Why the 'water scarcity' argument against biofuels is flawed

The massive campaign against biofuels is often based on flawed arguments (such as those driving the 'food versus fuel' debate) or on strategies that consist of fusing unrelated truths into a single argument that fits a predetermined agenda. One of the latest illustrations of this technique is the argument that biofuels will deplete scarce water resources. On closer inspection, the argument bears no relation with reality. On the contrary, we will argue that biofuels production can increase access to drinking water to those deprived of it most, that is, the poor in the developing world.

Let us first listen to Fred Pearce, one of the staunchest anti-biofuels advocates, who uses the popular New Scientist magazine as a campaign platform. Pearce presented his thesis yesterday at the Sugaronline conference in Geneva, a non-scientific meeting of the Euro-American sugar industry:

• The politics of water will become critical as demand for water from rising populations and the needs of industry increase.
• About one billion people lack access to clean drinking water.
• Vast quantities of water are needed to cultivate crops, with two-thirds of the world's water used in agriculture.
• Sugar is one of the thirstiest crops in the world. Pearce estimates that 600-800 tonnes of water were required to grow one tonne of cane.
• Part of the answer is to boost the efficiency of irrigation infrastructure.

The problem with Pearce's line of reasoning is that (1) numbers about physical water scarcity and virtual water budgets get mixed up, (2) he doesn't recognize the fact that the planet's carrying capacity can result in the production of 1500 Exajoules worth of energy by 2050, without endangering the by then increased demand for food, (3) that he doesn't take into account the fact that biofuels are produced because oil prices are high (biofuels substitute for expensive oil; if oil becomes too cheap, farmers switch to food production), and (4) Pearce doesn't see that both food (virtual water) and energy have a very low demand elasticity, which is why price decreases of one commodity allow for more spending on the other (in this case: mass-production of biofuels will lower energy prices, which results in savings that can be spent on access to water or on trade in 'virtual water'):
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: water :: scarcity :: economics :: virtual water ::


No water scarcity in the humid tropics
Let us begin by illustrating the obvious: Brazil is a wet and humid country that faces no water scarcity whatsoever. Strangely enough, in such a wet region, there are many people without access to clean and safe drinking water. But this is not because sugarcane catches the rain before they do. The reason is to be found elsewhere: there's no water infrastructure that brings clean water to them. More importantly, social inequalities are the main cause of people's lack of access to clean and safe water (poor people cannot afford it). Not agriculture's withdrawal of water.

The situation in Central-Africa illustrates this point even better: this vast humid region's agriculture sector only withdraws 0.05% of its entire renewable water resource [FAO Aquastat]. And still, many people there don't have access to clean drinking water. This indicates that not agriculture's or biofuels' withdrawal of water is the cause of the lack of access, but again, lack of infrastructure, problematic economics, bad governance, and a lack of social justice are.

So when it comes to solving this problem, we think the following line of reasoning does makes sense: the sugarcane farmer in the tropics should produce biofuels, to boost the local economy (as has happened in Brazil). The local poor, who do have plenty of access to water, but not to clean drinking water, would immediately benefit. A boosted economy (provided the wealth is distributed more or less fairly), will result in improved access to clean drinking water to those deprived of it. The state would spend less on oil imports, and can invest money in building infrastructures. In short, biofuels production enhances access to drinking water for the poor.

Virtual water and the demand elasticity of food and energy
But of course, the picture is more complex. Pearce takes global figures ("a billion people don't have access to drinking water") and then, in a strange turn, claims biofuels could worsen the situation. Let us first say that, theoretically, there is enough land and water available to produce 1500 Exajoules worth of bioenergy (7 times the amount of oil used today on the planet), without endangering the food security of people, and without threatening fragile ecosystems (IEA Bioenergy Task 40).

So there is no problem with the theoretical production potential. The planet has enough carrying capacity to meet the population's growing demand for food and fuel. The question is: will these resources be distributed fairly and equally?

Of the one billion people Pearce mentions, a great percentage don't have access to clean and safe water because of unfair economics, not because there is no water in their area. But another part of that "one billion" doesn't have access simply because they use more of it than their resource base allows them to (either their population is growing too big, or they live in arid regions). They face physical or virtual water scarcity. Now it is the latter group that deserves focus. They cannot grow enough food themselves, and must rely on imports. And this is how they get connected to a country like Brazil.

The question is: should Brazil refrain from using its agriculture to grow fuels, and instead produce more food so that those who face (physical) water scarcity can import enough of it without spending too much on it?

The answer is: it doesn't matter, both choices result in the same outcome.

Pearce forgets that both food and energy have an equally weak demand elasticity. They are very inelastic commodities. This means they are both crucial to an economy as a whole and to individual households. So for a State that imports food (because it faces water scarcity and cannot grow enough of it itself), it doesn't matter whether food or energy prices decline. Mass-produced biofuels will result in lower energy prices and imply that a state spends less on imported oil; individual households spend less on energy. The savings they make can now be spent on importing food, or in the case of individual households, on buying access to clean drinking water.

Food and energy have an almost equal demand inelasticity. This is why the debate about water depletion and food versus fuel makes no sense. Biofuels produced in the South (where water and land are abundant) result in lower energy prices (both at home, and on the global market), which results in more leverage to tackle the problem of water scarcity.


The reality of Peak Oil
On another note: the case in favor of biofuels gets strengthened if Peak Oil were to be knocking at the door. If the global decline in oil production starts, it will see a rapid reduction in output of some 3-4% per year. Now if this were to happen, there is only one immediate substitute that can prevent a collapse of the global economy, and that is biofuels.

Biofuels production could be upped rapidly at a pace of 3-4% per annum. The result would be rising food prices, but this is the opportunity cost we face. If we were not to invest in biofuels, and Peak Oil were to arrive, the entire global food distribution system (which is entirely dependent on abundant and cheap fuel) would collapse, resulting in far higher food prices. The collapse of this trade chain would result in far higher 'virtual water' prices too, for that matter.