10 November 2010

Television: "Liquid Assets: The Big Business of Water" by CNBC

Hosted by Michelle Caruso-Cabrera, CNBC Anchor and Reporter
Televised by CNBC
First aired 30 September 2010 at 9 pm EDT

Links: official website

Our host welcomes us on location just above the Arizona side of the Hoover Dam complex, where intake towers are framed by the rarely-seen backside of the dam and the bright "bathtub ring" around Lake Mead is obvious. The Colorado River originates in Rocky Mountain National Park in Colorado -- though the wrong, eastern side of the Continental Divide is shown in the video (I recognized the upper Big Thompson valley right away) -- from which the River travels through seven states on its way to the Gulf of California. There is much to be told about the Upper Colorado River Basin, water use and conservation and plans afoot in the states of Colorado, Wyoming, Utah and New Mexico; none of these issues are addressed here. The focus is, instead, on where money and power draw water from the River disproportionately, in the Lower Basin states of Arizona and, more to the point here, Nevada and California.

Al Stehly runs an avocado orchard at Sunrise Ranch in southern California (watch video). Despite the installation of highly efficient drip irrigation, he still pays water bills around $20K per month. As new suburban communities pop up around the farmlands, he wonders if new supplies have been identified or whether the existing water supply is simply expected to cover the new residents' needs as well as those of already-present farmers. Globally, agriculture uses 80% of existing freshwater supplies, and it is suggested that we are already at a "tipping point" between the needs of agricultural and urban uses.

Pat Mulroy, general manager of the Las Vegas Valley Water District and the Southern Nevada Water Authority, reiterates that the Colorado River is no longer the reliable resource that it once was, or at least claimed to be, and that diversification of LV's water sources is a difficult but necessary task. At the time of CNBC's filming, Lake Mead was only 40% full and dropping rapidly. Nevada receives only 2% of the average annual flow in the Colorado River, according to interstate agreements. In the city and vast suburbs of Las Vegas, water police patrol for wasteful water use, such as watering lawns during the daytime. Misdemeanor fines start at $80, and it has been found that residential homeowners generate more waste than casinos, who recycle their fountain water and have financial incentives to make sure their water systems run as efficiently as possibly. Las Vegas residents actually get paid to remove grass and use xeriscaping practices in their yards. Ms. Mulroy is arguably one of the most powerful women west of the Rockies, and certainly one of the most resourceful in the country.

Maureen Stapleton, general manager of the San Diego County Water Authority, stands atop a dam that is in the process of refurbishment and an increase in height for expansion of the contained municipal reservoir, while the city actively seeks companies to add desalination facilities along the coast. Imperial Valley farmers routinely sell surplus water to urban areas in southern California, as those farmers hold historical rights to use from the Colorado River. Many question the logic of using what could otherwise be diverted to cities for growing water-intensive crops such as alfalfa, especially in the Imperial Irrigation District where the weather and climate would not otherwise support such crops.

Bruce Babbit, former Secretary of the Interior, says that "there's no crisis" in water supply. The crises affecting water, he states, are in water-related infrastructure, the pricing of water, and in the allocation of supplies. As Mr. Babbit says, we just "need to use it thoughtfully." Some say accurate pricing of water supplies, along the lines of a market system, would solve the problem; others say that more market-oriented pricing is just part of the solution to such crises. All sides agree on the need for change (except for those who get their water free, or at a highly-subsidized price, the program fails to note).

Sitka, Alaska, receives an annual average of 86 inches of rain and 39 inches of snow, and the locals consider it "blue gold" (watch video). Most residents of Sitka support selling their abundant freshwater resources, especially from nearby Blue Lake, which is so clean that it needs no treatment to meet EPA guidelines for drinking water supplies. National Geographic News carried a story on these developments dated 25 June 2010. Garry White, the executive director of the Sitka Economic Development Association, counts permits for the sale of 95 billion gallons per year of Sitka-owned water at a rate of about $0.01 per gallon, generating high income for a municipality that is otherwise reliant on property taxes and a small tourism industry. The municipal infrastructure can already move 33.6 million gallons per day to the coast for export, though estimates of additional infrastructure investment needs range from $4M to $15M in order to fully exploit the available resources. At the source, True Alaskan Water is already bottling Blue Lake for export, but the big money is in bulk water transfer by ships to arid zones, including India and the Middle East. Peter Gleick, author and co-founder of the Pacific Institute, says that the plan is economically infeasible: a typical tanker (ship) of oil is worth $200-300M, but the same size tanker of water would be worth only $200-300K (that's less than the cost of the tanker ship itself, by the way). However, the locals are "convinced" that it can work. Recent news from India seems to support the notion that there's nothing to it but to try.

