The world's water economy stands on a knife edge

Water is so precious because it is limited by nature. The science of water economy studies the way in which water resources are limited and how they must be managed to satisfy farming needs without creating social inequalities and unsustainable environmental impacts.

Overall, the planet possesses some 1.4 billion cubic kilometers of water. However, it is estimated that less than 45,000 cubic kilometers (0.003 percent of the total) is theoretically usable and that only 9,000 to 14,000 cubic kilometers (about 0.001 percent of the total) is suitable for human use, which means it is of adequate quality and is accessible at an acceptable cost.

Freshwater resources are distributed unequally across the globe. According to The World’s Water (PDF), a report updated every two years by the Pacific Institute, nearly 65 percent of the world’s drinking water is in just 13 countries: Brazil (14.9 percent), Russia (8.2 percent), Canada (6 percent), the United States (5.6 percent), Indonesia (5.2 per- cent), China (5.1 percent), Colombia (3.9 percent), India (3.5 percent), Peru (3.5 percent), Congo (2.3 percent), Venezuela (2.2 percent), Bangladesh (2.2 percent) and Burma (1.9 percent). On the other hand, a growing number of countries are facing grave water shortages, and some are even looking at annual per capita availability of less than 1,000 cubic meters.

On a global average, the World Health Organization estimated, 842,000 diarrheal deaths occur each year; 361,000 of those deaths are of children younger than 5 who died because of unsafe drinking water. According to UNICEF, 768 million people worldwide lacked access to safe drinking water in 2015; one in six people do not reach the minimum standard set out by the United Nations of 20 to 50 liters of freshwater per person per day.

According to UNICEF, one in six people do not reach the minimum standard set out by the United Nations of 20 to 50 liters of freshwater per person per day.

With statistics like these in mind, in 2010 the United Nations recognized the "right to water" as a fundamental and essential human right. This right establishes that everyone, without discrimination, has the right of access — physically and economically — to a sufficient amount of water that is safe to drink.

This recognition of water as a basic human right was proclaimed in the U.N. General Assembly’s Resolution 64/292. In response to the resolution, the U.N. Human Rights Council directed member states to "develop appropriate tools and mechanisms, which may encompass legislation, comprehensive plans and strategies for the sector, including financial ones, to achieve progressively the full realization of human rights obligations related to access to safe drinking water and sanitation, including in currently unserved and underserved areas."

Managing our supply: the 'virtual water' trade and water privatization

Water scarcity can be a source of conflict between those with a sparse supply and those with plenty, so the fair and careful monitoring of supply management and distribution is of global importance. In addition to the water used for drinking and agriculture, virtual water — water used during the process of worldwide trade — is an important resource that must be quantified and analyzed.

The concept of virtual water was introduced by Tony Allan, one of the world’s leading experts on water. Allan defines virtual water (PDF) as a means to "reveal the hidden factors of our real global water consumption." He also described the urgent need to promote this concept. "Already, our overconsumption and mismanagement of water have had a very serious impact on our water environments and the essential services they provide. ... Most of us don’t have the slightest idea about the sheer volumes of water involved in our daily lives. To make a cup of coffee, it takes 140 liters. That’s the true amount of water used in growing, producing, packaging and shipping the beans you use to make your morning coffee." Allan thinks the use of virtual water was less of a concern in the past because "the ratio of water to people was so massive that it was as if our water supply was infinite." Now, he said, "it is not. And now, with a global population pushing 7 billion, water scarcity is not just a possibility. It is already a reality for many."

Virtual water is traded in huge volumes as crops that need large amounts of water to cultivate are shipped far and wide, not always with sensible results. For example (PDF), three of the world’s top 10 wheat-exporting countries are seriously short of water, and three of the top 10 wheat importers are blessed with an abundance of it. The level of interdependence between countries in the virtual exchange of water resources is critical, however, and it is destined to grow in the future, given the ongoing, often controversial deregulation of international trade.

Water trade expert Dennis Wichelns, a professor of economics and executive director of the Rivers Institute at Hanover College, analyzed the trade patterns between Jordan and other countries, including the United States. Because Jordan has little water, it trades with other countries for commodities that use a lot of water to produce. Wichelns explained, "[Jordan] imports 5 billion to 7 billion cubic meters of water in virtual form per year, which is in sharp contrast with the 1 billion [cubic meters] of water withdrawn annually from domestic water sources." Therefore, he stated, "People in Jordan survive owing to the fact that their 'water footprint' has largely been externalized to other parts of the world, for example, the U.S."

If demand grows and resources dwindle — in part because of pollution and climate change — then clearly the economic value of water will grow, and the gap between those who have plenty of water and those who do not will provoke new conflicts. Water privatization (PDF) — when private sectors purchase the right to participate in the sanitation and distribution of water resources — has been cited as a possible, albeit divisive solution to this problem.

Water privatization — when private sectors purchase the right to participate in the sanitation and distribution of water resources — has been cited as a possible, albeit divisive solution.

Opponents of water privatization point out how risky it is to entrust the management of water resources to private entities. The greatest of those risks, they said, is being sure that water managers respect their obligation to develop the water supply in poorer areas, where consumption is lower.

This risk is playing out in South Asia, in the tensions between India and Bangladesh over use of the water in the Ganges–Brahmaputra Delta. Bangladesh, located farther downstream from the delta and the more economically and politically disadvantaged country, contends that water allocation and privatization favor India, despite the water-sharing treaties the countries have signed. This conflict raises ethical concerns, because any time one country is "cheated" out of its full water share, the less water it has to distribute to its citizens, which obviously worsens water insecurities.

Supporters of water privatization point to how much more efficient the private sector is at managing water than the public sector. Outsourcing water management to private entities, they say, could improve distribution and make it possible to divide maintenance costs between different companies, resulting in lower costs to consumers.

Private companies, such as the American States Water Company and its utility subsidiary, Golden State Water, work together to divide costs for roughly 260,000 consumers in California. Dividing the costs of utility and electric services may help save consumers from having to pay those costs themselves, were the company publicly owned.

Private companies may also focus on developing effective distribution monitoring systems. One company, Environmental Health and Safety Support, does so through its supervision of groundwater well designs and its evaluations of aquifer recharge.

Above all, the most effective monitoring systems are those that manage water with citizens’ interests in mind. Knowledgeable, experienced farmers, whom Allan refers to as the de facto managers of the world’s water, are a vital component of realizing a fair system. The importance of farmers’ roles further underscores the symbiotic relationship between agriculture, food and the environment.