A World of Water Woes

Droughts and rising populations are stressing supplies of the precious liquid. Could we be nearing the next major natural resource crisis?

by David Wyss From Standard & Poor's RatingsDirect

Water use in the U.S.

Household uses of water

World water availability

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Water may be the source of the next major natural resource crisis. A rising world population; increased demand for water for agriculture, industry, and energy production; and a growing desire for safer and more plentiful water supplies are pressuring existing resources. At the same time, climate change may be reducing the availability of fresh water. Most citizens of Europe and North America have taken for granted access to cheap, safe water. People in Asia, Africa, and Latin America would like to. Will all of us have to start thinking harder about it?

Drought conditions in several parts of the world have increased the attention paid to water resources recently. In the U.S., the drought in the Southeast that began last year is the second-worst in the region's history and has strained state and city governments, including that of Atlanta. Australia, a country where water has always been very limited, has been suffering from a severe dry period. The continuing lack of rainfall in much of Africa has increased fears of famine and war.

At the same time, nonhousehold demand for water, particularly for irrigation, has been growing. Ethanol production requires more crops, which in turn demand more water. Potential exploitation of shale oil and tar sands for energy also requires water for processing. Increased development raises the need for electrical power, which requires water to generate electricity at hydro dams or to cool nuclear or fossil-fuel plants.

But the most significant problem is that an increasing population is pressing on limited water resources. The most rapid population growth is in the Middle East and Africa, the part of the world with most limited water resources.

How Water Is Used

Water use can be divided into consumptive and nonconsumptive uses. Consumptive uses either remove water from the system through evaporation (such as irrigation) or leave it contaminated and in need of major treatment to return it to the system. Nonconsumptive uses recycle the water into the system with little change, as in the case of most cooling systems, both for power and industrial uses.

The use of water has been relatively stable in the U.S. since 1980, after growing rapidly in the previous decades (see chart). The reasons for the decline in per capita usage aren't completely clear, but the fall-off was concentrated in irrigation and thermoelectric power.

Power Generation The reduction in use for thermoelectric power reflects changes in power generation and in technology. More plants now use closed-loop cooling systems, which require less water, as opposed to the older, "once-through" cooling systems, which are gradually being phased out as owners renovate power plants. In addition, power generators' increased use of natural gas has reduced the need for water. With gas becoming more expensive, utilities could shift back toward coal, although this has regulatory consequences because of carbon dioxide and other emissions. Power generators' use of water fell to 195 billion gallons per day in 2000, from 210 billion in 1980. This use is largely nonconsumptive, in that virtually all the water is returned to the stream with little significant change (at least with modern cooling).

Agriculture Irrigation represents nearly two-thirds of consumptive water use. Its use declined to 137 billion gallons per day in 2000 from 150 billion in 1980. The rise before 1980 was associated with a sharp rise in land under irrigation. Since 1980, farmers have slowed the addition of irrigated land and shifted to more efficient ways to water their crops (sprinklers or micro-irrigation instead of flooding). Less than one-half of irrigated acreage (29.4 million out of 61.9 million) used surface irrigation (flooding) in 2000. Sprinklers and micro-irrigation are more capital-intensive than surface irrigation but require significantly less water. California, not surprisingly, accounts for 72% of the micro-irrigation acreage—the most expensive but most efficient system.