Monday, January 04, 2016

Capitalism and Water

Water is at the base of all forms of life on earth, and its existence on the planet created the preconditions for the origin of life and the billion years of evolution. Through the history of humanity many civilizations flourished depending on a water source. Mesopotamia, (land between the rivers in ancient Greek), and known as the “cradle of civilization” depended on the Tigris and Euphrates. Ancient Egypt developed on the Nile, the Chinese empire prospered along the Yellow and Yangzi basins and developed a complex administrative machine based on water management for agricultural irrigation. It is possible to say that human development is water-driven, and this crucial resource is vital to economic and social prosperity. Today in many countries water is a common good, underlining the importance of its universal access.

 Sustainable water management is fundamental for addressing climate change. “Actors across all sectors should contribute to climate change adaptation and mitigation strategies integrating water into future climate architecture.” In order to meet this goal, financing is a crucial aspect, declared Torgny Holmgren, of the Stockholm International Water Institute (SIWI). In 2015, the World Economic Forum ranked water as the highest risk affecting global society. According to World Water Council (WWC), one in eight people live without safe drinking water and two people in five do not have adequate sanitation globally. 

The price of water in California has been steadily rising, as has demand from a growing population, while the state struggles with four years of severe drought.

Scott Slater, chief executive of Cadiz Inc, wants to pump 814 billion gallons of water from under the Mojave desert to Los Angeles and other drought-stricken communities in southern California, and make more than $2bn (£1.3bn) doing so. “Yes, it’s quite a lot of money,” Slater admits, “It’s worth whatever the community who wants the water is willing to pay for it to meet their demands.” Drought is good news for Slater and Cadiz. “In a condition of scarcity, all water, all water that’s reliable, becomes more valuable.” The company’s share price spikes every time a drought emergency is declared.

Cadiz owns water rights associated with 45,000 acres of land along route 66, about 75 miles north-east of Palm Springs. The holdings were built up by the company’s founder, Keith Brackpool, a British horseracing impresario, who came to the US after admitting having breached financial disclosure laws in the UK in the 1980s. The company biggest investors, some of whom have been waiting for Cadiz’s water to flow to LA for more than a decade, include the New York hedge fund Water Asset Management and Crispin Odey’s Odey Asset Management in London. Slater has already got contracts to sell the water for $960 an acre ft (the amount of water it takes to cover an acre of land in a foot of water). That works out at $2.4bn over the 50 years of the company’s water extraction deal with San Bernardino County. Slater says water is worth as much as $2,200 an acre ft in San Diego, where it is shortest supply. A decade ago the price was less than $100, he says.

Cadiz has plenty of opposition - environmentalists, local ranchers, protectionists and Native American tribes. Slater says his plan is environmentally “benign”. David Lamfrom, the director of the National Parks Conservation Association’s California desert and wildlife program, said he believed that “full examination of the Cadiz Inc proposal will once again prove that it is unsustainable and that it will harm our desert national parks, communities, businesses, and wildlife”. Senator Dianne Feinstein also criticized the project, “I remain concerned the Cadiz project could damage the Mojave desert beyond repair…”

The law in California states no entity can own water but they can buy, sell and trade the right to use it.
“There are people that think water is a human right and confuse privatisation with the right to get water under economic terms,” Slater says. “This is the United States of America and we have private property here. This is not a communist country. We own land, and land use is an attribute of property ownership,” he says. “Food doesn’t stay on the farm it was grown on. We share our food, we share our energy, we share our oil and gas. I can sell land to anybody. Why would I treat water any differently? The use of water is owned. It’s not like someone is calling up God and saying ‘make it rain’. It is sold as a right, just like you sell a house.”

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