In May 2021, it was a small news byline. The Chicago Mercantile Exchange (CME, Inc.) started buying and selling water futures in California. Pro-capitalism voices say this will provide information about the future of water prices. But controlling this life-sustaining resource using only market mechanisms is foolhardy. Doing so enables polluters to destroy a limited resource, and enables traders to profit on the resulting water shortages. Markets create perverse incentives when it comes to essential resources. This new market emerged at the same time environmental regulations were weakened, and clean drinking water has become less available.
It is one more drop in the bucket in a series of ominous developments affecting water. These and other events must be viewed together and understood as a larger dynamic.[Feature photo by Chris Ralston on Unsplash]
People can thrive only if they have access to foundational resources
We know that water is an essential building block of health, physical, emotional, economic. It is essential for bare survival. If we cannot guarantee access to clean water, we limit people’s ability to survive, nevermind thrive. It limits their freedoms, and their lives.
When people do not have clean water for drinking, cooking, and cleaning, it becomes a primary focus of their lives. The time and energy to acquire it crowd out all other pursuits. Its lack creates a profound insecurity that threatens a person’s safety.
Rather than address the key dynamics that drive a system toward crisis, the market finds a way to extract profit from it.
No water, no life.
Reinforcing loops drive growth in business
Back to the new market for water…
Businesses thrive on a simple idea really. The more money you have, the more you can invest in your business. As sales increase, profits increase. And as profits increase, investments can increase again. This closed loop causes the growth that most businesses lust after. Generally, growth is caused by reinforcing feedback loops. Reinforcing loops are in action everywhere you see growth, particularly exponential growth.
In the water business, visibility in market channels and word of mouth drive sales which drive profitability, enabling further investment in marketing. In businesses that require water for production, the main growth-driving loop is one of investments, sales, and profitability.
However, in the physical world, physical growth cannot continue indefinitely. Balancing loops of all sorts kick in, causing growth to slow. Then businesses typically push back still harder, both inside the bounds of legality, and outside those bounds.
Balancing loops limit growth
We call the balancing forces that slow growth the “limits to growth”. Potential limits include a lack of business savvy of the management, the size of the target market, or the attractiveness or quality of the product. Another limit could be boundaries set by regulators. In the case of water sales, eventually the hard limit will be the supply of the resource needed for the product. Generally, whatever the limit is at a given point of time, the focus of business is to do whatever they can to push through it, or move it.
The movement to commoditize the building block of life, something that is fundamentally limited, is short-term thinking. The people who are doing it rely on the fact that those harmed by their actions are “others”.
Water stories: Messes markets made
Below are a several of the harmful messes created by the free markets and corporate corruption of government agencies meant to protect our fresh water.
Water Mess #1 – Flint, MI
Big picture snapshot:
Inadequate oversight and protection caused a century of industrial poisoning of the Flint River, a community water supply for the city of Flint. Subsequently, in 2011 corrupt and derelict government actions led to local illness and stress in lower socio-economic and Black communities.
Scan this for more detail: https://www.nrdc.org/stories/flint-water-crisis-everything-you-need-know#sec-summary
Water Mess #2 – Fracking
Big picture snapshot:
Corporate poisoning and depletion of groundwater caused widespread local disease since 2000, in PA, WV, NY, and TX. Deep pockets in the oil and gas industry continue to fund aggressive defenses in courts, and to weaken regulatory oversight.
Scan these for more detail: https://www.gem.wiki/Environmental_impacts_of_fracking#Groundwater
Or this, if you have a subscription: https://www.consumerreports.org/water-contamination/how-fracking-has-contaminated-drinking-water/
Water Mess #3 – Nestle
Big picture snapshot:
Ownership of the Nestle water business was tossed around like a hot potato while they react to their limits to growth. Nestle actions resulted in draining water supplies in FL, ME, CA, and MI. Nestle reacted with more lobbying, more campaign contributions, and behind-doors dealing to expand their claim to those resources.
