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The Smartest Thing China Could Do Right Now: Invest US$ 200 Billion in Brazil – Part 3

Brazil has more fresh water than any other country

Here is the number one reason why China should invest in Brazil for the
long-term. These investments should be viewed from China’s perspective not just
as another investment to maximize its returns on invested amounts. It should be
viewed by China as a matter of national security and long-term survival for its

It should be viewed as a complement to China’s own economic development considering the importance of securing a food supply for its very large and growing population.

A few years ago, I remember reading an article in The Economist magazine about global freshwater resources, and the article said that the number one reason for conflict and wars between countries in the 21st century was not going to be politics, ideology, and religion – it will be disputes regarding a very scarce and precious resource – freshwater.

Freshwater is very important because it is needed for life to exist. Human beings have many uses for freshwater including in agriculture, in industrial production, in all kinds of households uses, and as part of its environment such as rivers, and lakes.

Our planet’s water resources are made up of two types of water: 1) salt water/ocean water which represents 97% of total water resources and, 2) freshwater with only 3% of the water resources available to us. And over two thirds or 2% of the freshwater is frozen in glaciers and polar ice caps, leaving only 1% available for human use in “surface” and in “groundwater” water.

It is estimated that the volume of global freshwater is made up of three types of freshwater:

1) The icecaps and glaciers are the largest sources of fresh water on earth at 68.7%.

2) Groundwater comprises 30.1% of all freshwater resources on earth.

3) Surface freshwater comprises 0.3% of all freshwater resources.

4) Other freshwater comprises 0.9% of all freshwater resources.

Surface freshwater is water in rivers, lakes, reservoirs, and wetlands. Surface water is naturally replenished by precipitation – rain or snow – and naturally lost through discharge to the oceans, evaporation, and sub-surface seepage. Surface freshwater is affected also by man-made pollution, and global warming.

The sources of the surface water are estimated to be: lakes (87%), swamps (11%), and rivers (2%).

Other freshwater sources also include desalination. Desalination is an artificial process by which ocean water is converted into freshwater. Desalination is currently very expensive compared to most alternative sources of water, and only a very small fraction of total human use is satisfied by desalination.

Of all the freshwater on Earth, only about 0.3% is surface freshwater contained in rivers and lakes – yet rivers and lakes are not only the water that most people are familiar with, but are also the source where most people get the water needed for their everyday lives.

Freshwater Usage

The main uses for freshwater are: it is estimated that 70% of worldwide use is for agriculture/irrigation. About 15% is for industrial uses such as in power plants, oil refineries, chemical plants, mining operations, and all kinds of manufacturing plants. And another 15% is used for household purposes such as cooking, drinking, bathing, sanitation and so on…

The supply of freshwater is not equally available around the world, and the supply that is available can be affected by many factors including the weather changes and overpopulation. For example, we see on the news on a regular basis major droughts in parts of Africa that result in famine to large parts of the population of various countries.

In the coming years China will have a major strategic problem to solve regarding freshwater rights. As they build new cities to accommodate the hundreds of millions of people who will migrate from rural areas to the big cities they will have to decide how to allocate their scarce freshwater supply. This suggests that they will have a growing conflict between agricultural water users, who currently consume the majority of the water, and its new demand required for use in the big Chinese cities.

We also have to keep in mind that China will face a severe freshwater shortage in the coming years due to physical scarcity, and a condition of overpopulation relative to their carrying capacity with respect to their freshwater supply.

In an article published in Foreign Policy (2001) issue 126 on pages 60-67 – “Dehydrating Conflict” the author said: “Water stress can also exacerbate conflicts and political tensions that are not directly caused by water. Gradual reductions over time in the quality and/or quantity of fresh water can add to the instability of a region by depleting the health of a population, obstructing economic development, and exacerbating larger conflicts.

Conflicts and tensions over water are most likely to arise within national borders, in the downstream areas of distressed river basins. Areas such as the lower regions of China’s Yellow River or the Chao Phraya River in Thailand, for example, have already been experiencing water stress for several years. As well, countries that rely heavily on water for agricultural use, such as China, India, Iran, and Pakistan, are particularly at risk of water-related conflicts.”

Here is where the connection between China and Brazil becomes so important in the coming decades, mainly from the Chinese perspective. The study published by the Pacific Institute regarding the global freshwater supply by country in 2006 – shows that Brazil is the richest country in the world regarding its total supply of freshwater.

Brazil has almost twice the amount of available freshwater as Russia, the country ranked second in the list of global freshwater supply. And Brazil also has almost 3 times more freshwater than the countries ranked 3rd (Canada), and 4th (United States of America) in that list.

