The Trickle-Down Effect

Heralded as the economic growth engine of Canada, Alberta has recently discovered that its most strategic resource may not be subsurface oil and gas reserves. Perhaps more critical to future economic development will be the existence of abundant and predictable quantities of water. As the prairie province deals with water allocation for a burgeoning population and expanding industrial sectors—oil sands, agriculture, petrochemicals and power generation—it is feeling the impacts of climate change, including droughts, destructive floods, and reduced contributions from rapidly receding mountain glaciers that feed Alberta’s waterways and aquifers.

In August 2006, four of five rivers in southern Alberta’s South Saskatchewan River Basin were closed to new water withdrawals, due to over-allocation by the provincial regulator. In northern Alberta, oil sands companies continue to seek increased allocations from the Athabasca River to support their rapidly expanding, water-intensive bitumen mining and upgrading operations. Current withdrawals may have already compromised the river’s healthy inflow capacity during the low-flow fall and winter months.

In the spirit of shared governance of Alberta’s watersheds (one of the provincial government’s stated management objectives), concerned citizens, the Alberta Water Council, climate scientists, policy groups, and environmental organizations are calling for science-based management practices, claiming that the provincial regulator has not adequately addressed the impacts of climate change on its diminishing water resources.

First in time, first in right

The rules for access to Alberta’s water date back to the province’s homesteading days. Senior water license holders continue to benefit from their historical rights, while newcomers (often known as junior water license holders) may be out of luck with respect to securing vital water resources. This inequity has precipitated a game of musical chairs, with senior water license holders acting as water brokers, transferring unused volumes to third parties for tens of millions of dollars.

Critics accuse the Alberta government of approving amendments to senior water licence agreements—often without public input—and of diverting unused volumes of water to third parties, for purposes other than originally intended and to the detriment of Alberta’s waterways.

The Province created its Water Act in 2000, legislating, for the first time, the monetization—through the sale, transfer, or carving up of senior water rights—of Alberta’s water resources. Market-based instruments contained in the Water Act are designed, as economic management tools, to financially incent license holders engaging in voluntary stewardship, information disclosure, water security, and cooperative management agreements.

Andy Ridge is the director of water policy for Alberta’s Ministry of Environment and Sustainable Resource Development. “In a perfect world, everyone has the right to water,” says Ridge. “Nobody can sell a drop of water. What you transfer is the ability, from one entity to another, to withdraw water.”

Certain conditions must exist, he adds, for the sale or transfer of water rights. The Act, he says, calls for a defined purpose and use for the water, and a quantification of volumes.

In 2007, the Province approved just such a transfer. The Municipal District of Rocky View secured a senior water license to provide water security for the development of a mega-mall in Balzac, a small hamlet located north of Calgary. It paid $15 million to the Western Irrigation District (WID), an entity engaged in agricultural water usage. In turn, the WID used the money to convert 50 kilometres of a leaky irrigation canal into a water pipeline, thus reducing water losses through leaks and evaporation.

Water mastery

Ridge says, when it comes to meeting that water needs of Alberta’s diverse stakeholders, “it’s always circumstance specific.”

“We apply water mastery when there’s an issue,” says Ridge. “Water mastery” is his term to describe the Province’s balancing act of meeting the water needs—current and future.

“In tough times, we get involved to ensure that everyone is less harmed,” says Ridge. But tough times have existed for more than a decade in southern Alberta, where the Province has ordered junior water holders to reduce or stop water withdrawals, enabling “first in time, first in right” senior holders to maintain their draws. In these “tough times,” explains Ridge, the Province also encourages senior rights holders to decrease their draws—but they are under no obligation to do so.

According to Dr. Bill Donahue, director of science and policy for Water Matters, a Canmore-based think tank focused on protecting Alberta’s watersheds, senior and junior licensees in southern Alberta came to a “gentlemen’s agreement” on water withdrawals during severe drought conditions in the early 2000s. But, Donahue asks, “Should we be simply relying on the largesse of senior water users to determine how we allocate water in Alberta?”

New availability in Alberta’s waterways, Donahue explains, is being created by voluntary efforts in the water conservation, efficiency, and productivity initiatives outlined in the provincial Water for Life: Alberta’s Strategy for Sustainability document that addresses many of the issues and challenges surrounding water management. The Water for Life strategy calls for voluntary reductions of water usage—by both senior and junior licensees—of 30 per cent by 2015.  While it has no regulatory teeth, Ridge describes it as “a roadmap that confirms water is a priority for people, the environment, and the economy.”

