Developed and Emerging Nations Forced to Ante Up to Stem a Worldwide Water Shortage

By Jason Simpkins
Managing Editor
Money Morning

Three-quarters of the world consists of water, but growing populations, higher living standards, and global climate change have more than a few analysts worried that there still may not be enough to go around.

In fact, water shortages are erupting around the world, from San Diego to Riyadh.

Hundreds of farm workers and locals from all parts of California took to the streets last Thursday as part of a four-day march to protest federal cutbacks in water supplies.  

This is ground zero,” Mario Santoyo, an adviser to the California Latino Water Coalition, told the New York Times. “There’s a human tragedy going on here, and we need water.”

The state of California projected in March that, because of a drought in the state’s Central Valley, as many as 23,700 full-time workers would lose their jobs, and farmers would lose up to $477 million in revenue, The Times reported.

California Governor Arnold Schwarzenegger has declared the drought a state of emergency and – not for the first time – threatened statewide water rationing.

Yet, the scene in California is just a small glimpse of the kind of dissatisfaction and unrest that many experts believe will become frequent occurrences if the world’s evolving thirst isn’t quenched.

Today, 2.8 billion people, or 44% of the world’s population, live in areas of high water stress, according to the Organization for Economic Co-operation and Development. This will rise to almost four billion by 2030 based on present trends. The livelihoods of one in three people on the planet will be threatened by water scarcity within 15 years.

And the situation is showing signs of spiraling out of control as populations around the world continue to grow.

The world’s population has more than doubled in the past 50 years, soaring to about 6.5 billion from 3 billion (The combined population of China and India is about 2.5 billion). In that time the use of water has tripled, according a recent article in The Economist. Analysts anticipate that the world’s population will increase by about 2 billion by 2025 and 3 billion by 2050.

And it’s not just the volume of people that has analysts worried. It’s where those people will be living and what they’ll be eating. The vast majority of masses joining the world’s population in the coming decades will be city-dwellers, who consume more water than their rural counterparts.

That’s largely because urban populations, particularly populations with higher standards of living – such as those blossoming in developing countries like China and India – consume more meat, and therefore more water.

According to The Economist’s article, it takes about 1,000 liters (264 gallons) of water to produce one kilogram (2.2lbs) of wheat. But it takes as much as 15,000 liters (3,963 gallons) to produce a kilo of beef.  The meatier diets of Americans and Europeans requires about 5,000 liters (1,321 gallons) of water a day versus the 2,000 liters (528 gallons) of water needed to sustain the vegetarian diets of Africa and Asia.

The world will need as much as 60% more water just for agriculture for the 2 billion people expected to join the urbanite ranks over the next decade and a half, according to the Food and Agriculture Organization.

And it’s not just developing countries that need to worry. A report by the World Wildlife Federation, entitled “Rich Countries, Poor Water,” pointed out that water crises are increasingly affecting many wealthy nations, due to climate change, drought and water resource "mismanagement."

“In Europe, countries on the Atlantic are suffering recurring droughts,” the report notes, “While water-intensive tourism and irrigated agriculture are endangering water resources in the Mediterranean.”

The Murray-Darling basin, an area of southeast Australia as large as France and Spain combined, recorded its lowest level of inflows in 117 years during the first three months of 2009.  Farmers have been restricted to as little as 16% of their annual water allocation. Authorities warn that water supplies for the two million Australians who live in the basin cannot be guaranteed beyond next year.

United Nations Secretary-General Ban Ki-Moon has warned that "time is running out," as estimates suggest that almost a third of the world’s population will be living in regions facing severe water scarcity by 2025.

Money Down the Drain

The United States and other countries around the world are already being forced to confront their water supply shortages. And they’re having to do it with cash.

California will receive $260 million in federal economic stimulus funds to fix dams, restore fisheries and habitat and help the state cope with drought conditions, Interior Secretary Ken Salazar said last week. In addition to that, the state is likely to qualify for much of the $135 million in federal grants set aside for water reuse and recycling projects.

I think a new reality is forming here ... that water is scarce and we are going to have to change the way we use water,” Frank Royer, general manager of the Camrosa Water District in Camarillo, told the Ventura County Star.

Saudi Arabia – a desert country that is swimming in oil but desperately lacking fresh water – is putting $800 million into a new public company that will invest in overseas agricultural products, the Financial Times reported.

The reason: The Saudi government is discontinuing domestic wheat production to conserve its water resources. The country has been producing about 2.5 million tons of wheat each year since it began its wheat program in the late 1970s.

China is another country hoping it can spend its way out of a water dilemma.

About 15.3 million hectares, or 13%, of Chinese farmland are lost to droughts every year, according to a recent article in BusinessWeek. Roughly 300 million people living in rural areas still don’t have access to drinking water. And of China’s 600 cities 400 are facing water shortages.

That’s because, on top of water scarcity, China has horrible pollution, which has rendered much of the nation’s fresh water undrinkable.

More than 200,000 people in Yancheng, Jiangsu were recently cut off from clean water for three days when a chemical factory dumped carbolic acid into a river, BusinessWeek reported. A similar incident occurred in November 2005 when a chemical plant in Jilin spilled massive amounts of toxic benzene into the Yangtze and Songhua rivers.

About 1 billion tons of untreated sewage is dumped into the Yangtze River each year. And half of China’s population - 600 million to 700 million people - drinks water contaminated by human and animal waste.

As of September 2008, China had poured $7.46 billion into 2,712 water treatment projects, according to the nation’s Ministry of Environmental Protection. Beijing also has launched a multibillion-dollar effort to transport water from southern regions. But that project has been delayed because of environmental concerns and resistance from the estimated 300,000 farmers who would have to be relocated to accommodate water pumping and cleaning stations as well a canal., BusinessWeek reported.

The Asia Society argues that water – not oil – will evolve into the key regional security in the 21st century, and Asia in particular is desperately lacking.

“This is a fundamental resource that we need to survive,” Suzanne DiMaggio, director of the Asia Society’s Social Issues Program told TIME magazine. “The emerging picture is very worrisome.”

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