Wednesday, September 4, 2019

Water-Trading Market Runs Into Trouble Wall Street Journal 9.4.2019

A couple of years ago, the Colorado Water Congress had a session that featured the methods Australia had engaged in to manage water. One of the strategies mentioned included water-trading markets, a plan initiated in the country in 2007. The Wall Street Journal article described water-trading as a market-based system that incorporates cap and trade. Investors can buy and sell water shares, a segment of the market worth about $20 billion.  One of the oldest examples in the United States, the Big-Thompson in Colorado, "has never grown to make much of a difference in the overall supply". California has considered water-trading and Nevada's state engineer signed off on a plan at the beginning of the year in Diamond Valley.

The proponents of the market-based system hoped that the value of water would increase, encouraging high-valued uses of water. Instead of growing wheat, farmers have planted water guzzling crops, such as almonds, citrus fruits, and cotton. The article cited corruption, fraud, and theft as the reasons that Australia's Darling River has run dry and has not flowed for eight months, with devastating effects on fish and wildlife. Users of water have stolen water from rivers and streams and governmental officials "a former agriculture minister allegedly oversaw the purchase of a water license at a record price from a Cayman Islands company cofounded by the current energy minister."

In response to this article, Matt Kennedy, of AquaShares in San Francisco, California,  in the September 13, 2019 edition of the WSJ referred to the water exchanges that have succeeded. According to him, those include Oman's aflaj, Morocco's khettara, Iran's qanat, China's karez, Bali's subak, and Spain's Huertas. These efforts at water trading established the trust needed to avoid the problems that exist in the Australian model. He blamed the transactional approach of economists and suggested involving "anthropologists, hydroecologists, sociologists, and human rights lawyers. . . to also restore ecological health and ensure social equity." (p. A14)

Wednesday, August 7, 2019

17 Countries . . .Face Water Stress : World Resource Institute

The New York Times today mentioned this report, the full title of which reads: 17 Countries, Home to One-Quarter of the World's Population, Face Extremely High Water Stress. Published yesterday and written by Rutger Willem Hofste, Paul Reig, and Leah Schleifer, the article reaffirmed the headlines we have read this year about water shortages within certain nations throughout the world. Going beyond drought as the culprit, the article noted that the Institute, through hydrological models, attributed water withdrawals as the current source of concern. To quote the authors, "WRI found that water withdrawals globally have more than doubled since the 1960s due to growing demand-- and they show no signs of slowing down."  The authors classified countries into various categories of what the authors called "water stress": (1) extremely high baseline water stress, (2) high baseline water stress, (3) medium-high baseline water stress, (4) low medium baseline water stress, and low baseline water stress. The 164 countries included only UN members; therefore, Palestine, small island nations, and others did not get ranked.

The 17 countries addressed in the title of the report, cover most of the Middle East, parts of North Africa, and India. The opening paragraph stated that Chennai, India, one of the country's top ten populated cities,  has nearly dry reservoirs. Water extracted in the 17 countries for agriculture, municipal and industrial use caused withdrawals almost equal to supply yearly. One-quarter of countries included in the report extracted 40 percent or more of their available supply annually. In addition to the water stress of the 17 countries, the report mentioned three other trends: (1) India's water stress goes beyond the surface, (2) pockets of extreme water stress exist even in countries with low overall water stress, (3) water stress is not your destiny.

In discussing the trends, the authors identify additional solutions besides agricultural improvements and limiting extraction: increase reuse of water, increase irrigation efficiencies, "conserving and restoring lakes, floodplains, and groundwater recharge areas; and collecting and storing rainwater". Countries can implement other efforts, such as effective water management, realistic pricing, and minimizing food waste and investing in natural and constructed infrastructure that impact water quality and quantity, such as wetlands and pipes and treatment plants.

