Integrated water resource management in an emerging green economy few concerns Dipankar Dey1 --------------------------------------------------------------------------------------------------------------------Water scarcity has emerged

d as one of the major economic and environmental issues of this century. The Earth Summit (Rio +20) Document The Future We Want (June 2012) has advised each participant country to consider the implementation of green economy policies in the context of sustainable development and poverty eradication. The UN-Water Status Report on the Application of Integrated Approaches to the Development, Management and Use of Water Resources which was launched, during the Earth Summit, on 19 June, 2012 has also highlighted the fact that an Integrated approaches to water resources management and development are critical for progress towards a green economy. The concept

of virtual water trade is gaining importance. It has been claimed that one solution to water scarcity involves accounting for the virtual water when designing trade policy. In future, in the name of protecting water resources, developed food importing nations might ask for water labels to guarantee that only pure water (and preferably from renewable sources) be used in the production of exported food items. By discouraging/prohibiting the use of arsenic and lead contaminated underground water in cultivation and animal husbandry, water labels will ensure the safety of the exported food. In such a scenario, which is very likely, the organic farmers will increasingly rely on renewable natural water sources for cultivation. Funds will be diverted to develop water bodies to serve that purpose. A part of these organic foods will be sold, to the affluent domestic consumers, through organized retail chains. And for the remaining hungry millions, GM grains will be cultivated with arsenic contaminated ground water. --------------------------------------------------------------------------------------------------------------------The Earth Summit (Rio +20) Document The Future We Want (June 2012) has advised each participant country to consider the implementation of green economy policies in the context of sustainable development and poverty eradication. The UN-Water Status Report on the Application of Integrated Approaches to the Development, Management and Use of Water Resources which was launched, during the Earth Summit, on 19 June, 2012 has also highlighted the fact that an Integrated approaches to water resources management and development are critical for progress towards a green economy.i Again in October 2012, OECD has released a report titled The Framework for Financing Water Resources Management. The report provided governments with a framework to assess and strengthen the financial dimension of water resources management. It also proposed a set of principles to frame financing strategies for water management, with a specific focus on the potential role of economic instruments.ii The Water Economy Water scarcity has emerged as one of the major economic and environmental issues of this century. In 2008 the Stockholm International Water Institute has calculated that 1.4 billion people lived in "closed basins" where existing water could not meet the agricultural, industrial, municipal, and environmental needs of all. The water and energy intensive agriculture practices, followed worldwide since 1950s, have already made serious damage to the ecology through
1

Dipankar Dey, PhD, Dean, IBS Business School, Kolkata, dip_dey@hotmail.com, ddey@ibsindia.org; Tel: 919433887819, the views are personal.

indiscriminate use of chemical fertilizer and underground water. Thus both air and water got contaminated. It is apprehended that agriculture will be adversely affected in the near future due to rise in global temperature. To address this challenge, an agro-biotechnology based new green revolution has been recommended by the global think tanks and transnational corporations associated with agri-business. It is argued that plants with some degree of drought tolerance will be important for developing countries as drought is projected to be the most prevalent constraint to increased crop productivity. Mass applications of biotechnology and bio-informatics have been projected as the appropriate drivers of this 2nd green revolution.iii The looming water scarcity, direct fallout of the 1st green revolution, has not only paved the way for the introduction of genetically modified (GM) seeds, it has also created a vast market of its own. Till now, water market has remained confined to industrial and personal consumption sector only. As in the case of other industries, water industry is now dominated by few transnational corporations, namely Thames-RWE, GE Water, International Water Holdings BV, Siemens Water Technologies, Black and Veatch, Veolia Environment, Suez Lyonnais. The list of major TNCs engaged in water utility services reveals, among others, (a) the strong presence of European firms in the industry; and (b) simultaneous involvement of these firms in energy utility services also. Companies like GE, Siemens, RWE and Bechtel, known worldwide as utilities engaged in energy sector, have successfully diversified into water utility service. As early as 2002, the European Union (EU) had opened the discussion on foreign participation in water distribution in developing countries.iv Then in 2005, during negotiations on GATS (The General Agreement in Trade in Services), under the WTO Doha Development Round, they proposed that in exchange for access to the water markets, developing and least developed countries (LDCs) would receive long sought-after access to the western markets. In plain term it means, developing countries would get market access of their agricultural products in the EU on the condition that they (developing countries) open their water sector to the water TNCs. In 2005, 95% of the worlds privately run water utility service was controlled by European companies. v Saving Water for Future European Union (EU) and other developed nations have taken a conscious decision to save their scarce water resources by shifting the burden of cultivation to developing countries. European Union will emerge as one of the largest importers of food grain as EU has offered to eliminate export subsidies altogether by 2013. The EU is already the biggest market for Third World foodstuffs. vi Through this strategy major economies of Europe (also USA) have successfully brought down their present water usage, as the table 1 indicates, for the benefit of their future generations.

