Your future may hold a “water account”

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While Alberta is addressing water management issues through its recently updated Water For Life strategy and the Water Act, there is more work to be done, said speakers at the first-ever Water, Agriculture and the Environment conference in Lethbridge in November.

John Thompson of AMEC Earth & Environmental and the Alberta Water Research Institute says the province is edging towards demand management, where basin residents will be expected to make do with the available supply, rather than supply management, where water is moved to where it is need.

He says there is an emphasis on no inter-basin transfers, except where a community is in dire need and another basin is only solution. In 2007, the province closed the South Saskatchewan River Basin (SSRB) (only Red Deer is open) to new surface water licence applications.

The South Saskatchewan River Basin includes the sub-basins of the Bow, Red Deer, Oldman and South Saskatchewan river basins. Major cities in the basin include Calgary, Lethbridge, Red Deer and Medicine Hat. “Consumption will rise, even with no new allocations, due to normal growth and licence transfers,” says Thomspon.

Since no new surface water licence applications are being accepted in the SSRD, it has created an environment of scarcity, thus prompting trades and a value for water. Still, very few trades have been completed to date.

“There are concerns that transaction costs are too high, and that there is no marketplace for buyers or sellers to declare interest,” says Thompson. He recommends the creation of a real or virtual marketplace (similar to Alberta Agriculture and Rural Development’s manure and compost trading system), and a simplified transfer process.

Lessons from Australia

Thompson says commodification of water does not mean export. Water exports from Alberta remained prohibited. “We’ve been through three or four good years now and that may have lulled us into a false sense of security – if we run into some dry years, will we be prepared?” says Thompson.

Australia is one place that knows about drought. It has always experienced periods of drought, but since 2001 it has been in a prolonged drought. In 2006, the late-winter to mid-spring rainfalls failed, leading to the lowest average rainfall in the state of South Australia since 1900. High temperatures have worsened the situation.

Mike Young from the University of Adelaide spoke to conference participants about how Australia has dealt with the water shortages. “We weren’t ready for the dry years,” says Young, noting that one of the biggest lessons learned was to always allocate enough to the environment.

Af ter some major water reforms, now many more irrigators are able to survive drought and communities are willing to trade water. It is often moved out of areas with local environmental problems, such as salinity, to areas where it is needed, and where others will pay for it.

While many mistakes were made, including managing groundwater and surface water as one, not accounting for return flows, and ignoring impacts of climate change, there were some things that Australia did correctly, says Young. These included installing water meters, enforcing compliance with licensed volume, defining entitlements as shares, and unbundling to reduce control and transaction costs.

Based on his first impressions of Alberta, Young made several recommendations for a reform sequence. He suggested capping all groundwater systems and any uncapped surface water. Other reforms included complete metering, mandatory reporting and the establishment of a trial trading program.

While Alberta may be years away from a formal water trading system, perhaps someday it will follow in Australia’s footsteps, where producers set up a “bank account” for water, enter their neighbour’s name, determine the amount of water to be traded, press “confirm” and the trade is instantaneous.

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