Go to the following link to find the rankings of UN countries and the categories for each of the 50 states of the United States.

https://www.wri.org/blog/2019/08/17-countries-home-one-quarter-world-population-face-extremely-high-water-stress


Wednesday, May 8, 2019

The Prosperity Paradox : How Innovation Can Lift Nations Out of Poverty 2019

Although Christensen and his colleagues wrote this book targeting developing countries, the last chapter on infrastructure has lessons for everyone. Entitled "If You Build It, They May Not Come", the chapter divides infrastructure into these seven categories: schools, financial systems, ports, electricity, sewer systems, roads and bridges, and water works. The first two, the authors considered soft infrastructure, and the rest hard. Some of these store or distribute natural resources, other do both. From this reality, the authors define infrastructure as, "the most efficient mechanism through which a society stores or distributes value" (p. 243). Given this definition, the infrastructure, schools, does not necessarily deliver the value, education. We see this truth not only in poor countries, but within the educational system in the U. S. This rule of value applies not only to education, but to the other forms of infrastructure. Many countries have stories of bridges or roads to nowhere or disruptive dams.

For the above reasons, Christensen and his colleagues take a market view of infrastructure development rather than relying on a central government:

"It would be easier to rely on governments to take the lead and remove that worry and responsibility from private enterprise. But history tells us that that doesn't often happen.
When you create a new market, the profits from the market help pay for the infrastructures pulled into the economy. This is how many major infrastructure projects in the United States were developed. By themselves, many of the infrastructures--the roads, the rails, the canals, and so on--were not profitable. But once the infrastructures were pulled into an American economy that was creating a lot of value that needed to be stored or transported, the infrastructures then became viable" (pp. 252-253).

Wednesday, April 3, 2019

The Control of Nature, Under Water : Can engineering save Louisiana's disappearing coast? New Yorker Magazine, April 1, 2019 by Elizabeth Kolbert

Unlike many articles on water that I have read, this article forced me to confront the question: How much should humans interfere with the forces of nature? Focusing on Plaquemines, land that extends into the Gulf of Mexico "where the river meets the sea" (p. 32), the author explained the natural interplay between the weather, the Mississippi River, and the land in this section of Louisiana. This area, below sea level, could not withstand the fury of Hurricanes Katrina or Rita. Erosion has brought the city of New Orleans twenty miles closer to the Gulf of Mexico. Additionally, New Orleans, below sea-level, continues to sink. "A recent study that relied on satellite data found some sections of New Orleans dropping by almost half a foot per decade" (p. 41). The city's solution of pumping water exacerbates the problem of subsidence; the more the city pumps, the more the city sinks.

Geographically, Louisiana, like Italy, looks like a boot with Plaquemines at its farthermost point of the toe. Describing the degree of erosion of Plaquemines and in Louisiana generally, the author stated:

"And what's happening to Plaquemines is happening all along the coast. Since the days of Huey Long, Louisiana has shrunk by more than two thousand square miles. . . Every hour and a half, Louisiana sheds another football field's worth of land. . . On maps, the state may still resemble a boot. Really, though, the bottom of the boot is in tatters, missing not just a sole but also its heel and a good part of its instep" (p. 34). 

Citing this phenomenon as a "land-loss crisis" (p. 34). Kolbert attributes the problem to the Army Corps of Engineers attempt to manage and control the Mississippi with "thousands of miles of levees, flood walls, and revetments" (p. 34). Kolbert wrote the article to disclose the latest project to control the river, "a huge new public-works project is getting under way--this one aimed not at flood control so much as at controlled flooding, Ten pharaonic structures are planned. The furthest along of these is slated for Plaquemines Parish. . . and, when operating at full capacity, will, by flow, be the twelfth-largest river in the country" (p. 34).

Historically, the Mississippi has dropped sediment in Louisiana. Tracing the rivers history, Kolbert claimed that "In the last seven thousand years, the river has avulsed six time, and each time it has set about laying down a new bulge of land" (p. 34). The author recounts some of these, from the time of the building of the pyramids and the formation of New Orleans to the creation of Western Terrebonne Parrish during the time of Charlemagne. Plaquemines, the most recent of the avulsions, dates about fifteen hundred years old. However, the story does not end there. The sea eventually reclaims the some of the land, "where the river delivers enough sand and clay to make up for the lost volume, the land holds its own. Where compaction outpaces accretion, the land begins to subside until, eventually, the Gulf reclaims it" (p. 35).

The Army Corps of Engineers projects of dredging and diversions hope to thwart another avulsion or crevasse, a breach of a levee, in a race against nature.

