Let’s Sell Water To The U.S.A.

Commentary, Daniel Klymchuk, Environment, Regulation, Uncategorized, Water

Manitoba could net more than $1 billion a year by piping water from northern Manitoba and selling it the United States by diverting just 1% of the renewable fresh water flow into Hudson Bay.

The Doer government thinks we should not. It has even passed legislation prohibiting water exports.

The law, however, does not mean that Manitobans can’t think for themselves. We should at least consider the issue and what is best for the future of our children, particularly if we want them to stay here.

If the future of Manitoba were the fuel indicator on a dashboard, it would be blinking and buzzing. We depend on the generosity of other provinces for more than one-third of our provincial budget. Over the last decade, this has amounted to over $20 billion. And yet, where are we?

During the same period, the number of people living below the poverty line has increased, crime has increased, our health care has deteriorated and our universities are crumbling like oatmeal cookies. An objective outsider might say: “Have you tried anything else? Have you questioned the notion that fresh water is priceless?”

Consider that more than 7,000 desalination plants throughout the world are creating fresh water through a process called reverse osmosis. In 2006, Tampa, Florida, became the first major U.S. city to adopt desalination as a major source of fresh water. This facility, which depends on electricity from a coal-fired plant, provides 10 per cent of the area’s water at a 30-year estimated cost of 6.6 cents per cubic metre (about 264 gallons).

Yes, this is expensive when compared to ground water at five to 10 cents per cubic metre, but it will not cripple an economy. (In fact, when looking at the large City of Winnipeg surcharge on water bills, one can be forgiven for thinking we should have gone with desalination.)

So given the Floridians are already indicating what the “market” price of fresh water is, imagine how Manitoba might deliver that water to them.

Imagine a pipeline from the water’s edge of Hudson Bay to the U.S. border. If the fresh water were diverted just prior to entering Hudson Bay, Manitoba’s ecology would be unaffected.

The project would require an insulated, underground-pressurized line extending 630 miles down the eastern (not western) side of the province. An almost perfect template for the scope of this proposed construction is the California Water Project, which moves five-billion cubic metres of fresh water along a 621-mile aqueduct from the mountains in the north to San Diego in the south.

The proposed Manitoba project would require a 30-foot wide conduit or its equivalent in smaller pipes and a flow of eight cubic feet per second. A pumping station every 50 miles would lift the water from sea level to 750 feet at the U.S. border.

Construction cost would be about $22 billion ($35 million per mile) which at a carry of 3.375 per cent (U.S. Treasury Bond rate for 30 years) equals $1.166 billion.

Annual power needed to move the water would be 2,500 megawatts, supplied at off peak hours, at the industrial rate of 3.5 cents per kilowatt hour. This would enrich Hydro by $700 million without any investment by the utility. Maintenance and wages would add about $100 million for an annual total of $1.966 billion.

On the revenue side, based on the Tampa costs, we could realize $3.3-billion per year (0.66 x 5-billion cubic metres). Profit, if all costs were deducted, would be $1.334 billion. However, if the United States carried the cost of the project, as is usually the case for such strategic infrastructure, the profit would be an impressive $2.49 billion every year. It would be enough to easily wipe out Manitoba’s equalization hand out which was $2.06 billion in the most recent budget.

On a bigger scale, this new wealth would be sufficient to wipe out over two thirds of all federal transfers to Manitoba which come in at a whopping $3.61 billion this year.

Our best outcome might be to sell the water contract to a pension fund. The Canada Pension Fund is very active in this area, having acquired the London water utility in 2006. At an estimated capitalization rate of five per cent, the contract could be worth at least $26.6 billion in the first scenario to $49.8 billion in the second.

What could be better than a pipeline financed by the United States, owned by the Canada Pension Plan and an unending source of revenue that would be a bold, giant step towards ending Manitoba’s hanger-on status in the federation?

Daniel Klymchuk is a Research Associate at the Frontier Centre for Public Policy.