an apparent public admission that the state has no viable ideas for increasing supply, on the first of April, like a bad joke, Governor Brown called for the state’s first ever mandatory water use restrictions. “Folks realize we have now reached the limits of supply, so the focus is on demand.” says Heather Cooley, water program director for the Pacific Institute, a water-resources research group in Oakland, CA. Proposals for reducing demand range from increasing water efficiency to $10,000 fines for residents and businesses caught being wasteful. However, some people have pointed out the hypocrisy of the water restrictions. Craig Ewing, president of the Desert Water Agency which serves Palm Springs and other communities, has heard it often, “The public is faster to react to these things than governmental institutions, and so the public is already saying, ‘Why are we seeing new development when we’re being asked to cut back?’ And the governments are going to be slower to figure out, ‘Well, how do we deal with all of this?’”

Currently, many proposed policies that could effectively stem our water problems are immediately discarded as unworkable because they are seen as anti-growth. Temporary building moratoria for areas without a secure water source are a case in point. However, if the public were better informed about the negative consequences to their quality of life from policies that support continued growth even in the face of critical resource shortages, perhaps they would favor policies with growth-curbing corollaries instead. Unfortunately, for some in the state, like those in East Porterville whose homes are currently without any running water at all, the choice of whether or not to grow their community has been obviated. Their focus now is firmly fixed on survival.

Fresh Water, Growth, Degrowth, and the Steady State Economy

by Geoffrey Matthews

Geoffrey MatthewsIn Our Common Future, the 1987 report of the United Nations World Commission on Environment and Development, sustainable development is described as a process of change which meets the needs of the present generation without compromising the ability of future generations to meet their own needs and aspirations. To achieve this objective, the report suggests a series of goals that should underlie national and international action on development. In the authors’ opinion, the most important of these is “a production system that respects the obligation to preserve the ecological base for development.”

The only way to do this is to manage economic growth or degrowth by the adoption of an economic policy where development may not exceed ecological limits–precisely the definition of the steady state economy proposed by CASSE.

However, in spite of initiatives by extraordinarily committed individuals, developments in ecological economics, and publications by Herman Daly and other members of CASSE, the traditional development process continues almost unchanged. This process fails to appropriately prioritize the social, economic, and environmental sectors to ensure that the growth of each does not occur at the expense of the others. Consequently, the conflicts between economic growth and the environment continue unabated, improvements to quality-of-life are slow and unsustainable, and poverty continues to erode the advances that have been made.

I believe one of the major reasons the concept of a steady state economy is not gaining traction is the omission of the role of fresh water in the production and maintenance of all its ecosystem and economic goods and services. The value of fresh water is that it sustains the life support system via the hydrological cycle. This cycle is the natural phenomenon whereby solar energy evaporates water from the surface of the planet to form clouds, and returns the water back to the planet’s surface in the form of rain, mist, and snow.

Matthews, Fig 1This diagram represents the availability of water in the economy and the environment. The quantity (Q) will vary over time (T) due to changes in the hydrological cycle, climate variations, and pollution. These variations in availability will always affect the scale of the economy and the ecosystem, because fresh water is required for every environmental and economic activity on this planet. To ensure a steady state economy, the supply of fresh water required to satisfy the ecosystem demand must be maintained at the expense of the economy’s demand for fresh water. Therefore, the scale of an economy and the services it produces are subservient to the availability of fresh water and the maintenance of the ecosystem services in its region. This means an economy can only grow within the dynamic hydrological envelope, and under the red supply line. As soon as its demand reaches the available supply, growth must stop, as in the below figure.

Matthews, Fig 2Indeed, some planning committees have made explicit the understanding that economic scale is subservient to fresh water availability–for example, the Town of Okotoks, Alberta, Canada. In 2002, Okotoks designed a Water Management Plan based on the limits of the environmental carrying capacity of the Sheep River and its watershed, gross water consumption of about 300 liters per capita per day, and an urban development policy that provided no allowance for extending utility services outside the town’s municipal boundary. However, in 2013, after consulting the citizens of Okotoks, the town decided to pursue urban growth by annexing adjacent land, but not at the expense of the water required to satisfy the Sheep River ecosystem demand. The present population of Okotoks is about 27,000, and the actual water supply will permit this population to grow until it reaches 35,000. Beyond this limit, additional water will be drawn from a regional water supply system via Calgary.

Conversely, in the case of a drought, when the hydrological envelope shrinks naturally, the economy must downsize or degrow, as in the below figure. No continent is immune to this natural phenomenon, and issues of food security often become the main concern. The degree of intensity and duration of droughts vary, so the amount of downsizing or degrowing will depend on the ability of the citizens and local/regional authorities to cope. Holistic water resources management and drought preparedness are key to the coping capacity of communities. There are no easy solutions because humanity cannot, and will never, control the behaviour of the hydrological cycle.

Matthews, Fig 3So what does this mean in terms of a “full world”? To date, we are accustomed to talking about a finite planet and ecological footprints in terms of the number of planets needed to support us. Although correct, many people cannot easily sense the impact of the deterioration of the life support systems, the loss of biodiversity, and the depletion of renewable and non-renewable natural resources on his or her quality of life because the process is relatively slow. Compare this to the change in the supply of fresh water due to the behaviour of the climate or pollution. This is a daily topic of conversation because fresh water is vital, and people’s reactions in terms of quality of life, finance, effects on aquatic and terrestrial biodiversity, farming, industry, population carrying capacity, etc. are always immediate. In other words, they already know that “their world” is defined by the finite amount of water and quality of water in their region.