India, however, has followed a suicidal policy of exhausting, this vital natural resource. Experts are now suggesting accelerating the withdrawal process further. Even China the most populous country has saved over 80% of its total renewable water resources for future use.

Table: Fresh Water Withdrawn as % of the Total Renewable Water Resources Country India China The Netherlands USA Germany France UK 1878-97 39.7 18.7 71.0 18.2 43.2 22.6 6.4 2003-07 19.5 12.6 15.6 21.0 15.0 8.8 2008-12* 40.1 11.7 -

*Estimated, Source: UNDP, HDR 2000, 2011 How could countries like The Netherlands and Germany reduce the use of fresh water? The water import dependence (WID) data of few major economies of Europe and USA will explain the above observation. WID (expressed in %), is the ratio between water footprint of a countrys import and its total water foot prints. The higher the ratio, the more a country depends on outside water sources. During 1997-2001, the water import dependence of the Netherlands, UK, Germany, Italy France and Spain were 82%, 70% ,53%, 51%,37% and 36% respectively. The corresponding figures for India, Bangladesh, China, and Brazil are 2%, 3%, 7% and 8%. And the WID of Japan and USA, during that period, were 64% and 19%.vii Thus during 1997-2001 the Netherlands could reduce, through imports, the countrys total water foot prints by 82%! This explains how The Netherlands could reduce their fresh water withdrawal figs (refer table 1) to 12.6% from as high as 71.0%. The concept of virtual water will help us to understand this mechanism better. Virtual/embedded water is the amount of water used in the production of food, energy and other products. It is the embedded water content of a product. If a country decides to rely more on imported food, it can save enormous amount of its own water which otherwise would have been used for cultivation. For example, to produce one ton of wheat, say, 1160 cubic meters of water is required. That means, 1160 cubic meters of water got embedded in one ton of wheat. Thus if India exports one ton of wheat to Europe then there is a virtual flow of 1160 cubic meters of water from India to Europe. The concept of virtual water trade is gaining importance. It has been claimed that one solution to water scarcity involves accounting for the virtual water when designing trade policy. Suggestions have been made to set up a virtual water-trading council, under the World Trade

