Blog of law articles

(BY HUGO)

Three significant reports have been published last week on water management issues in Canada.

Firstly, the National Round Table on the Environment and the Economy released «Changing Currents: Water Sustainability and the Future of Canada’s Natural Resource Sectors» (NRTEE Report). The NRTEE Report is one of the outputs of a two year research program designed to address the following questions: With development of the natural resource sectors on the rise, does Canada have enough water to support economic growth while maintaining the health of the country’s ecosystems? And is Canada in a position to sustainably manage its water resources for future generations?

The NRTEE Report aims at giving an overview of water resources status in Canada as well as identifying the key water issues for natural resources exploitation. The Report identifies four water sustainability issues of national importance: 1) water governance and management; 2) the impact of climate change; 3) the water-energy nexus; 4) public participation.

The NRTEE Report recognises that watersheds deliver ecosystem services to society that, when valued economically, often far exceed the value of water allocated for direct anthropogenic uses. Conventional financial markets do not capture the value of ecosystem services, yet the value provided to society by freshwater cannot be underestimated. In regions where ecosystems are severely degraded, the economic costs associated with lost ecosystem services and efforts to restore them are considerable and can far outweigh benefits of other water uses. The Report then determines that the attempts to value ecosystem benefits are generally at the experimental stage and necessarily imperfect and site-specific. Although this is not stated in the Report, these considerations could be argued to favour prevention and precaution in approaching any projects altering water resources status.

With respect to water governance and management, the NRTEE Report finds that water policies and regulations in Canada are burdensome and complex due to the jurisdictional division of powers between the federal and provincial governments and due to the fact that provinces also delegate some of their authority to municipalities. The Report recognises that water management in Canada has traditionally been achieved through regulatory and legislative tools, but a move toward a broader suite of policy tools for water management is needed in order to enable a more flexible and adaptive policy approach acknowledging regional and local particularities. The fragmentation of water management will require collaborative water governance models which will succeed only if a number of conditions are met:

«• they focus on a clear scope and clear outcomes;
• the right people are brought together, with the right convener;
• participants agree to fully get engaged and there is real commitment to the process;
• clear roles are identified for participants;
• the processes foster shared ownership and accountability; and
• an ongoing dialogue is built.»

Finally, the NRTEE Report stresses in various occasions the importance of alternatives to regulation for water management. The potential of markets appears to attract most of the interest in this respect. This is a notable confusion in an otherwise impressively researched and balanced report. Indeed, markets exist only through regulation. Property rights that are generally considered the essential building blocks of markets have often materialised through expansive frameworks constituting the foundations of legal regimes in Western jurisdictions. In other words, markets cannot be presented as an alternative to regulatory approaches, their very existence depends on regulation.

Secondly, the International Joint Commission Great Lakes Science Advisory Board released «Groundwater in the Great Lakes Basin» (IJC Report). The IJC Report is a fantastic source of data regarding groundwater in the Great Lakes basin. It conveys the enormous importance of groundwater to the Great Lakes Basin:

«It is estimated that there is as much groundwater in the Great Lakes Basin as there is surface water in Lake Michigan. The groundwater contribution to the Great Lakes tributaries ranges from 48% in the Lake Erie basin to 79% in the Lake Michigan basin. Groundwater maintains stream flows and wetlands during dry periods, supporting significant ecosystem functions. Groundwater is an important source of drinking water in the Great Lakes Basin. 8.2 million people, 82% of the rural population, rely on groundwater for their drinking water. Groundwater also provides 43% of agricultural water and 14% (and increasing) of industrial water in the basin.» (p.1)

The IJC Report consists in a short summary of findings and recommendations complemented by a series of 13 appendices on the most pressing issues regarding groundwater, ranging from the impact of chemical contaminants and pathogens to conveyance losses and applicable laws. Among the many points made in the Report are the following:

- the Great Lakes cannot be protected without protecting the groundwater resources in the basin, both at the quantitative and qualitative levels.

- with respect to volumes, even relatively small groundwater withdrawals have important repercussions. For example, withdrawals in the Chicago area shift the Great Lakes drainage divide as groundwater pumped from the basin is released in the Mississippi watershed after usage.

- with respect to quality, fecal pollution and microbial contamination is one of the most frequently identified threats to Great Lakes groundwaters. Pathogens enter the basin ecosystem from sludge, manure and biosolids land spreading, leaking sewer infrastructure and on-site waste water systems, landfills, cemeteries, injection wells, and waste and stormwater lagoons, all of which can impact groundwater quality.

- An impressive 440 273 229 m³/year of water is lost underground every year in conveyance through outdated and broken sewers and main water lines, notably resulting in severe groundwater contamination. This corresponds to economic losses amounting to US $218 306 566 per year. Montréal loses approximately 40% of its total produced water output, which equals 119 858 800 m³ per year at a cost of approximately $ 44 347 756.

Thirdly, the Fraser Institute has released a new report, «Making Waves: Examining the Case for Sustainable Water Exports from Canada» (Fraser Report). The Fraser Institute emulates the right-wing Montréal Economic Institute and argues in favour of water exports. The Fraser Report posits that Canada has so much water that it can be exported. It considers that unallocated environmental water is lost because it is left unused (p.35). Also, water should notably be explored based on the fact that «History is replete with examples of the superiority of trade to optimize resource allocation. Indeed, market pricing is the most powerful means of equalizing demand and supply.» (p.12; see also 36-37)

The central assertions to the Fraser Report are of dubious value. With respect to the over-abundance of water in Canada, both the NRTEE and IJC Reports reflect the fact that there is a looming water crisis in Canada. With respect to the water supposedly lost because left unused in the environment, the Fraser Report contradicts a very strong consensus in the scientific community to the effect that all characteristics of natural hydrological regimes are essential to preserve freshwater ecosystems (the natural flow paradigm). There is no such thing as lost or excess water. The myth of market efficiency is also easily dispelled following the reasoning of Ronald Coase: in situations of imperfect information, as is obviously the case with respect to water resources in Canada, markets fail.

It is interesting to see that Circle of Blue has decided to give air time to the Fraser Report rather than to the other two reports. This is the type of choice in news coverage that sets the terms for public and political debate.