Is Water the New Oil?

Prof. Anthony TurtonDirector: 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.

• 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 ...

Sahelanthropus Tchadensis

Millions of Years Before Present

7 6 5 4 3 2 1

Orrorin Tugenensis

0

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?

We need to understand the water resource management problematique in the context of salt loads.

It is not water scarcity that destroyed ancient irrigation civilizations, but rather a salts build-up.

Managing salts-loads is a technical challenge, but it also poses business risk for a variety of reasons

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

World Water Scarcity 1990

Water scarcity is related to population growth as much as it is related to environmental factors

World Water Scarcity 2020

Note the Cuvelai and the Limpopo River Basin’s both pass into extreme stress because of population growth

World Water Scarcity 2050

Note the Orange River Basin now joins the Limpopo as extremely stressed systems

World Water Scarcity 2070

At this stage the most economically active portion of South Africa resembles the Middle East North Africa

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happens it means that former knowledge becomes irrelevant because the assumptions on which it is based are no longer applicable.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

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 ...

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

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 ...

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

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

The Externalization of Costs Model

Value

Time

Dev Cost

Revenue

V1

V2

Profit

Mine Closure

T1

Remediation Cost

Magnitude at Closure

T2

Externalized Costs

© Adler et al., 2007

Balance Sheet Items

Off-Balance Sheet Items

Our national economic growth has been driven by an externalized cost model and

this can no longer be sustained

The Internalization of Costs Model

Value

Time

Our national economic growth can be stimulated by an internalized cost model

based on Dual Stream Reticulation

Potable Water

Industrial Process Water

Benefit

This will cushion the impact of increased input costs from energy and water and

will enable future economic growth

Surface strata

Dolomites

Ore-bearing strata

Eastern Basin

Central Basin

Western BasinDyke Dyke

Safety drive

Workings

Vertical Shaft

Acid Mine Drainage in Gauteng

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

Groundwater Recharge in Perth

Groundwater recharge uses aquifers to store water underground for future use – but it also manages

evaporation losses

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

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).

Thank You