Canada

Hot Water

Ottawa and the provinces grapple with the question of selling a precious resource

John Geddes May 17 1999
Canada

Hot Water

Ottawa and the provinces grapple with the question of selling a precious resource

John Geddes May 17 1999

Hot Water

Canada

Ottawa and the provinces grapple with the question of selling a precious resource

John Geddes

Jerry White has admired crystalline Gisborne Lake since the first time he flew over it 28 years ago. The water was so clear, he recalls, that he imagined he could count the pebbles on the bottom from the air. The shallow lake, about seven kilometres inland from the village of Grand Le Pierre on Newfoundland’s south coast, fills a depression scooped out of light pink granite by a glacier 10,000 years ago. There are no big rivers to flush muddy sediment into it, only clean rivulets fed by rain and melting snow. For White, who now runs a thriving construction business in Gander, that first aerial view grew into what has became an entrepreneurial vision: he wants to sell Gisborne Lake water to a parched world, both by the bottle and in oceangoing tankers. “There’s no other lake in Newfoundland like it,” he says. “That’s why I’m so interested.”

White’s grand plan is attracting worried scrutiny these days from politicians and top-level bureaucrats in Ottawa and St. John’s. The reason: his project poses the first real challenge to a federal government policy, announced with some fanfare on Feb. 10, that aims to outlaw all bulk water exports—if the provinces agree. It is the Liberal government’s bid to put to rest long-standing fears that Canadas most precious resource could be drained away to slake the thirst of foreign markets. But Newfoundland’s stand on White’s proposal is far from clear. And the Council of Canadians, the left-leaning lobby group, contends that allowing one bulk water scheme like White’s will make it all but impossible to stop future export projects. “Once you turn on the tap, you

can’t turn it off again,” warns COC chairwoman and anti-free-trade firebrand Maude Barlow.

Barlow’s argument is that, under the North American Free Trade Agreement, as soon as any bulk water export is allowed, all water will have to be treated as a trade good—subject to strict NAFTA rules. Her view, which is shared by the Canadian Environmental Law Association, among others, is that if Gisborne Lake water is allowed to be exported in tankers, any U.S. or Mexican company that was denied the right to set up a similar exporting scheme anywhere else in Canada would be entitled to demand compensation from Ottawa. But the federal government insists that interpretation of NAFTA is simply wrong. “If indeed we choose to trade some water as a good, that doesn’t create an obligation to trade any other water,” said a senior official in the department of foreign affairs and international trade.

Still, Ottawa admits this is a contentious area of trade law. So the federal government would much rather Newfoundland, along with all the other provinces, accept a ban that would prevent the NAFTA question from ever being put to the test. But for Newfoundland Premier Brian Tobin, agreeing to that is not so easy: jobs are at stake. White’s plan calls for capturing about one-quarter of the lake’s annual outflow of 100 million cubic metres. His McCurdy Group of Companies would bottle some of it and pump the rest into tankers bound for far-away markets, perhaps in the Middle East. He estimates 150 jobs would be created in Grand Le Pierre—an outport community of about 400 people that was decimated by the collapse of the cod fishery. Its mayor, George Fizzard, blames Ottawa for pressuring Tobin to delay approval. “They say they’re interested in people finding work,” Fizzard complains. “Well, it doesn’t look much like it.”

Nobody objects to White setting up his bottled-

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water plant. It is the proposed tanker operation that has opponents up in arms, and leaves Newfoundland with its hard choice. The province’s environmental assessment panel is now looking at a second draft of White’s environmental impact study, after sending the first version back with a request for more information. White says he is confident the consultants he has hired to complete the mandatory environmental analysis have left no room for a legitimate rejection of the plan on grounds of damaging the local ecology. “All we’re going to do is catch this water before it gets into the ocean,” he says.

Variations on this drama—a smalltime entrepreneur pushing a reluctant provincial government to confront the emotional water-exporting issue—have been played out before. British Columbia banned bulk exports in 1995, before any of several firms then planning to ship bulk water to California could get their ventures up and running. (One of those companies, Sun Belt Water Inc. of Santa Barbara, Calif., served notice early this year of its intent to claim compensation, over the B.C. ban, from Ottawa under NAFTA, an action federal officials insist has little merit.) Last year, the Ontario government gave a permit to Nova Group of Sault Ste. Marie to ship Lake Superior water to Asia. An outcry from environmental groups ended when the province withdrew the permit and promised a new regulation to outlaw future bulk water exports.

The patchwork of provincial reactions prompted Ottawa to try to establish a national policy. On Feb. 10, Environment Minister Christine Stewart and Foreign Affairs Minister Lloyd Axworthy unveiled a strategy aimed at settling the issue once and for all. They promised to amend the International Boundary Waters Treaty Act to prohibit bulk removals from border waters, primarily the Great Lakes—putting an end to the old spectre of Canadian rivers being diverted to irrigate the arid U.S. southwest. At the same time, Ottawa and Washington together asked the International Joint Commission, the agency that oversees management of waters along the border, to study a wider range of issues surrounding diversions and large-scale removal of water from all boundary lakes and rivers. Finally, Ottawa launched the talks with the provinces aimed at an accord banning large-scale transfers of water out of Canadian watersheds, whether within the country or for export.

Work towards the accord is off to a halting start. Along with doubts about Newfoundland’s final position, Quebec is, predictably, following its own course, conducting a sweeping review to come up with a provincial water policy— while leaving open the possibility of bulk exports. Some observers now doubt whether Ottawa will be able to

cobble together a nationwide accord. That leaves critics, including Barlow’s COC, urging the federal Liberals to unilaterally impose a national export ban. But Stewart told Macleans she sees no need for Ottawa to go it alone. She said no province—including Newfoundland—is likely to risk the public backlash that would follow a decision to allow large-scale exports. “This is such an important issue for Canadians,” Stewart said, “that my sense is the .« provinces are well aware of that reality.” I Many technical experts question the ? underlying assumption that big water exports are really a lucrative business proposition. “Despite all the kerfuffle, the export market for Canadian water is minimal,” says Don Tate, a former Environment Canada official now working as an independent water management consultant in Ottawa. A report released by Quebec as part of its water policy review, for example, says desalination plants can turn salt water into fresh water at a cost of $ 1.50 to $2 per cubic metre—two to three times cheaper than the cost of transporting water long distances by tanker. As for the U.S. southwest—often portrayed as a potential sponge for Canadian water —Southern Illinois University water management expert Ben Dziegielewski says conservation methods, from ultralow-flush toilets to efficient drip irrigation systems, make far better economic sense than massive water imports.

Would-be water entrepreneurs agree that selling drinking water to well-off consumers—not solving large-scale shortages—is where the money will be. “What we’re talking about is high-end drinking water,” says Fred Paley, chief executive officer of Vancouver-based Global Water Corp., which has hopes of shipping water in bottles and by tanker from Alaska to China, California and perhaps the Middle East. “You could put together a heck of a water-marketing program,” he adds, “based on the imagery and mystique of Alaska.” Or, presumably, around the image of a pristine Newfoundland lake. But whether Jerry White gets his chance to mount that campaign is now a question not of business but of politics. Eû]