The city officials of Milwaukee, Wisconsin, seek to draw business to their region, fueling the city's transformation to the "Water Hub of America" on Lake Michigan. The North American Great Lakes contain approximately 20% of world's surface freshwater, which is nearly 90% of the available surface freshwater in the United States. Milwaukee has focused on water-oriented businesses such as Badger Meter, Siemens, GE (the parent company of CNBC, it is stated for full disclosure), ITT and others, and the mayor wants to offer water cheap or even free to new businesses that move their facilities to the city. Even local educational curricula are beginning to incorporate topics in the business of water: scarcity, quality, infrastructure, technology are subjects that students meet in high schools and in their college choices.

At the MillerCoors brewing facility in Milwaukee, "water is everything" (see a separate CNBC article). Water is used in brewing, pasteurizing, packaging and shipping. According to MillerCoors, the industry standard holds that making 1 barrel of beer requires 5 barrels of water, while MillerCoors uses only 3.5 barrels of water through advances in water recycling, especially in the pasteurization process (watch video). The point is raised here that the water footprint of many food products, especially heavily processed fast foods, remains exceedingly large. At the same time, food processing and transportation rely on energy, on which subject Peter Gleick points out to us that energy and water are interdependent. Actor and activist Ed Begley Jr. tells us that conservation is the key because, different from the energy alternatives now available as oil supplies run out (though they won't any time soon), there is no alternative to which we can resort when clean freshwater runs out. Recent conferences in Washington DC, World Water Week in Stockholm, and other events seek to raise the profile of water issues in the public discourse, but citizen activism remains low, at least in the U.S. For those of us who work on these issues, and for many who don't, the "Water - Energy Nexus" is by now losing its meaning. The buzz-phrase remains limited in scope and bereft of meaning to all but the most attentive. I hope to change that soon, but you'll need to remain attentive...

Chile is a country with extremes: the Atacama Desert in northern Chile is one of the driest places on Earth, while water resources abound in the southern portion of the country. Chile is considered to have one of most advanced water markets in world, and with an estimated 100% of urban and 75% of rural populations having access to freshwater, Chilean citizens generally consider the market-based water system more efficient than government control. There are even water real estate agencies that arrange for a landowner to sell the water that is on their land, but not the land itself. Water itself, or simply the access to it, can be leased and sold as property, but it is not explained here how one person leasing their section of a rushing river to a hydropower company will affect their upstream and downstream neighbors. Despite some ambiguities in the market mechanism, many water rights are sold to mining interests in the northern parts of the country and to power companies and fish farmers in the southern regions. There are obvious trade-offs when agricultural productivity is reduced in favor of mining, and drinking water must be trucked into some of the driest and least-populated areas of the country for the remaining citizens to survive on their otherwise dry land. Still, looking on Chile's example, former U.S. Secretary of the Interior Bruce Babbitt calls for more market flexibility in the western U.S. to ease scarcity and related problems in an otherwise heavily-subsidized and control-oriented water distribution system. Many states in the western U.S. insist on the doctrine of prior appropriation, while others say that "beneficial use" should be decided by officials, not by market pricing, in an eventual and necessary transition to a more equitable system of water rights.

And finally, in our tour of water issues, we come around again to the topic of bottled water. Comedian and former mayor Lewis Black gets a few moment on-screen just because he has a stand-up bit on the issue, but more credible witnesses to the rise of bottled water also appear including Peter Gleick, author of Bottled and Sold, and Joseph Doss of the International Bottled Water Association. To what do they attribute the rise of bottled water, now the #2 beverage category in the U.S. behind only carbonated beverages? Mr. Doss suggests that it's not the advertising--it must be something else. A brief history lesson shows us that Perrier started with elitist advertising, then added health benefits to their appeal. In the U.S., water bottler Crystal Geyser essentially founded the market on the basis of health, sophistication, widespread availability, and hand-held convenience. In general, bottled water sales closely follow the overall economy with a slight lag, suggesting its commodification over time. The same is not necessarily true of water in general, especially that provided by your local utility through your tap. Peter Gleick rightly suggests that we need to think about it thoroughly and, essentially, make unnecessary the reasons people use to justify their purchase of bottled water.

According to our host, Mark Twain said "Whiskey is for drinking, water is for fighting." I don't think that is the exact quote, and I'm not even sure it's the most appropriate for this television documentary, but in broad overview of the challenges and successes related to water, the pithy quotes really don't matter. What does seem to matter in the public perception of water is supply, cost, and accessibility.

No comments: