Sunday, 28 July 2013

"Pump no more" - The beginning of Water wars

Pump no more.

author - Mo Polamar

This bumper sticker is perpetually in vogue with regard to oil and its drilling and soon will be in vogue with regard to water.

Water is a not only a scarce resource but also an elemental resource. It is a scientific fact that we are a sum total of five elements, earth, fire, wind, water and ether, If there is one good reason for humans to flourish on earth it is because of water. Water is the only element that we consume directly whereas the rest of the elements are used in adulterated forms. Water, for centuries is assumed an infinite resource and we used and abused the resource so far through all the various economic revolutions, be it the industrial or agricultural.

Oil, all though, cannot be compared with water is also an abused resource. For decades we have been pumping oil and increasing our dependency on it. We have been repeatedly told of the day when we will run out of oil. Not so ironically the stock market is the custodian of the total available oil as the declared and to-be drilled oil reserves reflect on the stock market and contribute up to 12% of the global financial markets. By measuring the oil reserves we are able to easily define a scarcity scenario, this scenario helps create market value to oil and to the infinite products that oil enables.

So, Is it time to measure water and commoditize as we did with oil. On one hand it seems like a good idea because water once declared in the market as a commodity a price discovery process will take place automatically. A simple reflection of that value in the consumer market is that Coca Cola will cost about 10 times the present price. For some that might be a good outcome as it brings discipline to the factories and industry that abuse the use of water. But consider the downside, Large corporates like Reliance and other will own the water reserves and will manipulate the price to suit their share holder need leaving the common man applying for loans to purchase water to drink and to wash up, imagine and visualize with your olfactory.

Lets take a step back and assess the challenges in measuring water. Water is getting scarcer and the indicators are obvious, like the average depth of a bore well in India now is 1400 ft from a 250ft two decades earlier. It is long accepted that it is an impossible task to measure the water reserves, as many factors like rainfall, under ground aquifers, demand driven by individuals and industry are unpredictable. Continuing to model the need and use of water is an important task but the objective must be to conserve and not to discover water in the financial markets. Conservation can be achieved if Water is viewed as a national resource and not as a state resource therefore strong central policies with even stronger governance structures are required. Conservation policies are in the short run an unnecessary inconvenience for the industry but in the long run it will lead to savings as water conservation and energy consumption are directly related.

Every state government has policies that contradict in on way or the other. Considering there are no strong policies to conserve water, the policy that must be awarded is in Punjab, energy use for pumping water is free for agriculture and industry burning a hole of about 3000 crores to the government and influencing a 6% fiscal deficit. Water is getting scarce in Punjab and irrigation is effected leading in reduction of production of agro products, a steady and steep decline is seen over the last decade.

I live in Bangalore and I am concerned with this policy because it takes away water from under my feet, so! Pump no more.
Some one else living in Pakistan is concerned with this policy because it takes away water from under their feet, so! Pump no more.
Those that live in Punjab must be concerned the most. Many rivers flow through the state, Punjab is at the foothills of the great Himalayan range. What if Punjab runs out of water???

So! Lets change the bumper sticker to -  "Pump no more water" 

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