Is Water the New Oil?
Prof. Anthony TurtonDirector: TouchStone Resources (Pty) Ltd
[email protected] 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happens it means that former knowledge becomes irrelevant because the assumptions on which it is based are no longer applicable.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
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