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Is Water the New Oil?

Is Water the New Oil?. Prof. Anthony Turton Director: TouchStone Resources (Pty) Ltd bronwyn@speakersinc.co.za www.anthonyturton.com. © AR Turton, 2009. The Critical Balance ... . Is all about the growth of the human population and the resultant demand for water.

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Is Water the New Oil?

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  1. Is Water the New Oil? Prof. Anthony Turton Director: TouchStone Resources (Pty) Ltd bronwyn@speakersinc.co.za www.anthonyturton.com © AR Turton, 2009

  2. The Critical Balance ... • Is all about the growth of the human population and the resultant demand for water. • Homo Sapiens – Wise Man – seems to think that “he” (it is always a male) has the sole capacity to “become master and owner of nature” (Rene Descartes circa 1650). • History of all hominid species tells us an interesting story ...

  3. Millions of Years Before Present 7 6 5 4 3 2 1 0 Sahelanthropus Tchadensis Orrorin Tugenensis Ardipithecus Ramidus Australopithicus Anamensis Australopithicus Afarensis Australopithicus Bahrleghazali Kenyanthropus Platyops Australopithicus Africanus Paranthropus Aethiopicus Australopithicus Garhi Homo Rudolfensis Paranthropus Boesei Paranthropus Robustus Homo Habilis Homo Ergaster Homo Erectus Homo Heidelbergensis Homo Neanderthalensis Homo Sapiens What makes us think that we will become the first hominid species to escape extinction?

  4. We need to understand the water resource management problematique in the context of salt loads. Managing salts-loads is a technical challenge, but it also poses business risk for a variety of reasons It is not water scarcity that destroyed ancient irrigation civilizations, but rather a salts build-up.

  5. Water Crowding as a Concept • Prof Malin Falkenmark – 1980’s • Water Scarcity – 1,000 people per “flow unit” of 1 million m³ of water. • Water Barrier – 2,000 people per flow unit • Orange River Basin = 1,803 in 2025 • Limpopo River Basin = 4,974 in 2025 • Incomati River Basin = 2,310 in 2025 • Maputo River Basin = 2,366 in 2025

  6. World Water Scarcity 1990 Water scarcity is related to population growth as much as it is related to environmental factors

  7. World Water Scarcity 2020 Note the Cuvelai and the Limpopo River Basin’s both pass into extreme stress because of population growth

  8. World Water Scarcity 2050 Note the Orange River Basin now joins the Limpopo as extremely stressed systems

  9. World Water Scarcity 2070 At this stage the most economically active portion of South Africa resembles the Middle East North Africa

  10. Tipping Point as a Concept • Ecosystems perform in a way that is reasonably predictable most of the time. • When non-linearity happens it means that former knowledge becomes irrelevant because the assumptions on which it is based are no longer applicable. • We cannot solve tomorrow’s problems with today's science based on yesterdays experience – that is the Tipping Point

  11. Old Knowledge • Both water and oil are regarded as a stock ... • They are finite ... • Value is determined by their relative scarcity ... • Markets determine that value ... • Oil is an economic good so this logic is accepted ... • But water is a social good, so this logic is rejected by key players ...

  12. New Knowledge • Water differs from oil in that it is a flux ... • This means it is a fugitive resource moving in space and time ... • Value will be determined by relative scarcity when resource collapse is happening ... • Sewage effluent is a resource, so it has value .. • Move it off the Balance Sheet where it reflects as a cost to the Income Statement where it reflects as a revenue generator

  13. New Knowledge • Learn from the energy sector collapse • If you take 2007 as a base year and call it 100% • Then factor in all tariff increases until 2012 • That same unit of electricity will be 515% in 2012 when compared to the baseline of 2007 • This is a signal that the Externalization of Costs Model is coming home to haunt us • The same will happen to water ...

  14. Future Survival • Accept that water is a flux and manage it accordingly • Combine sewage effluent with AMD to form the resource foundation for a new Dual Stream Reticulation system • Need signals to trigger the transition from the old Externalization of Costs Paradigm to the new Beneficiation Paradigm • Political buy-in is vital

  15. Future Survival • Three main drivers of political buy-in at present: • Acid Mine Drainage – Gauteng and Mpumalanga • Endocrine Disrupting Chemicals – Limpopo • Biological contamination arising from the collapse in sewage treatment services • Phosphate Standard is key in any debate around new policy options

  16. Off-Balance Sheet Items Value Mine Closure Remediation Cost Externalized Costs Revenue V2 Dev Cost Profit V1 Balance Sheet Items Magnitude at Closure Time T1 T2 The Externalization of Costs Model Our national economic growth has been driven by an externalized cost model and this can no longer be sustained © Adler et al., 2007

  17. Value Time The Internalization of Costs Model Our national economic growth can be stimulated by an internalized cost model based on Dual Stream Reticulation Potable Water Benefit Industrial Process Water This will cushion the impact of increased input costs from energy and water and will enable future economic growth

  18. Acid Mine Drainage in Gauteng Vertical Shaft Surface strata The volume of the mine void under the Witwatersrand is equal to 5 times the volume of Lake Kariba – with no evaporative loss - with new thinking and political will this can become a major source of New Water Dolomites Ore-bearing strata Workings Safety drive Eastern Basin Central Basin Western Basin Dyke Dyke

  19. Groundwater Recharge in Perth Groundwater recharge uses aquifers to store water underground for future use – but it also manages evaporation losses

  20. Groundwater Recharge in Perth The Perth groundwater recharge will take treated sewage effluent and then store that in aquifers for future use. For more information see http://www.watercorporation.com.au/M/mar_background.cfm

  21. Take Home Message • For South Africa to continue with sustained economic growth and prosperity we will need to do things differently. • One of these is to understand that Water is a Flux and manage it accordingly. • This includes Active Groundwater Recharge that reduces evaporation losses, which in the case of the Orange and Limpopo are as high as ±95% (i.e. Only ± 5% of the water falling as rain ends up in the river and thus a useful economic resource).

  22. Thank You

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