“Almost universally, senior water users look at water conservation gains as an opportunity to expand operations and as an insurance for future business, rather than as something that benefits our rivers,” says Donahue. A lawyer equipped with a doctorate degree in limnology (the study of inland waters) from the University of Alberta, Donahue says that the Province’s “passive management” enables industrial sectors and municipalities to do “an end-run around sustainable water management.”

Donahue cites two examples of “end-runs” that contravene the spirit of managing water resources sustainability.

In 2010, the Province approved a request for an amendment of the City of Calgary’s senior license to divert treated wastewater to a new gas-fired power plant being built nearby by ENMAX Corporation. In 2007, the Province approved an amendment to the City of Edmonton’s water senior license, enabling it to sell wastewater to Petro-Canada Ltd. (now Suncor Energy Inc.) for use in heavy oil upgrading operations east of the city.

In both instances, Donahue explains, the amendments of senior water licences resulted in negative benefits to Calgary’s Bow River and to Edmonton’s North Saskatchewan River, as wastewater was diverted for industrial purposes and not returned to the river systems. He adds that Petro-Canada and ENMAX avoided costly public environmental hearings and didn’t have to apply for low priority, junior water licenses.

Return it to the rivers

For the past decade, the City of Calgary has encouraged its residents to conserve water, even providing financial incentives to purchase low flush toilets and install water meters. However, Calgarians who believed they were contributing to improving the aquatic health and trout habitat of the Bow River— billed by Travel Alberta as the world’s premier trout fishing stream—might be surprised to learn that the water conserved had been sold for industrial users or to other municipalities in southern Alberta.

“Even the Alberta Water Council made a recommendation that conserved water should be returned to rivers, to improve and protect river health,” says Donahue. The Alberta Water Council is a multi-stakeholder partnership funded, in part, by the provincial government, that works towards the shared governance of Alberta’s water resources and the goals outlined in the Water for Life strategy.

The Calgary-based Water Conservation Trust of Canada is working toward ensuring conserved water gets back to the stream. Reminiscent of the Nature Conservancy of Canada, the Trust was created with a water stewardship role in mind. It provides an additional market-based tool to work with licensees, communities, and the province’s nascent water market, contributing positively to in-stream flow volumes and the overall environmental integrity of Alberta’s watersheds.

Maureen Bell is an environmental lawyer and the executive director of the Trust. “We protect what we value,” she says. “A lot of people have railed against a water market, but no jurisdiction has indentified an alternative decision-making system to share water fairly. The water market might work, if it’s properly regulated.”

The first of its kind in Canada, the Trust was modelled after others operating in Washington, Oregon, and Montana. In June 2010, it received its first donation. Through conservation efforts, ConocoPhillips Canada Ltd. reduced its overall water consumption by 50 per cent on the Medicine River, a tributary of the Red Deer River. Recognizing the saved water’s vital contribution to the in-stream flow and the associated health benefits to the aquatic ecosystem, the oil and gas company donated 50 per cent of its senior water licence to the Trust.

But almost two years later, the Province has yet to approve this landmark transfer. In fact, the Trust’s initial request for water transfer was denied. In turn, the Trust has filed a legal appeal to keep its unprecedented water transfer moving forward while an alternative approach, envisioned under the Water Act, is investigated.

The Trust’s mandate revolves around holding water conservation licenses. However, according to Ridge, “The concept of a license that’s being held for the environment—that’s what the Water Conservation Trust of Canada is promoting—is contained in the Water Act.” To date, only the Province holds these conservation licenses in trust, but the Water Act doesn’t specifically prohibit other groups from doing so, too.

Just as Alberta’s homesteaders developed the province in the early 1900s, Bell, a native Albertan, is pioneering a new vision for prosperity which includes an innovative tool to achieve the healthy aquatic ecosystems contemplated within the provincial Water Act. “We’ve spent six years breaking trail,” said Bell, “and we’re close to a breakthrough.”

Susan R. Eaton is a Calgary-based geologist, geophysicist, and freelance writer who reports on science, technology, energy, the environment, and ecotourism. She also manages her own environmental and energy consulting practice, SR ECO Consultants Inc.

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