Friday, August 01, 2014

Water, Water Everywhere, But How Much Is Too Much?: The Global Water Crisis – Part I

Almost seven years ago, the first article of a five part series ran in the 2007 September issue of Viewpointe with a headline similar to the above. It stated, Water, Water Everywhere, But Just 1% to Drink: The Global Water Crisis. That series explained that “although almost 71 percent of the Earth is covered with water, 97.5 percent of it is salt water, and two-thirds of the fresh water is locked up in polar ice, leaving less than 1 percent of all the water in the world useful for society's needs.” The article also emphasized that the consequence of that limited supply would result in much higher water prices in the future.

The entire series despaired of the growing number of countries, including our own, experiencing severe shortages (the current California drought) of both drinking water, and water suitable for agricultural irrigation. The current crisis however, driven by global warming, is the result of a proliferation of far too much water, an issue that could lead to potential catastrophic results.

While the drinking water crisis still endures, this additional water problem, one of perhaps even greater magnitude, has exploded. Like the first, this is a predicament closely associated with global warming. One way this new problem can be framed is by repeating the example cited in that 2007 Viewpointe article. It read as follows:

“There are times when valid issues are raised, relating to economic theory. One such, credited to the famous economist Adam Smith is titled ‘TheWater-Diamond Paradox’ and appears in his seminal book, The Wealth of Nations, published in 1776. It is now thought that others, such as Nicolaus Copernicus, Galileo, and John Locke had previously tried to explain the inconsistencies involved.

“The paradox arises based on the contradiction that while water is critical for human survival, diamonds, which have no obvious utility, are substantially more expensive. Adam Smith’s explanation for this perplexing reality was that supplying diamonds requires more labor than does water, but this solution is now considered to be incorrect. The accepted solution is that while the total utility obtained from water is great, the marginal utility (the use to which the goods is put) is lower for water since it is more plentiful than diamonds. It is, in part, this scarcity that adds to diamonds additional marginal utility. To put it another way, an extra ounce of water would provide much less in the way of extra satisfaction than would an extra ounce of diamonds. However, this paradoxical question that has persisted for over 230 years may, in the not too distant future may no longer exist since to an increasingly thirsty world water may become scarcer, and even more expensive than diamonds.”

Back in 2007, that conclusion seemed quite rational since global water shortages were devastating a great many areas of the planet, and in fact continue to do so. A recent US Today study of residential water rates over the past 12 years for large and small water agencies nationwide, found that monthly costs doubled in 29 localities. Looking at 100 large municipalities across the country, the price increases over the last decade are so significant that many Americans are required to cut other expenses just to keep up. In April, CNBC reported that prices of fruits and vegetables in California would rise some 30 percent as a result of the drought in the state. Here is confirmation that when demand exceeds supply, prices rise.

However, economic theory might well be in for some reassessment based on the development of a new paradox. If scarcity elevates the price of a product’s utility, and overabundance lowers a product’s value, is it possible that the impact of a superabundance of a product such as ocean water, instead of reducing prices, could cause wildly – in fact staggeringly – rising prices?

Admittedly it might be a stretch to maintain that the price of ocean water itself would rise if its supply far exceeded its demand. However, the ultimate costs of dealing with the far-reaching consequences of too much ocean water could be enormous. This is the essence of The Fifth Assessment Report (AR5) of the United Nations Intergovernmental Panel on Climate Change (IPCC). The IPCC does not conduct any research of its own, nor does it monitor climate related data or parameters. Instead it brings scientists together to assess the most recent scientific, technical and socio-economic information on climate change and its mitigation. Thousands of scientists and experts from all over the world contribute to the work of the IPCC as authors, contributors and reviewers on a voluntary basis.

The first part of the report, released last September reconfirmed (even more strongly) previous reports that climate change is happening and it’s mainly caused by humans. Atmosphere and oceans are warming, glaciers melting, sea levels rising, water cycles changing and extreme weather increasing. It also warned of accelerating impacts: In the years 2002-2011, the Greenland ice sheet was losing mass about six times faster on average than the preceding decade. Similarly, the Antarctic ice sheet lost mass five times faster. Since 1993 sea levels have risen twice as fast than they did in the past century on average, and sea ice extent in the Arctic melted significantly faster than projected.

There are three primary factors that are associated with rising sea levels:

Thermal Expansion: Global warming has affected the ocean’s temperature, and as the oceans warm they also expand by rising. Within the past century, about half of the rise in sea levels is attributed to this factor.

Melting Ice: Average temperatures are climbing continuously, especially in the summer months. This is exacerbated by later winters and earlier springs, and thus glaciers and polar ice caps are experiencing significantly heavier melting causing sea levels to rise.

Ice Loss: The monumental ice sheets that cover Antarctica and Greenland are also melting at accelerated rates. Higher sea temperatures are causing these massive shelves to melt from below and break off, adding more water to the oceans.

The newest IPCC report now predicts a global rise of 2-3 feet by the year 2100, which would threaten the survival of coastal cities and even entire island nations. But despite aggressive emissions reductions, a rise of 1-2 feet is predicted. Even under this highly optimistic scenario we might see over 1.5 feet of sea-level rise, with serious impacts on many coastal areas, including coastal erosion and a greatly increased risk of flooding.

However, if we view the impact on the global costs that could be imposed as a result of rising seas, it will be the larger coastal cities that will be primarily involved. As indicated earlier in this article, in addition to attempts to create infrastructures to mitigate the problem, the losses incurred by falling, or even the complete wipeout of real estate values due to the forced abandonment of large areas, tens of trillions of dollars are involved. This does not even include the costs of huge decampments of millions of people as they evacuate sinking lands.

Unfortunately, these seemingly science fiction type scenarios may be scientific but they are not fiction according to the vast majority of scientists who participate in the IPCC reports. It is true that there are several organizations and individuals (some of whom have vested interests like the KOCH Brothers) who lobby against the concept of global warming or are mere skeptics about its consequences like rising sea levels. Nevertheless, the problem boils down to what is said about players in a poker game: If you are one of the players, and you don’t know who the sucker is, it’s probably you. If you don’t recognize what is fact or fiction in the game of global warming, you might be the sucker. Here’s a hint based on next month’s article: Despite the current boom in Miami real estate, from a long-term standpoint, this may be a good time to sell.