Study Proposes Framework for North American Water Trade
Release Date: January 12, 1995
Contact: Dr. Terry Anderson
Phone:(406) 587-9591
Dr. Michael Walker
Phone: (604) 688-0221 extension 303
MEDIA RELEASE
Vancouver >>> A new study jointly published by The Fraser Institute in Vancouver and the Political Economy Research Center (PERC) in Bozeman, Montana was released today. Continental Water Marketing, edited by Terry Anderson, a Senior Associate at PERC, analyses water trading in the context of trade agreements such as NAFTA and GATT. The two organizations brought together respected scholars from Canada, Mexico and the U.S. to study the prospects and pitfalls of liberalizing water markets across North American borders.
Controversy over continental water marketing is aggravated by the past legacy of massive schemes, always heavily subsidized, to divert water from Canada to the southern U.S., especially California. In his introductory chapter, Terry Anderson points out that "subsidized water transfers are not water marketing."
Real continental water marketing is about willing buyers and willing sellers trading with one another. Such trade requires well-established water rights and benefits from having treaties such as NAFTA and GATT in place to facilitate trans-border transactions.
Continental Water Marketing examines the history of water treaties between the three countries, the status of water trading within the context of NAFTA and GATT, and the economics of water trading. Also discussed are the institutional changes necessary in order for all three countries to capture the efficiency gains available from marketing water.
The authors are not generally sanguine about the prospects for marketing water on the North American continent. Law professor, James Huffman, concludes that "two hundred years of water diplomacy have resulted in a bias in favour of governmental allocation of water." Other essays document how political allocation thwarts efficient use of this precious resource. Economist Rodney Smith believes that, "large-scale water trading is unlikely because it is still relatively cheap in the US., often due to subsidies, and because
Canada is unwilling to allow the long-term contracts necessary to make large investments economical."
Liberalized laws for water marketing are especially important to Mexico, where only one in four people has access to potable drinking water. Roberto Salinas-Leon concludes that
"Mexico requires major institutional modifications to its water regime." However, he believes that "the forces of free trade and NAFTA will eventually create this legal adjustment."
With international water basins encompassing nearly 50 percent of the world's land, Dr. Mostafa Tolba, Director of the UN's Environment Programme, fears that "national and global security are at stake in the allocation of water."
Continental Water Marketing provides a blueprint for solving trans-border water problems within the North American continent and offers a framework for international water marketing throughout the world.