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Be careful what you wish for

Posted 10/05/2011 by KatieJ

Water looks to be the next commodity that is likely to be traded, according to recent remarks made in Geneva, Switzerland, by the chairman of Swiss food major Nestle, Peter Brabeck. He was speaking to a mainly academic audience on the challenges of providing water, energy and food for a world population that is now expected to reach 10bn, if the latest projection from the UN population division is correct. ‘I am not against the idea,’ he told the Reuters news agency, when questioned about the idea of exchange-based water trade.

But unlike all the other commodities that are traded, like oil, and the food crops like cocoa and coffee that Nestle is heavily involved with, water is one commodity that no-one can do without. The world could get used, eventually, to life without oil, indeed, the scientific community is devoting considerable resources in the search for alternatives, and even life without coffee and cocoa is possible, although, for many, a morning start without that essential cup of coffee might be considered a life not worth living.

But there are no alternatives to water, as C&I pointed earlier this year (C&I, 2011, 3, 4), and the idea of water trading conjures up images of prices rising dramatically, as oil prices have done, with a very large proportion of the world therefore unable to afford this essential molecule.

To support his case, Brabeck cited what he believes to be one example of water trading that has existed in the state of Oman on the Persian Gulf for thousands of years. On checking for this example, however, one discovers that the aflaj irrigation systems to which he presumably refers are not based on commodity trading as we know it today.

The archaeological evidence suggests that these irrigation systems existed in this extremely arid area as early as 2,500 BC and are still in use. Aflaj is the plural of falaj, which, in classical Arabic means to divide into shares and equitable sharing of a scarce resource to ensure sustainability and this remains the hallmark of this irrigation system. The fair and effective management and sharing of water in villages and towns is still underpinned by mutual dependence and communal values, not by monetary value and consequent speculation.

Calling for water trading on the basis of the world’s experience of oil is a dangerous thing to do. Brabeck said:’You see what happens when demand is growing. The market reacts and people start to use oil in a more efficient way.’ While no-one would argue for the need to use water more efficiently, Brabeck’s example of where water trading should be used throws up even more arguments against this route.

He believes that the government in Alberta, Canada, should adopt such an approach as there is competition there between farmers and oilmen, between water for growing crops and water for the exploitation of the oil sands. This puts a whole new meaning into the fuel versus food debate.

Neil Eisberg - Editor

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