Will water corruption trump water security?

I am convinced that ... we will run out of water long before we run out of fuel. Nestle Chairman Peter Brabeck-Letmathe

The head of the water program of the International Union for Conservation of Nature, Mark Smith, recently indicated that two thirds of the world's population will be affected by water shortages by 2025. I'll say that again: two thirds of the world's population. Just staggering given that is only 15 years away.

Given that Australia is the world's driest inhabited continent I was very quickly shaken from my torpor. Is Australia ready for 2025? Perhaps one should be checking one's migratory options?

This year saw the completion of the National Land & Water Resources Audit Final Report: 2002-2008. It seemed like a good place to start looking at how we are going, but it's "not available". I was told by a representative of Land Water Australia that the report can't be released until such time as the Department's Minister gives the go ahead. So much for the Rudd Government's policy of giving people information. Let's hope it's not currently undergoing a process of sanitisation.

If we ever do see it, it will be interesting to compare it with the National Land and Water Resources Audit, 2002. Even back then things looked bleak: the 2002 audit found that:

• many of Australia's surface water resources have limited opportunities for further development. 26 per cent of Australia's 325 surface water management areas, drawn from the 246 recognised river basins, are either close to or overused compared with their sustainable flow regimes (PDF 4.31MB);
• the water from 168 of Australia's 538 groundwater management units is either totally allocated or is already over allocated. Not all allocated water entitlements are used, but 30 per cent of Australia's 538 groundwater management units are close to or overused compared with their sustainable yield; and
• of the water diverted for use, on average, 77 per cent actually reaches the consumer, the remainder is lost to seepage and evaporation.

And it seems to have gone downhill from there. Since the 2002 audit there have been significant concerns raised about Australia's surface and ground water and the inextricable link between the two; about the increasing use of water from underground aquifers becoming "an unacceptable risk"; about Australia's Great Artesian Basin (the only source of water for inland mining, tourism and grazing in four states) being under threat from declining artesian pressure, which forces the water to the surface via bores and springs; about Western Australia's underground water supply not recharging fast enough; about the mismanagement and agonising death of the Murray Darling; about our appalling water reuse statistics; about alarming images of our river health, and on top of all that, about the potential impacts of climate change on coastal aquifers and water evaporation (PDF 1.88MB).

If that isn't bad enough who can forget the International Water Management Institute map highlighting the entire Murray Darling region as an area of projected physical water scarcity by 2025. (Physical water scarcity is when the water resources cannot meet the demands of the population.)

Last year Transparency International released its Global Corruption Report 2008: Corruption in the Water Sector (GCR). The GCR was "the first of its kind to explore the impact and scope of corruption in different segments of the water sector".

The GCR notes that climate change raises the stakes for cleaning up corruption in the water sector and that corruption remains one of the least analysed and recognised problems in the water sector. It identifies water as a high risk sector for corruption because water governance spills across agencies, water management is viewed as a largely technical issues in most countries, water involves large flows of public money, private investment in water is growing in countries already known to have high risks of corruption and water is becoming more scarce.

Many will not be surprised to learn that Australia received an "honourable" mention:

... The impact of environmental degradation, inadequate water management and chronic underinvestment are known to us all ... At the heart of these failures is the crisis of governance in water - a crisis in the use of power and authority over water and how countries manage their water affairs. And yet, despite the imperatives of water for citizens' livelihoods and a country's growth, water governance has not been prioritised. Institutional dysfunction, poor financial management and low accountability mean that many governments are not able to respond to the crisis and weak capacity and limited awareness leave citizens and non-governmental organisations in many countries unable to demand change ... Corruption in and around the development of the water sector is a key dimension of this governance failure ...

In Europe, North America and Australia corrupt practices involving or affecting water resources and services are not uncommon. Industrialised countries have their own forms of nepotism in their boardrooms and institutions; fraud and embezzlement feature frequently in the press. Even high levels of regulation and oversight have not prevented corruption from playing out where the public and private sector meet ... When state capture occurs, the decision-making process and enforcement of water policies are manipulated to favour the interests of a few influential water users or service providers at the expense of the broader public ...

Fortunately the GCR makes important recommendations for reform, including the scaling up and refining of the diagnosis of corruption in water, strengthening the regulatory oversight of water management and use, ensuring fair competition for and accountable implementation of water contracts, and adopting and implementing transparency and participation as guiding principles for water governance.

Turning back to Australia, if one reviews the submissions made to the 2009 biennial assessment of implementation of the National Water Initiative one could be forgiven for thinking that either severe pulmonary incompetence or "state capture" is at play in this country.

It is chilling to imagine a world without water security. Not only is water essential for life but, as the February report of the Pacific Institute points out, it is crucial for the global economy: it drives every industry from agriculture to electric power to silicon chip manufacturing, and activities as diverse as apparel manufacture and tourism also rely on supplies of clean, potable water to survive and grow. That water is the economic linchpin no doubt explains why the World Bank has already closely examined this for one of Australia's largest trading partners.

Finally, also courtesy of the Pacific Institute (PDF 1.01MB), we are able to track and categorise events related to water and conflict.

What is clear from all this is that the current way we regulate, manage, and use water in this country is dysfunctional and must change. Apart from the Government letting us see how we are faring by releasing immediately the National Land & Water Resources Audit Final Report: 2002-2008, it must kick its army of salaried officialdom into action to examine first, the potential for and consequences of water (and wastewater) corruption; second, how government's ability to provide water security notwithstanding water scarcity will be hindered if the management and control of water is in the hands of global marketeers (like investment firms, banks, private-equity firms, hedge funds, pension funds, technology corporations and sovereign wealth funds) and, last but not least, the extent to which water corruption, privatisation and state capture has already occurred.

It is our government's role to calculate and make provision for raising the public capital required for water research and technology and the replacement and creation of water infrastructure; if it fails to do that you can bet that the water investment opportunities for the marketeers will come thick and fast as the financial crisis deepens.

Just as there is an uncomfortable feeling that the coming water crisis is inescapable, there is a similar sense of inevitability about the truth of Maude Barlow's predictions that we will continue to witness corporate giants force developing countries to privatise their water supply for profit. Wall Street investors target desalination and mass bulk water export schemes. Corrupt governments use water for economic and political gain. Military control of water emerges and a new geo-political map and power structure forms, setting the stage for world water wars.