Total renewable Freshwater Supply by Country (updated in 2006)

Annual Renewable Water Resources (km³/yr)

1) Brazil – 8,233.0

2) Russia – 4,498.0

3) Canada – 3,300.0

4) United States of America – 3,069.0

5) Indonesia – 2,838.0

6) China – 2,829.6

7) Colombia – 2,132.0

8) Peru – 1,913.0

9) India – 1,907.8

10) Venezuela – 1,233.2

All quantities are in cubic kilometers per year (km³/yr).

Source: Worldwater Org – Pacific Institute for Studies in Development, Environment, and Security. These data are typically comprised of both renewable surface water and groundwater supplies.

The Guarani Aquifer

Located mainly in Brazil, the Guarani Aquifer covers about 1.2 million square kilometers (463,323 square miles) – it is the largest single body of groundwater in the world, and the aquifer’s water is considered of excellent quality.

The Guarani Aquifer, located beneath the surface of the original four Mercosur countries (Argentina, Brazil, Paraguay and Uruguay), is one of the world’s largest aquifer systems and an important source of fresh water for its people. Named after the Guarani tribe, it covers 1,200,000 km², with a volume of about 40,000 km³, a thickness of between 50 m and 800 m and a maximum depth of about 1,800 m.

It is estimated to contain about 37,000 km³ of water and the largest single body of groundwater in the world, with a total recharge rate of about 166 km³/year from precipitation. It is said that this vast underground reservoir could supply fresh drinking water to the world for 200 years.

Due to an expected shortage of fresh water on a global scale, which environmentalists suggest will become critical in under 20 years, this important natural resource is rapidly becoming politicized, and the control of the resource becomes ever more controversial.

The area of the Guarani, in Argentina, is of 225,500 km²; in Paraguay is of 71,700 km²; in Uruguay is of 58,500 km², and in Brazil is of 840,000 km², spreading itself under the subsoil of eight states (Mato Grosso, Mato Grosso do Sul, Goiás, Minas Gerais, São Paulo, Paraná, Santa Catarina and Rio Grande do Sul), and 70.2% of the total area of the aquifer is located in Brazil.

The area where the Guarani is located is characterized by concentrating in the most important agricultural zone of each country. Besides, the entire region is characterized by fertile lands and soil with high indices of productivity where farming of soy, maize, wheat, barley, sugar-alcohol, etc., are well developed, and with excellent potential for further development of the cattle business with its great diversity of breeds, beyond an industry already well diversified.

It is calculated that the annual extraction of the water from aquifers from around the world is of 160 billion cubical meters or 160 trillions of liters with some countries showing extreme usage such is the case in China, India, Saudi Arabia, Africa of the North and in the United States. On the other hand, Brazil is in great shape when compared with these countries regarding its freshwater supply.

Privatization – the Wrong Strategy

Freshwater net published an article on its website saying: “Global consumption of water is doubling every 20 years, more than twice the rate of human population growth.

… Multinational corporations recognize these trends and are trying to monopolize water supplies around the world. Monsanto, Bechtel, and other global multinationals are seeking control of world water systems and supplies.
The World Bank recently adopted a policy of water privatization and full-cost water pricing. This policy is causing great distress in many Third World countries, which fear that their citizens will not be able to afford for-profit water.

… “Governments around the world must act now to declare water a fundamental human right and prevent efforts to privatize, export, and sell for profit a substance essential to all life.” Research has shown that selling water on the open market only delivers it to wealthy cities and individuals.
Governments are signing away their control over domestic water supplies by participating in trade treaties such as the North American Free Trade Agreement (NAFTA) and in institutions such as the World Trade Organization (WTO). These agreements give transnational corporations the unprecedented right to the water of signatory companies.

… Water-related conflicts are springing up around the globe. Malaysia, for example, owns half of Singapore’s water and, in 1997, threatened to cut off its water supply after Singapore criticized Malaysia’s government policies.
Monsanto plans to earn revenues of US$ 420 million and a net income of US$ 63 million by 2008 from its water business in India and Mexico. Monsanto estimates that water will become a multibillion-dollar market in the coming decades.

Yet governments are handing responsibility of this precious resource over to giant transnational corporations which, in collusion with the World Bank and the World Trade Organization, seek to commodify and privatize the world’s water and put it on the open market for sale to the highest bidder.

Millions of the world’s citizens are being deprived of this fundamental human right, and vast ecological damage is being wrought as massive industry claims water once used to sustain communities and replenish nature.”

Freshwater Policy in Brazil

Freshwater policy in Brazil should protect the entire freshwater system in Brazil including groundwater, and should keep it as a community service, and access to freshwater should be considered as a fundamental right of every person living in Brazil.

The water companies in Brazil should be developed with help from the federal government and they should operate such as mutual insurance companies in the United States – they should operate as non-profit organizations and the owners of these water companies should be the communities being served by the water company system.

The cost of water in Brazil should be priced according to the usage of the customers of the water companies, but a reasonable amount of freshwater should also be supplied to the poorest members of society who can’t afford the cost of these services without the help from the federal government.

