Who Killed Water Markets?

A free-enterprise solution to our creeping water shortage is staring us in the face. So why have water markets been so slow to materialize?

Aug 1, 2008

by Michael McCullough

Beyond the skepticism and inertia of entrenched interests, water markets face more ideological opposition. Groups such as the Parkland Institute worry that the poor – including less profitable commercial or rural users – might be priced out of water markets. (The government should subsidize those users directly, Brubaker advises.) Then there is what Brubaker calls the “Maude Barlow School” which links monetization of water resources to national sovereignty, believing that once water is freely bought and sold, there would be nothing to stop thirsty, rich Americans from appropriating Canadian water on a massive scale. Chris Wood notes in Dry Spring how this argument overlooks the fact that, even with a long-term water shortage more profound than ours, there is no movement afoot in the United States to acquire Canadian water. Americans are instead directing their energy at ways to better use the water they have. With good reason, too; what international water trade exists worldwide is hampered by high costs that make conservation far more cost-effective.

“There are some groups that are fundamentally opposed to water’s being bought and sold,” says Canmore-based environmentalist Danielle Droitsch. Others, including the organization she heads, Water Matters Society of Alberta, are not so quick to judge. “There are some real positives to water markets,” she says. “In general, it does facilitate more efficiency and conservation. It also facilitates higher productivity.” There are better and worse examples of water markets, though; good ones, Droitsch says, have safeguards to protect the interests of communities and the environment.

Brubaker also emphasizes that what she is talking about is not the privatization of water. By law, the provincial government owns the water and simply grants landowners, municipalities and industrial users the right to use it. That would not change. What she is talking about is putting a price on water. Some critics contend that water is a human right and too valuable a resource to put a price on. “It’s too important not to price it,” she counters. “No one objects to food being bought and sold in the marketplace. Why not water?”

The East Balzac Solution

It’s a situation that’s expected to become more common in the future. Mall developer Ivanhoe Cambridge and the United Horsemen of Alberta are already building a huge shopping centre and horse-racing complex just north of Calgary. It will go a long way to growing and diversifying the tax base – currently 79% residential – of the Municipal District of Rocky View.

But wait! It’s going to take more water than the municipality can supply, and since 2004 the Bow River watershed in which Rocky View sits has been closed to new water licences. Thus began a hunt for water that for a while focused on a scheme to divert water from the Red Deer River watershed, virulently opposed by neighbours to the north.

Then in 2007 Rocky View reached a deal with the Western Irrigation District, a cash-poor non-profit owned by 400 farmers that nonetheless held a substantial licence to the Bow’s run-off. Rocky View would contribute $15 million towards replacing open canals with pressurized pipe that should save the irrigation district an estimated 2,000 acre feet of water, equivalent to 6,700 cubic metres a day. In return, the municipality would be entitled to the saved water.

Not yet approved by Alberta Environment, the deal was ratified by 57% of the members of the Strathmore-based irrigation district and community opposition has mostly gone quiet. No additional water will be taken from the Bow system (indeed, 200 acre feet will be returned to the river) and measures such as a 72-acre section of the East Balzac development being set aside as a preserve should further the interests of conservation. This, proponents of water markets argue, is how it’s supposed to work.

Who’s Using
Alberta water allocations, by purpose, 2006