Quick scan for more detail: https://www.theguardian.com/us-news/2021/apr/27/california-nestle-water-san-bernardino-forest-drought
Water Mess #4 – Leaky Oil and Gas Pipelines galore
Big picture snapshot:
Oil and Gas pipeline companies’ new and aging leaky pipes often contaminate drinking water sources. These corporations fairly routinely steamroll anyone in their construction paths. Complicated further by recent projects threatening sacred land and water supplies of Native American tribal lands, the companies continue to build infrastructure that enables this destructive industry.
Here is a list of gas pipelines causing harm in the US: https://www.nrdc.org/experts/amy-mall/gas-pipelines-harming-clean-water-people-and-planet
The video below shows the location and relative size (the black dots) of spills that have happened since 1986.
Tragedy of the Commons – competition destroys limited resources
When there are many businesses engaged in the reinforcing activities for their individual benefit, and they are all consuming a shared resource, they tend to decimate that resource. This dynamic has played out time and time again.
This commonly occurring dynamic is sometimes called the Tragedy of the Common. The pattern was first identified in England in 1863 when raising sheep was big business. When several flock owners grazed their sheep together on commonly held land, they routinely overgrazed to the point of destruction of the common. The same story reoccurs in fishing, hunting, forestry industries, and now water. It is a really hard lesson to learn. Here it is. Unless there is an outside mediator that limits individual competitors, with a goal of protecting the common resource, common resources are destroyed by competition.
The Tragedy of the Common dynamic is the single biggest reason that collective governance in some form is necessary in society. Protecting the Commons, the resources that enable all to flourish, should be a function of government of the highest order. Understanding this dynamic is the basis for the public trust doctrine.
Water is a fundamental human right
Since 2002, the United Nations has asserted that Water is a basic human right – one that is the foundation to all other human rights. “The human right to water is indispensable for leading a life in human dignity. It is a prerequisite for the realization of other human rights.” Water as a Human Right? IUCN, UNDP, 2004
They state: “Water must be available to all human beings. And it must be: Sufficient, Safe, Accessible, and Affordable”
Water is a fundamental right for U.S. Citizens
Life, liberty, and the pursuit of happiness.
This idea was in the U.S. Declaration of Independence, and eventually made its way into The U.S. Constitution, in the 14th Amendment. Life itself is not possible without access to sufficient, safe, accessible and affordable water. It follows that a right of US citizenship must be universal access to clean water. Because the tendency of markets to provide spotty access – only to those able to pay, and only distribute to those regions where those people are – it is clear government protection is necessary. The tendency of markets to decimate commonly held resources must be kept in check by outside governance.
The market is reacting to the shortages in supply; that is why they are putting a price on it. Making water a commodity treats it as simply a product. And doing that will lead to disabling and life-consuming activity for those without political power, those on the lower end of the economic ladder. This extractive activity, left unchecked, will destroy the common.
Rather than address the key dynamics that drive a system toward crisis, pure markets find ways to extract profit along the way.
What value is a citizenship that effectively protects many other rights and freedoms, but not water fit to drink, the essential basics necessary to survive?
Further Water Shortages Expected
In addition to 1) the necessity of water for people to thrive, and 2) the well-established pattern of corporations corrupting government oversight agencies, climate change is also driving water shortages.
In August of 2021, the news broke that the Colorado River, a major fresh surface water source for much of the western US, is drying up, and the reservoirs that hold this resource have shrunk by 35%. So the market jostling and competition is well underway, and the biggest most powerful players – the corporations, are poised to win.
Scan this pretty article: https://www.cnn.com/interactive/2021/08/us/colorado-river-water-shortage/
Recent science projects further widespread water shortages. The two maps below on the right, are from a publication “Adaptation to Future Water Shortages in the United States Caused by Population Growth and Climate Change”. They show the percentages of total fresh water supply decreasing in majority of watersheds (b), and the demand for that water increasing (d).
We should note that domestic water or household water used is a tiny fraction of all water used. In 2015, it was just one percent of total use. The largest percentages of total fresh water use are irrigation and thermoelectric energy, totaling 90%. So ensuring the essential rights of people to drink, cook, and bathe with clean water is not a matter of the physical volume required. It is a matter of governance.
