It’s Peak Water, Not Peak Oil

The 178 countries that adopted United Nations Agenda 21 in 1992 believed that the world had past the point of “Peak Oil” availability and that governments must dramatically reduce consumption to prevent catastrophic economic collapse as oil future supply was in terminal decline.  But over the last five years, advancements in hydraulic fracking and other new technologies have eliminated any risks to the availability of oil for at least the next fifty years.  Coupling supply increases with more efficient use of energy, oil demand may now be in a terminal decline cycle.  Given that fracking is driven by the availability of water supplies, the world is now entering a period where transnational competition for the water will be a key determinant for economic growth and national security.

Water is unique compared to other natural resources.  There are lots of substitutes for many resources, including oil, but none for water.  Countries can import fossil fuels, minerals, timber and food; but they cannot import enough water to significantly change their circumstances.  Water is heavier than oil, making it very expensive to transport across long distances, even by pipelines, which also requires energy-intensive pumps.

Water that sustains life can also cause death, when it becomes a carrier of deadly microbes or takes the form of a flash flood, tsunami or hurricane.  The greatest natural disasters of our time are the 45 meter high tsunami that devastated the Fukushima nuclear power plant in Japan in 2011 and Hurricane Katrina leveled New Orleans and the Gulf Coast of Mexico in 2005 – both water-related.

Supplies of potable (drinkable) water are under strain in most of the world.  Rapid economic and demographic expansion in arid countries, such as Asia and the Middle East, have turned access to “potable water” into a major issue across large parts of the world.  Rising standards of living are associated with higher consumption of meat, which is ten times more water-intensive per calorie than farming plants.

The worldwide human population is just over seven billion people, but the livestock population is more than 150 billion.  The direct ecological footprint of the livestock population is much greater than that of the human population.  Rapidly rising global meat consumption is now a key driver of the coming stress on water supplies.  Political and economic conflicts are already raging over the building dams on international rivers.  Egypt has all but threatened war over Ethiopia’s plan to build a massive dam on the headwaters of the Nile.  China is threatening Vietnam with plans to divert the Mekong River and India with threats of diverting water flow from the Himalaya Mountains.

A report reflecting the joint judgment of US intelligence agencies warned last year that the use of water as a weapon of war or a tool of terrorism would become more likely in the next decade.  The Inter-Action Council, comprising more than 30 former heads of state or government, has called for urgent action to prevent some countries battling severe water shortages from becoming failed states. The U.S. State Department has officially upgraded water to “a central US foreign policy concern.”

The United States is blessed to have three times the world’s average of water per capita in out agricultural communities, but China has only one third the world averages.  This 87% deficit has been estimated by the World Bank to cost China 2.3% of GDP.  South Korea, India, Egypt and Israel are already in a crisis over consistent water supplies.

Water is a renewable resource, but the amount of usable freshwater is a fixed resource of about 200,000 cubic kilometers.  The human population has almost doubled since 1970, while the global economy has grown at an even faster pace.  This new prosperity is driving growth of manufacturing and food production to meet rising consumption levels.  This affluence has caused the average body mass index (BMI) to expand since the 1980’s.  Obesity has doubling and fatter people demand more food.

The era of cheap and plentiful freshwater is rapidly being replaced by supply and quality constraints.  Investors are beginning to view “Peak Water” as the new gold rush.  Unconventional sources, such as recycling, desalinization and filtering brackish waters can provide some relief.  But gaining access to water supplies is going to increasingly drive domestic competition and international security.

wall st examiner