Tuesday, April 2, 2019

Economist Special Report : Water March 2, 2019

With the subtitle, Thirsty planet, the Economist addressed water from multiple perspectives. In addition to a general introduction, the other subtitles included, Surface tension, Subterranean blues, Desalination, Waste Not Want Not, and the Conclusion, Hard and Soft Solutions.  The authors explained the purpose of the report: "It will look at the state of the world's freshwater and at the increasing demands on it, and consider the ways they can be met (p. 5)." Given that 70 percent of human and Earth's composition is water, the article focused not on quantity but on water management, "or more precisely, how to withstand economic, cultural and political pressures to mismanage water" (p.5) This premise assumes that managers have a holistic rather than a fragmented, national, or regional view of water resources.  Public sentiment, from The United Nations (UN) to other governmental bodies, view water as a fundamental human right.

The introduction mentions climate change, the cheapness of water in the developed world, and the devastation of natural environments as the major threats to water quantity and quality. The authors cite the UN's "water development report" (p. 6) that documents the decline of the availability of water and its increased use, a sixfold increase in one hundred years. The three factors of "population, prosperity, and climate change" (p. 6), the authors argue, will increase demand, with a 20 to 50 percent increase from current levels by 2050. According to the Intergovernmental Panel on Climate Change, temperature change of "a 2 degree C rise, an additional 8% of the world's population in 2000 will be exposed to new or aggravated water scarcity by 2050" (p. 7).

Since agriculture requires 70 percent of the world's water, the authors speculated on the effect that climate change would have on water availability. They acknowledged the current occurrences of extreme weather events, from rising ocean temperature. Their concern, however, focused on the shortage of water and drought with declining stream flows in rivers.

Regarding surface water in rivers and streams, the authors added this subtitle, "poisoned and over-exploited, many rivers are in a parlous state" (p. 7). Human pollution, industrial waste, hydroelectric and other dams threaten water flows. Some remedies include "large scale infrastructure to bring water from elsewhere; flow-management through digital monitoring and the use of economic levels" (p. 8).
The authors cite examples of India's Ganges, Israel's Sea of Galilee (a freshwater lake), and Australia's Murray River as examples of governmental approaches to water management.

Ground water also suffers from chemical and other pollutants from "landfills, septic tanks, leaky underground gas tanks and the overuse of fertilizers and pesticides" (p. 9). As mentioned previously, agriculture accounts for 70 percent of water use. The authors listed the main extractors of ground water: "America, China, Iran, and Pakistan, account for 67% of total extraction worldwide" (p.10). Food production demands the majority of this water.

To solve the problem of insufficient surface and ground water, some countries, especially Israel, have resorted to desalinated sea water. By pumping sea water over a one kilometer distance and purifying it through reverse osmosis, one water treatment plant, the Sorek desalination plant, supplies Israel with one-fifth of its water use. Of the estimated 15,906 desalination plants worldwide, Israel has five,  fewer than Saudi Arabia, the United Arab Emirates, and Kuwait. The cost of the process reflects the ability of these countries to pay for it.  The cost of transport and the energy required to desalinate makes this the most expensive way to produce potable water. A cheaper option, reuse of water and treated sewage, are alternative methods employed by Israel and Singapore, as illustrated by the authors.

Conservation of water, especially by agriculture its largest user, can result from drip irrigation and sensors that "monitor weather, soil and plant conditions and calibrate how much water is delivered" (p.11). The public can control water use in the selection of what foods we eat and what we waste and the water footprint that we create. Technological enhancement can also assist in reducing food waste. "Remote sensor technologies, such as near-infrared spectrometers and hyperspectral imaging, capable of evaluation the perishability of individual items" (p.12) could solve this problem. Leaky water pipes and "non-revenue" water, water used without a cost frustrates the desire to conserve. A local utility in Denver attempted to achieve 'net-zero' water consumption at its newly built waste water treatment plant. Commercial companies, such as Nestle and Unilever,  continue to strive to reduce water consumption.

In conclusion, the authors refer back to the three forces driving water decisions, "economic, cultural and political pressures to mismanage water" (p.5) . They recount the large projects undertaken throughout the world, for example, Israel's National Water Carrier and the Three Gorges Dam in China. However, to achieve the UN's goal on water and sanitation, money is needed, estimated at $114 billion. Equitable pricing of water offers another challenge, as does the issue of allocation. Countries would have to face their current laws on water to establish a regional or collective doctrine.

