A Growing Debate – The Value of Water

Opinion by Bill Berzins, President of Fossil Water

“We never know the worth of water till the well is dry.” Thomas Fuller could very well have been warning Albertans when he coined this popular phrase in 1732. Indeed, as Alberta’s rapid pace of development places new demands on an increasingly scarce resource, the debate is growing.Alberta’s water market was enabled in the 1999 Water Act and further shaped by the 2006 Water Management Plan for the South Saskatchewan River Basin. The Plan, which placed a moratorium on new allocations of surface water within the Bow and Oldman River Basins, has been a catalyst for an emerging market for water entitlements. Recent applications for a change in purpose by the Western and Eastern Irrigation Districts have attracted the attention of ecological groups concerned that the needs of aquatic ecosystems will suffer as market forces drive up the price of water.

Water in Alberta is owned by the Crown and generally free to use under a system of licenses and approvals. Access to water is often subsidized – agricultural and domestic uses are encouraged through provincial and federal infrastructure grants that promote pipelines and canals. First-In-Time-First-In-Right governs the seniority of entitlements and gives higher value to rights granted long before today’s population of 1 million people in the Basin began debating the appropriateness of its use.

Alberta’s Water For Life strategy promotes the varied measures of trade for water – social, economic and ecological values. In the Province’s triple bottom line, it is assumed that advocacy is equal for each of these values. But as voters and shareholders alike seek immediate benefits from water and land managers, it is becoming increasingly difficult to strike a balance with long-term ecological benefits. Water rights have been traded for many years in arid economies in the US and Australia. Prior to the emergence of a water market, the Great Artesian Basin in Australia was heavily over-exploited. At peak usage, it was estimated less than 50 years of supply remained. To respond, Australia placed more restrictions on its use and established a WaterExchange in which rights are traded in spot and futures markets. Prices average $500 per acre foot (AF) with a range from $200 to $1,500 depending upon geography and use. The trend of ecological degradation has now been reversed in some areas.

Prices in a strong Nevada housing market peaked at $50,000 per AF, settling in at below $10,000 as housing supply catches up with demand. Recently, in the groundwater-dependent and water-short high desert community of Prescott Valley Arizona, the rights to reclaimed sewage were auctioned off to an investment group for $23,000 per AF. Re-use of reclaimed wastewater is expected to reduce the pressure on declining aquifer levels in this arid landscape.

Closer to home, more than two dozen transfers have taken place in Alberta since 1999. Water transfers between agricultural users are reportedly priced between $300 to $700 per AF. More recently, a transaction between the Western Irrigation District and the MD of Rocky View set a new benchmark of $7,500 per AF.

The quality of water and security of supply also complicates the picture. By relying on carefully maintained canal systems installed during the settlement of the Province, the average irrigator pays $56 per AF for surface water delivered to the fence-line. Conversely, the average urban household pays more than $1,500 per AF for delivery of potable water to the tap.

The emergence of a market for water rights in Alberta introduces many questions.

If water must remain free for most of us, what incentive do we have to take care of it before we pass it on to downstream users? Conversely, as water becomes more valuable, how can the ecological values critical to a sustainable future weigh into the auction?

Likewise, which uses of water should have the highest priority?

Is a secure food supply more or less important than the social and economic needs of growing communities?

Should we move quickly to replace the wide-open spaces of our agrarian landscape with our carefully planned urban communities?

And so the stage is set for many growing debates.

Bill is a professional engineer who has worked on water and environmental infrastructure projects for more than 25 years. He is Chair of the Bow River Basin Council, a member of the Alberta Water Research Institute Board and a member of the Alberta Water Council.