In the ongoing legal battles with Nestle above, Jim Olson, a lawyer representing citizens in Everton, MI said “the best and last line of defense is the public trust doctrine”. He called it the “backstop to protect public waters”. It states that water is a public resource that the government is obligated to protect. “In short, water can’t be privatized, as Nestlé is moving to do.”
Nonetheless, Nestle, energy companies, and other polluting corporations’ “investments” have been paying off, and there has been a slow shift toward private water ownership rights over the last decade.
It is time for the federal agencies and the law to come together to develop and implement a disciplined approach to protect this essential resource. Can we prevent future corporate excesses? Can we act as responsible stewards of our fundamental resources? We can, and we must.
Brown, T. C., Mahat, V., & Ramirez, J. A. (2019). Adaptation to future water shortages in the United States caused bypopulation growth and climate change. Earth’s Future, 7,219–234. https://doi.org/10.1029/2018EF001091
Bruess, Elena. “How Fracking Has Contaminated Drinking Water.” Consumer Reports / Health, ConsumerReports.org, 3 Dec. 2020, https://www.consumerreports.org/water-contamination/how-fracking-has-contaminated-drinking-water/.
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Global Energy Monitor. “Environmental Impacts of Fracking.” Global Energy Monitor, Global Energy Monitor, 29 Apr. 2021, https://www.gem.wiki/Environmental_impacts_of_fracking#Groundwater.
“Health Check, Abraham Maslow’s Hierarchy of Needs.” BBC World Service, BBC, 21 July 2013, https://www.bbc.co.uk/programmes/p01bxkcr.
Kann, Drew, et al. “The Colorado River’s Shortage Is a Sign of a Larger Crisis.” CNN, Cable News Network, 21 Aug. 2021, https://www.cnn.com/interactive/2021/08/us/colorado-river-water-shortage/.
November 08, 2018 Melissa Denchak. “Flint Water Crisis: Everything You Need to Know.” NRDC, National Resources Defense Council, 9 July 2021, https://www.nrdc.org/stories/flint-water-crisis-everything-you-need-know#sec-summary.
Perkins, Tom. “The Fight to Stop Nestlé from Taking America’s Water to Sell in Plastic Bottles.” The Guardian, Guardian News and Media, 29 Oct. 2019, https://www.theguardian.com/environment/2019/oct/29/the-fight-over-water-how-nestle-dries-up-us-creeks-to-sell-water-in-plastic-bottles.
“Public Trust Doctrine.” Legal Information Institute, Cornell Law School, 1992, https://www.law.cornell.edu/wex/public_trust_doctrine.
Jim Olson. “Groundwater and the Public Trust Doctrine, California Style.” Legal Planet: Insight & Analysis: Environmental Law and Policy, Berkeley Law, UCLA Law, 22 July 2014, https://legal-planet.org/2014/07/21/groundwater-and-the-public-trust-doctrine-california-style/.
Parker Alamo, et al. “Future Widespread Water Shortage Likely in U.S.” Science in the News, Harvard University, 20 Mar. 2019, http://sitn.hms.harvard.edu/flash/2019/widespread-water-shortage-likely-in-u-s-caused-by-population-growth-and-climate-change/.
Singh, Maanvi. “Drought-Hit California Moves to Halt Nestlé from Taking Millions of Gallons of Water.” The Guardian, Guardian News and Media, 27 Apr. 2021, https://www.theguardian.com/us-news/2021/apr/27/california-nestle-water-san-bernardino-forest-drought.
“Water Science School: Total Water Use.” Total Water Use in the United States, United States Geological Survey, 2016, https://www.usgs.gov/special-topic/water-science-school/science/total-water-use-united-states?qt-science_center_objects=0#qt-science_center_objects.
“International Decade for Action ‘Water for Life’ 2005-2015, The Human Right to Water.” United Nations, United Nations, 2010, https://www.un.org/waterforlifedecade/human_right_to_water.shtml.