Friday, March 22, 2019

Seven States Sign Deal in Effort to Avert Water Crisis Along Colorado River : New York Times by John Schwartz

Constant coverage on the Colorado River has emphasized the threat of its inability to supply water to states designated for an allotment in the Colorado River Compact and the other agreements that form the Law of the River. According to the Colorado River Compact of 1922, seven states--divided into the upper basin and the lower basin--would receive a share of the river's waters.  This New York Times article explained an agreement reached on Tuesday, March 19, 2019 by the seven states. Colorado, New Mexico, Utah and Wyoming constitute the upper basin states and Arizona, California, and Nevada, the lower basin.

To avoid a federal mandate and urged by the Bureau of Reclamation (BOR), a federal agency, the seven states wrote a drought contingency plan that they submitted to Congress. "Brenda W. Burman, commissioner of the Bureau Of Reclamation, the federal agency that oversees the river, pressured states and their water agencies to make a deal." The relationship between the federal government and the states results from the role each plays regarding the Colorado River: "the federal government regulates the water, the states own the rights to it."

Having experienced a 19-year drought and the possibility of a dry future with climate change, the group agreed collectively to curtail their use of water.  The primary objector to the agreement, the Imperial Irrigation District, relies most heavily on the river compared to other users in California. During the negotiations, Imperial proposed that it ask the federal government for $200 million to restore Salton Sea, the largest lake in California.  Salton Sea gets its water from return flows that have decreased due to the reduction of water use by farmers.   As the Salton Sea dries up, the dust blows, causing respiratory problems to local residents. Despite the offer of the six other states to "cover Imperial's share of water cuts without requiring that flows to the Salton Sea be reduced." California representatives to the agreement stated the agreement "may mean getting it done, but not getting it right."


https://www.nytimes.com/2019/03/19/climate/colorado-river-water.html

Monday, March 18, 2019

Solving the rate puzzle: The future of electricity rate design, McKinsey's consultants Blake Houghton, Jackson Salovaara, and Humayun Tai

Last year my water rates doubled. I called my water provider and asked about the reason for the hike. Although my bi-monthly water bill still costs less that my monthly phone bill, the utility had not hiked rates to this extent since my service began. The water utility explained that their board had voted on a capital improvement charge. According to the McKinsey article, electric utilities should consider similar rate increases, given greater competition from distributed energy sources that generate less carbon.

Because of the federal regulation of electricity companies, unlike water utilities, electricity providers must obtain approval from federal regulators to increase rates. Regulators  and public utility commissions resist sudden spikes in rates. Having charged various customer classes according to the volume of energy used, residential, commercial, and industrial customers receive a volumetric rate, in addition to a flat rate, regardless of the time of use or other variables. Therefore, rates have remained consistent even when utilities face aging infrastructure and other capital costs, such as integrating renewable energy sources into the existing network. In addition to grid modernization, electric utilities face regulatory costs that they must absorb. With growing competition from low-carbon, distributed energy sources, electric utilities face a declining revenue stream and fewer customers.

The authors emphasize a change in the rate structure and urge companies to start planning for a more competitive future. The authors summarize the rate initiatives that utilities should take to generate sufficient revenue: "an updated rate design must align rates with system-wide costs, encourage flexibility, and address customer' differing needs." The authors suggest that utilities increase fixed charges and demand, volumetric, charges. Other recommendations include the adjustment of daily rates to reflect the costs of time of use (TOU)--cheaper at night and more costly during times of high demand. Additionally, the article adds that electric utilities should reward customers to control their home automation devices for cost effective use.  Partnering with customers, electric utilities can better manage the price of energy, its capacity, and the flexibility of use. Other variables that electric utilities can incorporate into the rate structure range from location, dynamic pricing based on market forces, reliability assurances, to energy source options--renewable versus other sources. Customers, residential, commercial, and industrial, would select which of the various offerings fit their needs. The utility would operate as a platform with a wide menu of options available to the customer. To realize these new rate goals and objectives company would assess their capability and support, customer acceptance, regulatory approval, and the alignment of a new rate structure with company sustainability policies.