By Keith Gerein, Edmonton Journal With Files From Darcy Henton, Calgary Herald, May 12, 2011
Nestle chair's comments raise fears that H2O to become commodity
A controversy over water management has boiled up in Alberta over a media report in which the chairman of a major food company suggested the province is looking at the idea of allowing water to be traded and sold on an exchange like a commodity.
"We are actively dealing with the government of Alberta to think about a water exchange," Peter Brabeck, chairman of Nestle, told Reuters following a speech in Geneva on Tuesday.
He said Alberta is a good place to consider the concept, in part because of the expected increasing competition for water between agricultural producers and the energy sector.
If water was treated more like oil, with prices for the product fluctuating according to supply and demand, it would encourage users to treat it with more respect, he said. Potentially, an exchange system could help to curb a shrinking availability of fresh water in many parts of the world, Brabeck said.
"You see what happens when demand is growing. The market reacts and people start to use oil in a more efficient way," he told Reuters. "One thing that does not move at all is the price of water."
Alberta Environment denied that negotiations are taking place to institute a formal exchange.
"We've never considered going as far as what he is talking about -not even close to that," spokeswoman Cara Tobin said.
However, Environment Minister Rob Renner acknowledged there is an emerging debate around the idea as a potential way to encourage water conservation. He couldn't recall whether he spoke with any Nestle executives, but said he has heard from many people on both sides of the issue.
"I think there will come a day, at some point in time, when we need to value water. Whether that means in the form of a regulatory regime or whether it means in some form of a market remains to be seen.
"Not all water is consumed for the purpose of maintaining basic necessities of life. And so the issue really is, how do we allocate the rest of the demands for water in a fair and equitable way?"
Opposition parties seized on the Reuters report to accuse the Tory government of jeopardizing the province's most precious resource.
NDP Leader Brian Mason called the report "very, very frightening," and suggested a water exchange could be the first step toward exporting water to the United States.
"Obviously, in a market for water, those with the deepest pockets will be able to control the water. That means companies like Nestle. It means companies in the oil business will be able to outbid farmers for scarce water."
Liberal MLA Laurie Blakeman said she doesn't like the idea of a multinational corporation involved in a commodity system for water.
"You could have farmers selling water that other farmers needed, or selling water that oil companies need or even that Albertans need for a clean glass of water," she said.
"I think our government has sold us out or started to."
Later, during question period in the legislature, Renner told opposition MLAs to put away their "conspiracy theories" since "Alberta's water is not for sale."
A spokeswoman for the Alberta Water Research Institute said Brabeck did have some discussions with researchers when he visited Edmonton last year, but nothing formal came from it.
As part of his visit, Brabeck spoke about the benefits of giving water a price that reflects the true cost of treating and transporting it. Governments shouldn't subsidize or hide the cost of commercial water because that provides no incentive for companies to use it efficiently, he told The Journal.
Emma Lui, a water campaigner with the Council of Canadians, said she agrees with Brabeck's goal of promoting conservation, but not with his method.
"We are reluctant to price water and make it a commodity because we don't know how climate change is going to affect future water supplies," she said. "To say that only a certain amount can be set aside for drinking water and the rest can be sold, we don't support that."
Lui said most people are aware of the need to conserve water, and a market provides no guarantee of less consumption.
"It could send the wrong message, in that if a company was able to afford whatever the price may be, then they would be able to use it as much as they wanted, or pollute it."
Carol Stark of Water Matters, a citizens' group devoted to protecting Alberta watersheds, said the idea of a water market is not inherently bad as long as all user groups are treated fairly.
"We just have to ensure that the public interest and basic environmental needs are met."
Tobin noted there is already an exchange system of sorts in southern Alberta, in which holders of water licences are permitted to transfer, trade or sell a portion of their water allotment to customers that need it. A recent example occurred when a new shopping centre constructed in Balzac, outside Calgary, had to reach a deal with the Western Irrigation District for some of their allocation.
It's unclear if that transfer system could eventually be extended to the rest of the province, though the government is currently conducting a lengthy review of its water management policies, Tobin said.
A major report delivered last week by a government-appointed economic panel recommended the province adopt a market system that would allow water allocations to be sold or leased at a price determined by supply and demand.
The market would be overseen by a new Alberta Water Authority, which would also develop a plan for water infrastructure and maintain a database of water information.
kgerein@edmontonjournal.com
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