Moscow’s fresh water shortage

Khabiba writes*

Russia possesses a fifth of the world’s fresh water reserves, but these are  unevenly distributed [pdf]. The majority (90%) of its freshwater flows in the Arctic and Pacific watersheds where less than 15% of the population resides. Thus, only only 8% of Russian freshwater is available to the 80% of the population living and working in the central and southern regions of European Russia, which lies in the watershed of the Black and Caspian seas [pdf].

Russia’s capital (Moscow) faces water contamination concerns. Both surface and groundwater supplies are highly polluted. 56% of water supplies do not meet the safety standards. A 2013’s analysis of Moskva River water found high levels of sulfur, oil, aluminum, and heavy metals. The water is toxic, and proof of it is the sample outcomes from the investigations conducted by Greenpeace: in one sample, mercury levels were 20 times greater than safety standards; in another, manganese levels were 120 times greater.

Moskva River

Water pollution began in the Soviet era, when rampant industrialization led to enormous discharges of chemicals and waste into rivers. Upsettingly, such extensive industrial dumping continues to this day. Mosvodokanal registers some of the recent dumping activities. Factories either intentionally dump chemicals into rivers, or the chemicals arrive unintentionally via melted snows. A handful of local companies are taking action to prevent such dumping activities and improve water quality, but the incentives are mediocre. Environmental activists complain that only when “the ecological needs coincide with economic imperatives that the enterprises do anything.”

To minimize health hazards from contaminated waters, most of Moscow’s drinking water comes from upstream waters, which can still be foul. Downstream irrigators using Volga River water might be putting hazardous residuals on food crops.

Bottom Line: Moscow faces serious water pollution issues but lacks a strong political response.

* Please help my Water Scarcity students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

Book 2, Chapter 2 — Wealth

This chapter begins with the definition of wealth as part of the set of desirable things, which Marshall labels as goods, which are divided into material (wealth) and non-material, which include internal goods such as professional skills, and external goods such a relations with others. (Today, these are called human capital and social capital, respectively.)

Goods can be transferable, and most non-material goods (Marshall mentioned advantages of climate or rights of citizenship here) are not. Marshall then discusses how some goods are free but not always, e.g., some Brazilian trees but not all. Here, Marshall is working with the idea of excludable (private goods) versus non-excludable (common pool goods) without using those distinctions. Importantly, he distinguishes between the fish that are free to catch from the commons, and how those fish are converted into private goods as the application of labor displaces them from the commons into one’s private boat.

§2. Marshall defines wealth as consisting of material and non-material goods (e.g., business connection) that have money value or can be used to acquire money. Moving along, he describes economic goods as those that are held by one person (a private good) and valued in terms of money. These criteria exclude not only club goods (jointly held) but non-excludable public and common-pooled goods — goods that I consider “economic” in the sense of their value as well as the need to manage their scarcity. Marshall’s definition might explain some economists’ myopia with respect to those other important goods.

On a related note, Marshall requires the goods have money values. This criterion perhaps explains economists’ ignorance of valuable “goods” such as the environment. The entire study of “ecosystem services” and attempts to quantify their value is, at its root, an attempt to integrate those goods into the narrow “economic sciences” that Marshall espoused.

§3. Marshall notes how internal goods such as skills that are part of personal wealth can confuse discussions (or measurement) of wealth.

§4. Marshall then defines and declares the value of collective goods:

…the benefits which he derives from living in a certain place at a certain time, and being a member of a certain state or community; they include civil and military security, and the right and opportunity to make use of public property and institutions of all kinds, such as roads, gaslight, etc., and rights to justice or to a free education… one person has more real wealth in its broadest sense than another, if the place in which the former lives has a better climate, better roads, better water, more wholesome drainage; and again better newspapers, books, and places of amusement and instruction.

§5. Aware of those non-private goods, Marshall then notes how a nation’s wealth consists of more than the sum of individual wealth. He then adds that some national wealth must be counted as global wealth, as ideas (for example) cannot be kept within boundaries.

[In Footnote 1 on page 50, Marshall notes that monopolies resulting from legal protections or missing information are not a source of wealth as much as a transfer from others; national wealth probably increases when monopolies fail.]

§6. Marshall quotes Adam Smith declaring that an object’s value can derive from its utility but also its price in monetary exchange. Marshall prefers to focus on exchange values, which are quantified in monetary prices that are equivalent to purchasing power.

Marshall ends with “if inventions have increased man’s power over nature very much, then the real value of money is better measured for some purposes in labour than in commodities.” This parting thought seems to echo Marx’s Labor Theory of Value, but only with the assumption that inventions have lowered the cost of commodities (effectively) to zero, leaving labor as the scarce input that must be purchased with scarce money. Interesting.

Profiting from increasing scarcity?

Allison writes*

In the wake of country-wide civil unrest in response to increased costs of living, inequality and privatization, the Chilean business model of water and sanitation provision is more relevant than ever.

