Hot Commodity: Exporting Fresh Water

Water has been called the oil of the 21st century. It is in ever shorter supply, and its price is rising in thirsty cities and farming regions from the Middle East to the American West. And what Kuwait is to oil, Canada could be to water. President George W. Bush suggested as much before last month's global economic summit, when he noted that "water will forever be an issue in the U.S., particularly the Western part," and added, "I look forward to discussing this with Prime Minister Jean Chretien."

That raised the hackles of Canadian Environment Minister David Anderson, who snapped that the Bush-Chretien discussion will be "brief." The Prime Minister "will tell the President that we have a policy of not exporting water, and that, I guess, will be it." Bush's casual comment, though, lent encouragement to a handful of Canadian entrepreneurs who for years have been promoting schemes to export their country's plentiful water. "It's going to happen for sure," says Gerry White, president of McCurdy Enterprises, a real estate and construction firm in Gander, Newfoundland. "Trying to stop people from selling water is like telling Saudi Arabia not to sell oil."

White is preparing to invest $24 million in a plan to ship 132 million gal. of pristine lake water every week via specially lined oil tankers to prospective buyers (whom he declines to name) in the Southern U.S. and elsewhere. Canada's provinces prohibit bulk water shipments, on environmental grounds. Still, White's prospects have improved with official hints that Newfoundland's ban might be dropped--and with court challenges arguing that such bans are illegal under terms of the North American Free Trade Agreement. Says Bill Turner, who runs WaterBank.com an enterprise based in Albuquerque, N.M., that locates new water supplies for cities and industries around the world: "We're just at the beginning of the boom."

Even so, the dreams of an H2O bonanza can be maddeningly elusive. During the past half-century, there have been at least nine proposals for large-scale water diversions from Canada and Alaska, including a $100 billion megaproject to pipe water from James Bay in northern Quebec to the Western U.S. and a bizarre scheme for tugboats to tow icebergs to Mexico. Just three months ago, a Greek company, Aquarius Water Transportation, was in Houston trying to interest clients in pumping North American water into rafts the size of football fields and towing them to parched locales around the world--a method Aquarius uses to haul water around the Aegean.

Although bottled water is already a $30 billion global industry, the technological challenge of shipping bulk quantities of freshwater between distant points and distributing it to customers has so far stumped some major would-be players. For example, Azurix, a water-retailing company and a subsidiary of the energy multinational Enron, is struggling. "Enron thought it could use its expertise as a commodity trader to market water like energy," says Debra Coy, a water analyst with Charles Schwab. "But water is more complex politically."