As fresh water is an important “full world” parameter, I propose fresh water management be incorporated more fully into steady state policies and discussions with, for example, Integrated Water Resources Management (IWRM). IWRM, as defined by the Global Water Partnership, is a process that promotes the coordinated development and management of water, land, and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.

Like the example of Okotoks above, Ecuador is aware that its water demand is reaching the limit of its resources, particularly due to increases in population from 2.8 million in 1950, to 14.7 million in 2013. To address this situation, the government began implementing IWRM and population management simultaneously. IWRM began on February 19, 2008, when the National Constitutional Assembly declared

The State should guarantee the preservation, conservation, protection, restoration, sustainable use and integrated management of watersheds, including necessary quality and quantity of ecological flows to sustain the integrity of all ecosystems associated with the hydrologic cycle, in order to safeguard the satisfaction of individual and collective human needs in function with societal health, including respecting the rights of nature and preserving biological diversity.

Population growth is being managed via free contraception, family planning, and education. As IWRM is designed to replace traditional top-down fragmented sector management with a bottom up cross-sector approach relying on cooperation, coordination, and population decrease, tangible results are not apparent at present. This will take time, perhaps a generation. While the dual policies of IWRM and population management have not been incorporated into a stated steady state economy objective, this is a very promising beginning.

Geoffrey Matthews is a water engineer, now living in France.

Water Wars on the Way in Absence of a Steady State

by Brent Blackwelder

BlackwelderThe past century’s foolish management of water would not have happened in a steady state economy. But today’s globalized, growth-obsessed economy allows, and even subsidizes, construction firms and power companies to profit by destroying significant water resources that are critical for people’s survival.

Water wars are on the horizon, as massive river engineering schemes, especially in China and Brazil, seek to control the world’s big river basins. International Rivers, a nonprofit organization, has examined the viral spread of dams and water diversions and the harm they cause.

Nation after nation has externalized the costs associated with reckless use of water (a form of cheater economics), and this recklessness increases the likelihood of shortages and ensuing conflicts. Worry about water wars is not exaggerated! In June the front page of the Washington Post carried this headline: “Egypt frets, fumes over Ethiopia’s Nile plan.” The cause of the problem: a giant dam Ethiopia is building (with foreign aid) on the Blue Nile that will remove water historically flowing through Egypt and into the Mediterranean Sea. The article describes the potential for turmoil: “Egyptian military commanders may decide that ‘it is better to die in battle than to die of thirst’.”

Turkey has built massive dams on the Tigris and Euphrates Rivers, with the result that water flowing from 2003-2009 to Iraq was cut by 80% and to Syria by 40%. Strong evidence supports the contention that Syria’s ongoing civil war sprang from the massive drought that hit in 2006. As tens of thousands of farmers fled to cities to survive, chronic unrest and grievances intensified to the breaking point. Now over 80,000 people have died, billions of dollars have been spent on the war, and still there is no end in sight.

In contrast to a global economy with its head in the sand, a true cost, steady state economy would approach water issues in an entirely different manner. Guiding principles for this economy include:

  • Making decisions for the long term, not based on quarterly financial returns, and recognizing that healthy river ecosystems are essential for long-term well-being;
  • Examining the potential consequences of proposed actions on ecosystem health to determine true costs and benefits;
  • Paying attention to scientific findings about river flows and aquatic life, including new discoveries, such as the disruption of historical hydrological cycles as a result of global warming;
  • Avoiding actions that will increase tensions surrounding water supplies, especially where the tensions could escalate into armed conflict;
  • Avoiding overpumping and contamination of ground water to preserve water resource for future generations; and
  • Preventing greenhouse gas emissions. (Note: dams emit an estimated one fourth of the world’s human-created methane, a more potent greenhouse gas than carbon dioxide.)

One might mistakenly think that international institutions like the World Bank would promote such sound principles and discourage nations and other institutions from investing in conflict-instigating projects that destroy local food and water resources. However, so outrageous is the World Bank’s new big dam policy that a group of 80 organization leaders and water experts sent a letter of protest to World Bank President Jim Yong Kim.

Dry landscape in Syria

Parched landscapes like this one in Syria can cause increasing tension. Photo by Charles Roffey.

The World Bank’s recent action in support of the proposed $40 billion gigantic Inga 3 Dam in the Democratic Republic of the Congo (DRC) violates most of the above principles. In a nation like the DRC where less than 10% of the population has electricity, the International Energy Agency has pointed out that the unelectrified areas are best served by mini-grids and off-grid solutions. So much for the goal of poverty reduction where your prime beneficiaries are transnational mining operations!

Will water wars erupt in Asia’s Mekong River Basin, which is shared by ten nations? Major dams planned for the Mekong could destroy the world’s largest inland fishery (relied on by 60 million people), as well as degrade Vietnam’s large rice-growing habitat in the Mekong delta. The great fish legacy is about to be sacrificed to the god of hydropower as new dam building on the mainstem of the river will block out the migratory spawning runs of some 200 species of fish.

River-destroying actions like these are welcome in today’s global economy, but they would never be tolerated in a true cost, sustainable economy. Such an economy would instead select waterless energy solutions in light of growing water shortages and expanding population. Besides being water-free, sources of energy like wind and rooftop solar are better suited to serve poorer communities where there is little hope of stringing enough power lines from big centralized dams or coal plants to reach anything but a fraction of villages.

Now is the time for an energy transition from big dams and other unsustainable projects to decentralized projects that can meet local needs while conserving natural resources. But this transition will only happen if we get to work on a parallel transition: from the globalized, growth-obsessed cheater economy to a sustainable and fair steady state economy.