Exporting water: a source of wealth for Quebec

Montreal, August 27, 2008 – Large-scale exports of fresh water would be a wealth-creating idea for Quebec and for Canada as a whole. At a time when water is becoming scarce in many parts of the world, its economic development stirs up substantial opposition, however. Though some people fear harmful exploitation or even the drying up of our water resources, Marcel Boyer, the author of a research paper published by the Montreal Economic Institute, says it is urgent to look seriously at developing our blue gold.

“The development and marketing of this expertise require a strategic plan to enable Quebec to become a leader in water management,” says Mr. Boyer, vice president and chief economist of the Institute. “The success of these markets relies on the government’s ability to establish well defined water use rights that are transferable and can encourage resource conservation.”

The government could set out a regulatory framework for the trade in water to make owners or concession-holders more fully aware of the benefits and costs associated with the various uses of the water under their control.

These restrictions should be accompanied by a realistic fee structure that would give consumers and other users incentives to use the resource responsibly and encourage the businesses involved to ensure a stable supply. The absence of prices and markets leads to waste, entails a less efficient economy, and keeps people unaware of the value of water. A first step in informing the populace would be to determine the precise quantity and quality of water resources in Quebec. This could be done by the Bureau québécois des connaissances sur l’eau (Quebec Water Knowledge Bureau), the creation of which was announced several months ago by Environment Minister Line Beauchamp.

The special place held by Quebec and Canada

Canada holds the world’s most extensive freshwater reserves, with 8% of world inventory. Quebec has 3% of the planet’s fresh water on its territory, giving it 13 times more renewable fresh water per inhabitant than the United States. Quebec is using only 0.5% of its available renewable fresh water, compared to 18.9% in the U.S. Suitable use of this renewable resource would not have an impact on Quebec’s water reserves.

The quantity of water we could export without endangering the environment would be enough to fill nearly 300,000 Olympic Stadiums a year. According to the Department of Environment, if Quebec alone were to provide the world’s entire production of bottled water – 154 billion litres in 2004, this would represent 1% of the precipitation that recharges groundwater in Quebec’s inhabited areas. Meanwhile, 97% of the natural recharge in inhabited areas goes unused, flowing into rivers and then into the ocean.

The commercial value of water and the profitability of the infrastructure investment needed for this commercial development will be determined ultimately by the cost of seawater desalination, currently evaluated at 65 cents per cubic metre. Desalination is a polluting and energy-intensive technology, but in the long term it represents the most likely alternative to importing water over long distances.

Various water export scenarios reveal income opportunities that far exceed revenues from energy exports. If Quebec were to export 10% of its one trillion cubic metres of renewable fresh water per year at a price equal to the current cost of seawater desalination (65 cents per cubic metre), and if the government took 10% of this amount in royalties, it would generate income of $6.5 billion a year for the government, five times the dividend paid by Hydro-Québec.

The research paper, titled Freshwater exports for the development of Quebec’s blue gold, was prepared by Marcel Boyer, vice president and chief economist of the Montreal Economic Institute, Bell Canada professor of industrial economics at the University of Montreal, and a CIRANO fellow.

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Information and interview requests: André Valiquette, Director of Communications, Montreal Economic Institute, Tel.: 514 273-0969 ext. 2225 / Cell: 514 574-0969 / E-mail: avaliquette (@iedm.org)