Introduction

The invisible hand of Adam Smith will not make sure that the world’s scarce freshwater resources will be allocated in a way that creates the highest value to mankind. Leaving freshwater allocation to the market, be it in the time of Adam Smith or be it in our time, is not a good idea. It’s one of the worst ideas. I do not intend here to upset economists, but I think we should be fair and acknowledge that wise use of natural resources is not the private territory of the market. Freshwater is essential for life. Water is public health. Water is food. Water is energy. Freshwater allocation is primarily politics. The phenomenon of free-rider behaviour, the consumption and pollution of water by some at the expense of others, is material for the social scientist. Understanding the way in which water abstractions and pollutants change water flows and quality is part of the natural sciences. The relation between the quantity and quality of freshwater flows and ecosystem functioning is the domain of ecologists. Designing water infrastructure is engineering. None of us will contradict the relevance of the various disciplines in water management, but why then do we let the market play a major role in governing our freshwater resources? We know that water is a common resource and we may think that governments take care, but reality is different. What governments in this world do to protect and wisely allocate water resources is hardly relevant when we realize that the major mechanism that changes the status of our freshwater resources is the economic mechanism of demand and supply of our daily commodities, like food, fibres, energy, minerals and so on. The market says: it’s economically attractive to grow asparagus in the desert in Peru, so asparagus is grown in the desert in Peru and groundwater levels decline. The market says: import cheap stuff from China, so that is why the rivers in China are so polluted. Water is for free, so there is no way in which economies account for the scarcity of freshwater resources or the vulnerability of ecosystems to overexploitation or pollution. Other factors than water dictate economies. Economies develop certain

spatial production patterns, which in turn determine where water will be used and polluted, irrespective the amount of water that can actually be sustainably abstracted or the assimilation capacity for pollutants. Cities grow where they grow, without any relation to whether there is water to sustain the cities. Agriculture and irrigation schemes are developed in places even though it’s clear that there is not sufficient water to sustain crop production in the long run. Governments may have programmes to combat pollution and promote efficient use of freshwater resources, but by facilitating economic growth that is based on the ignorance of freshwater, they effectively do more harm than good if it comes to sustainable water use. The USA may have good water laws and good ambient water quality standards, but why then is the Ogallala aquifer beneath the Great Plains overexploited? Why is the Colorado River running dry and why do nutrient and pesticide levels in water bodies violate the standards in so many places? Nobody seems to care about making freshwater scarcity and pollution a factor in economic decisions. Setting boundary conditions to expanding agriculture, industrial growth or city development is not within the mandate of a water minister, so these developments will occur irrespective of the sustainability boundaries given by the locally available water resources. The central thesis of this book is that all problems of overexploitation and pollution of freshwater resources in this world relate to what we consume. Putting it this way is unusual. There is the assumption that it is relevant and even important to know whether or not the cotton in our pair of jeans comes from a place where rivers run dry as a result of cotton irrigation and whether or not the food we eat comes from places where groundwater aquifers are being depleted. Why would we need to care about water from the perspective of consumption and supply chains? The traditional view on issues of water overexploitation and pollution is that the farmers, industries and municipalities are to be held accountable, because in all those places where aquifers are depleted, rivers run dry or water bodies are polluted, it is because farmers, industries or municipalities abstract too much water, put too many chemicals on the field or discharge polluted effluents. Obviously, if this has to change, who else other than the farmers, industries and municipalities should act? Usually, state or national governments are recognized as key players as well. Governments must regulate it all properly – through water abstraction licences, effluent standards and permits, proper water pricing or whatsoever – so that water users receive proper incentives and clear boundary conditions. The conventional view is thus: governments have to regulate and water users have to conform to the regulations. There are two reasons why this view is insufficient. First of all, all production is driven by or at least made possible by consumption. If producers and consumers are part of a system that is unsustainable, it should be the system as a whole that needs to be involved and evaluated. Consumers are as much a part of the system as producers. Second, theoretically, consumers could be left out of scope if governments would properly govern and if producers would produce in a sustainable way, but none of the two is the case. Governments fail at a large scale by not regulating water prices so that they reflect

the actual value, by (indirectly) investing in water overexploitation rather than in conservation and efficiency, by setting water quality standards but not making sure that they are met, and so on. Producers fail by not caring either. Business strategies regarding sustainability do not often go beyond the factory gate, while unsustainable water use generally happens in the supply chain of companies. If in all nations in the world, governments would set proper local standards, implement local regulations and make sure that enforcement takes place, there would be no room in this world to overexploit or pollute water resources. Production processes would operate within the boundaries of what is sustainable, so consumers could trust that whatever they buy must have been produced in a sustainable way, whatever the sources of the different product components. But reality shows that it does not work when all is left to governments and companies. There is no choice for consumers other than to engage, for their own interest, in their capacity as consumers, as well as in their capacity as voters, investors of savings and independent agents of change. Real changes in the world, changes in the rules on how we interact and manage good housekeeping, occur only if a broad public is interested and motivated. This book aims to inspire you to think critically about the way we manage freshwater in this world and about the roles that different players can have in moving towards a more sustainable, equitable and efficient use of our globe’s limited freshwater resources. In this first chapter, I will argue why freshwater is a special resource. Freshwater is a renewable resource but finite though. It is not a private good but a so-called common-pool resource. Water users typically externalize costs to others, either in their direct environment or downstream. Furthermore, freshwater availability varies strongly within the year and over the years and from place to place, so that scarcity fluctuates over time and space as well. Finally, water is generally priced far below its actual value, which misleads us in a way that does not benefit a wise use of the resource. There are thus numerous reasons why freshwater systems are so often and so easily overexploited, not only damaging ecosystems, but also at the cost of sustainable welfare. In the final section of this chapter, I will reflect on the question of what makes freshwater a local and a global resource and introduce the water footprint concept.