Organization (WTO), to help manage both real and virtual water resources for the worlds booming population.viii Concerns In future, in the name of protecting water resources, developed food importing nations might ask for water labels to guarantee that only pure water (and preferably from renewable sources) be used in the production of exported food items. By discouraging/prohibiting the use of arsenic and lead contaminated underground water in cultivation and animal husbandry, water labels will ensure the safety of the exported food. The World Water Council has already initiated various moves to this effect and in its 5th World Water Forum, held at Istanbul in March 2009, it has called for, among others, harmonizing strategies for water, food and energy.ix In such a scenario, which is very likely, the organic farmers will increasingly rely on renewable natural water sources for cultivation. Funds will be diverted to develop water bodies to serve that purpose. The food processing plants will collaborate with the global water utilities of importing developed countries to guarantee that water purification level, as specified in the water standards, is maintained. A part of these organic foods will be sold, to the affluent domestic consumers, through organized retail chains. And for the remaining hungry millions, GM grains will be cultivated with arsenic contaminated ground water. While the citizens of the importing countries of the North, would consume green products, large number of the underprivileged population of Southern countries like India would lose their basic rights on water. The transnational water utilities will take charge of the municipal water distribution servicesx. The world is increasingly getting divided between the green and indigo economies. (Dey 2010) xi The indigo economy represents economic activities which primarily use dirty and polluting production process. This also represents an economic program that is mostly meant for global markets and is detrimental, as was the case of indigo plantation of the 18th century, to the large section of the local population. The developed economies are becoming green at the expense of the developing economies which are turning indigo by absorbing increasing amount of Franken foods and industrial pollutants, including nuclear radiation. According to Hindu mythology, to save mankind, lord Siva, the creator of the Universe, had absorbed all poison of the Earth at his neck and became Nilkantha indigo-necked. Like lord Siva, the inhabitants of these developing emerging economies would also turn into indigoxii by absorbing all poison of the Earth.

End notes
i

See, http://www.unwater.org/downloads/UN-Water_Report_for_Rio_Summary.pdf, visited January 15, 2013 See, http://www.oecd.org/water, visited January 15, 2013 iii For details see, Dey, Dipankar, The Second Green Revolution in India: The Emerging Contradictions, Consequences and the Need for an Alternative Initiative (August 12, 2009). Available at SSRN: http://ssrn.com/abstract=1447795 iv Between 1987 and 2002, the total private investment commitment in water and sewerage in developing countries was $35 billion.10% of this was FDIs. Three water TNCs, namely Thames-RWE (Germany); Suez Lyonnaise (France); Veolia Environment SA (France), were the major investors in water services.. See, World Investment Report (WIR), 2004. v Euobserver.com, (March 16, 2005), EU pressures developing countries for access to water services, http://euobserver.com/?aid=18673 Visited August 11, 2009
ii vi

http://www.eurunion.org/eu/index2.php?option=com_content&do_pdf=1&id=40, May 6, 2009 See Gardner G (August 6, 2009), Water Scarcity Looms, World Watch http://www.worldwatch.org/node/6213?emc=el&m=279787&l=4&v=a274235068
vii viii

Institute,

See, Virtual water trading could benefit developing countries, February 13, 2007. http:// www.unisa.edu.au/news/2007/130207 ix http://www.worldwatercouncil.org/fileadmin/wwc/World_Water_Forum/WWF5/5th_Forum_Highlights.pdf, visited on January 12,2010 x After privatization of the municipal water and sanitation services in Cochabamba, the third largest city of Bolivia, in 1999, Aguas del Tunari (owned by the U.S. transnational company Bechtel along with Italy's Edison and Spain's Abengoa corporations) had been awarded with the 40-year concession to supply water in the city. The foreign company hiked water rates by as much as 200 percent. Water bills amounted to 20 or 30 percent of the income of poor households. Even wells that had been dug by local communities or cooperatives as a solution to their lack of piped water came under the control of Aguas del Tunari, which thus acquired the right to charge for the water from the community wells that it had not even dug itself. See, Franz Chevez, Cochabamba's 'Water War', Six Years On, http://ipsnews.net/print.asp?idnews=35418, visited January 16,2013.
xi

See, Dey, Dipankar (2010), Of Global Warming and Indigo Economy, The Frontier Weekly, Vol.43, No.6, August 22-28, 2010. Also available at SSRN: http://ssrn.com/abstract=1601269.
xii

Originally the term Blue economy was used. See Dey. Dipankar (2007) SMEs: Rising Opportunities in the Emerging Blue Economy, published (October, 2007) in ie2 (International edition) the monthly magazine of EEPC (Engineering Export Promotion Council), Ministry of Commerce, Government of India.