Shortly after the fall of the Pinochet military regime during which significant neoliberal reforms were installed in the country, the urban water sector reform was enacted, which shifted the Chilean WSS sector into the hands of private (mostly foreign multinational) companies. Under this reform, the regulator, Superintendencia de Servicios Sanitarios (SISS), sets the tariffs with the service provider in order to establish “efficient tariffs” for the consumer that still provide full cost recovery and generate profit (by law, a 7% minimum return). A seldom accomplished feat, this pricing system aimed to recuperate the costs of operations and maintenance, including that of future restoration of infrastructure, in the tariff consumers pay. In order to guarantee affordability and protect the country’s poor, a subsidy was put into place, targeting the most vulnerable. In it, the government pays a portion of the price of those that qualify (according to the annual survey, Encuesta Casen), while the full costs are still shared on the consumer’s monthly bill. A key success of this model is its ability to ease the financial burden, while not distorting the price signals that promote sustainable water consumption.

This model has expanded access drastically, reaching 99.9% of the urban population in 2013. However, the increase in costs that accompanied privatization and its projected increase in coming years has the Chileans questioning the legitimacy of the system that many international scholars consider a “notable success”.

Chile’s greatest water demand in concentrated in the Santiago Metropolitan Region (RM), the nation’s capital and home to 40% of its population. The largest service provider, serving most of the RM is Aguas Andinas, majority owned by Spanish multinational Sociedad General de Aguas de Barcelona (AGBAR) and in part by the French Suez Lyonnaise Deaux. A fault of the system, as acknowledged by Chilean citizens, is the lack of transparency in the tariff negotiations between the SISS and Aguas Andinas every 5 years. The lack of overall citizen participation and the confidentiality of the process leads to secretism that raises questions surrounding the fairness of the relatively high prices consumers are being charged (pdf). This has led to perceived feelings of ‘being scammed’ and sentiments of victimization by big business in a context already characterized by resentment toward foreign companies that now dominate many Chilean industries.

Exacerbating the situation are further projected cost increases, due to increasing water scarcity. The country is experiencing what is being called a “mega-drought” due to the effects of climate change, jeopardizing the water supply to urban and rural populations. This necessitates additional investment in infrastructure to extend and secure water provision for Aguas Andina’s most demanding consumer base, RM, through projects such as the expansion of dams and piping to ensure adequate connections as sources dry up and become unusable.

Bottom Line: Whatever your opinion, the Chilean system will need to adapt to compensate for worsening water scarcity and the increase in prices that will come with securing the water supply for the Metropolitan Region’s 7 million inhabitants.

* Please help my Water Scarcity students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

L.A.’s mix of water and hubris

Maie writes*

In his 1974 classic ‘Chinatown,’ Roman Polanski portrayed a spectacular conflict over water in early-twentieth century Southern California – a story of intrigue, corruption, and greed. In fact, Polanski’s movie builds on some real events during the era of William Mulholland as the head of the Los Angeles Department of Water and Power (LADWP), which are hardly less scandalous. Mulholland began a tradition of meeting the rapidly growing city’s thirst with technological fixes. Some of them had dire consequences such as the deadly collapse of the St. Francis Dam in 1928 and the draining of the Owens Lake – a natural calamity that today compels the LADWP to continuously flood the dry lake bed to prevent toxic dust from blowing into inhabited areas. A more recent technological venture was the covering of the Los Angeles Reservoir with 96 million shade balls to prevent the sun transforming chemical residuals into dangerous byproducts.

The technocratic belief that any human demand can be met by just engineering nature has arguably been taken too far in Los Angeles. Yet, from the consumer side, the city’s water supply has mostly been a story of success and enabled a sixfold population increase within twenty years at the beginning of the twentieth century. From the construction of the 233-mile Los Angeles Aqueduct to the diversion of the Colorado River in the south-east and, more recently, increased groundwater pumping – shortages were quickly countered with solutions and the spirit of progress and unlimited possibilities was never diminished.

The scenic and beautiful Los Angeles River.

Today, the average Angelenos consumes 113 gallons of water per day, which is only possible because Los Angeles is able to import great amounts of water from far away sources. However, due to weather uncertainties such as low precipitation and the premature seasonal melting of snowpacks, the reliability of these sources is falling. A change of thinking is needed, but unfortunately, Los Angeles’ water supply system has grown extremely complex. About one hundred contractors, wholesalers, and retailers operate in the metropolitan region, which makes communication and cooperation extremely complicated. On top of that, shadows of the past keep haunting the city as the conflict between Los Angeles and the Owens Valley has not been reconciled yet. Even though the metropolis erected a $4.6-million monument at the dry lake bed, the valley’s residents can hardly forgive that a faraway metropolis once covertly purchased most of its land and water rights and drained its lake, leaving it exposed to toxic dust, vulnerable to drought, and hampering the valley’s economy to the present day.

Bottom Line: The history of Los Angeles’ water supply is a history of hubris. Only recently has the city started to understand that engineering cannot resolve emerging problems. Other measures like reducing consumption and integrating water flows into a sustainable cycle are needed. However, the city finds itself in a deadlock, with a fragmented infrastructure that makes changing the status quo extremely difficult, and residents that have grown accustomed to cheap and abundant water.

* Please help my Water Scarcity students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