Ecojustice Blog – Healthy communities Posted on February 4, 2011 (updated: February 17, 2015)

What does the privatization of water look like?

Randy ChristensenLawyer

Since last week’s post, “BC’s water to be sold to the highest bidder?,” the “Living Water Smart” folks have two responses on their blog asserting that water is not being “privatized” (“What do we mean by water markets” and “Water markets not about privatizing water”).

Focusing on “privatization” is a distraction that comes down to semantics. Many believe that making a water right something that can be sold constitutes privatization. The Ministry obviously defines it differently.

The real questions are whether or not the proposed Water Sustainability Act lives up to its name and protects the environment and the public interest, and whether BC should introduce water markets now. The answer to both these questions is a resounding no.

Protecting the public interest and the environment
The Ministry says: “…there is no intention to privatize BC’s water. Water is vested in the Crown under the current Water Act and this would not change in the proposed Water Sustainability Act.”

So, everything is already taken care of and nothing is changing?

Well, not so fast. The current Water Act says water is vested in the Crown, “except” to the extent that “private rights” have been established through licences (section 2). Technically speaking, the proposed Water Sustainability Act may not formally alter this arrangement, but by making existing private water rights tradable, the proposal strengthens existing private rights in water while denigrating public ownership.

The underlying problem is that current arrangements don’t sufficiently protect public ownership of water.

Any new legislation should unequivocally assert public ownership of water and clarify that water rights are merely a temporary right to use a public resource, and that right is subject to public interest and environmental protections that will be imposed as appropriate.

This needs to happen whether water markets are introduced or not and it is a primary reason why the proposed legislation should go back to the drawing board.

And, as noted last week, the Ministry downgraded plans for legally binding environmental flows for “objectives” that may be “considered.”

Are water markets a good idea?
The Ministry’s two main arguments for water markets are “restoring flows” and “flexibility.”

The restoring flows argument is a bit of a head-scratcher. Water markets are well documented to increase water use through the selling of unused rights (“sleeper rights”) which then get used. And water markets increase abuses of the resource through speculation. In other places, regulators have tried to prevent selling sleeper rights and speculation through the requirement that one can only sell water rights actually used. This paradoxically (or logically) causes people to use water they otherwise wouldn’t use merely to maintain their right to sell it.

What the Ministry means is that government or others could purchase water rights to protect the environment, citing the Murray-Darling basin in Australia. Interesting that they should choose this example as the Sidney Morning Herald reports that in 2009, Australian governments had to allocate $3 billion (yes, billion) to buy water rights from irrigators to salvage ecosystems.

This should be a cautionary tale, not a model.

California is the birthplace of the water market. As the Environmental Working Group reports, taxpayers subsidize the delivery of water to California farms to the tune of $416 million a year. The farmers turn around and sell a good portion of the water back to the State at eight times the price they paid so it may be used in San Francisco Bay and Delta restoration. And why are the Bay and Delta in need of restoration? You guessed it – diversion of water by agricultural users and pollution running off from farms. Little wonder California is teetering on the verge of bankruptcy.

Why is the Ministry proposing to buy environmental protection when it has the option–and the legitimate grounds–for doing so through regulation? In any event, there simply isn’t enough money in government coffers to buy the water needed to protect the environment in every stream in BC.

Water markets add “flexibility”
The Ministry says “a well designed market can provide flexibility that allows water to be shifted to other users or uses.” This is accurate as far as it goes, but what’s left out is that flexibility to shift water between uses is better achieved through a well-designed regulatory system that ensures people don’t waste water, mandates conservation during times of drought and prioritizes water use based on societal criteria.

What is also left out is that the forces driving the “shifting of water to other users” will be the power of the chequebook, not prioritization through democratic debate, even though water is and must remain a public resource. And why use price as the deciding factor in determining who should get to use water rather than, say, how many BC jobs a water use would create or support? Just because a posh country club is willing to pay the most to keep its greens green, it doesn’t mean that’s the best use of the water.

The real problem
Water markets are touted as a solution. What exactly is the problem?

The real problem is that the current principles for determining who gets water are, quite frankly, absurd. BC follows a system known as “first in time, first in right,” which means that rights to water are distributed on a first come, first served basis and are locked to that
allocation permanently under both the existing and proposed legislation.

Currently there are no provisions to require people who use water to accurately measure their use. Protections for the environment are few and far between, and there are no requirements to use water efficiently. Nothing in the proposed legislation changes this, despite the word ‘sustainability’ in the title.

Under this system when something like a drought happens, the oldest right gets their full allocation, while newer users may get none. What if that results in a town losing its water supply while a water bottler (who took over a farmer’s right) continues to operate? Under the current and proposed systems, the town gets shut down.

The sensible thing would be to scrap the current first in time, first in right, and bring in a system that protects the environment, ensures efficient water use and prioritizes water use based on social utility.

Instead, the proposed Water Sustainability Act entrenches the current system and proposes that the environment and new users must buy their way into that system. It may be debatable whether this is “privatization.” What’s not debatable is that the current proposal fails to adequately protect the environment and the public interest.

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