The water distribution system of any area in Brazil shouldn’t be allowed to be privatized under any circumstance not only today, but also in the future.

Brazil should add on its constitution an amendment forbidding the privatization of any water company in Brazil, and if there is any private water company today they should deprivatize and turn it into a non-profit mutual company.

The same rules should also apply to the entire sewage system in Brazil.

If the Brazilian government does not act very strongly in this direction, then a very few major players (corporations) will try to control the freshwater system in Brazil. Remember, these corporations would make a major monetary killing for themselves at the expense of the entire population, and they would also interfere with the development of the Brazilian economy.

In the coming decades freshwater rights will become a major issue and a battlefield between the have and have-nots in country after country around the world. Today it is time to spell out in black and white all the government regulations which will affect that area of infrastructure development and create the guidelines which would help preserve the Brazilian freshwater reserves that are available today. Being proactive today in that regard would also give all the necessary protection to a system and a national asset that will play a fundamental role in the future development of the Brazilian economy.

Brazil also should make an agreement with the other Mercosur countries including Argentina, Paraguay, and Uruguay regarding the freshwater usage from the Guarani Aquifer. And this agreement should be in line with the government regulations regarding freshwater and sewage that would be in force in Brazil; including the regulation forbidding privatization of freshwater distribution systems.

A New Global Trend

The Financial Times (UK) published an article on May 24, 2007 – “Thirsty work – Australia’s drought puts export farming on trial.” That particular article gives us in a nutshell what is happening today in many countries around the world. This problem is happening not only in Australia; it is a major issue that will be discussed in the near future by many countries around the world exporting agricultural products.

Now quoting from that article: “Spot the odd one out. Asia has billions of cheap workers, so exports manufactures. Europe has millions of graduates, so exports banking. Africa has steamy tropical regions, so exports fruit. America has Hollywood, so exports movies. And Australia is the second-driest continent on earth after Antarctica, so it exports water.

… In the wake of the worst drought in living memory in Australia, a battle over the use of water is raging between farmers, urban consumers and environmentalists. Australia in effect sends abroad billions of cubic meters of water a year by using it to grow a US$ 25 billion dollars worth of exported farm goods, both “dryland” (rain-fed) produce such as wheat, beef, wool and dairy, and irrigated crops such as rice and fruit.

If farmers can no longer export on that scale, the worldwide implications will be serious.

… Like many Australian farming communities, it is a place built to feed far-off consumers. Farm products, which suck up 65-70 per cent of the country’s water, make up nearly a quarter of all exports.

… But despite a historical Australian reverence for farming and rural life, the use of water in agriculture has now come under intense scrutiny. Trade should enable dry countries to import water by buying water-intensive food and fibre. Egypt, for example, now imports half its wheat, the traditional staple food. Parched Australia, however, is the world’s largest net exporter of the “virtual water” embedded in farm produce.

Critics charge this means the country is in effect sucking itself dry to subsidize foreign consumers, and that it should expand other exports instead. Environmentalists say both irrigation and dryland farming deplete water stocks and cause rivers and the country’s already naturally salty earth to become dangerously saline.

… Irrigated farming is under particular scrutiny. Just 0.5 per cent of Australian farmland is artificially watered, but it produces 23% of agricultural output. So much is financially and psychologically invested in irrigation in towns such as Griffith that to end it will be an enormous upheaval.

… Yet for many Australians the question is whether agriculture is a good use of water within Australia, not whether its farmers are more efficient than their counterparts in wetter countries. Many cities are suffering severe limits on water use.

… As most scientists believe, global warming means south-eastern Australia’s climate is on a drying trend. Another few dry years and no amount of pleading is likely to save the irrigators. It is not a pleasant prospect in Griffith, still arguing that what it does benefits Australia and the world beyond.”

The growing scarcity and competition for water resources are becoming a major threat to important breadbaskets areas in India and also in China. An increasing number of the rural poor on these countries are coming to see entitlement and access to water for food production and for domestic purposes as a more critical problem than access to health care and education.

World Resources Institute (WRI) has estimated that 41% of the world’s population, or 2.3 billion people, live in river basins under ‘water stress,’ meaning that per capita water supply is less than 1,700 m³/year. Water scarcity is partly due to the uneven geographic distribution of water, as determined by the Earth’s climate system. It is also a result of regional variations in population size such as in China and India.

Lester R. Brown from the Earth Policy Institute wrote: “Water scarcity may be the most underestimated resource issue facing the world today. As world water demand has more than tripled over the last half-century, signs of water scarcity have become commonplace. Some of the more widespread indicators are rivers running dry, wells going dry, and lakes disappearing.

… This reported 1% growth would be reassuring, but it appears to be overstated since governments are much better at gathering data on new irrigation projects than on irrigation reductions as water is diverted to cities or aquifers are depleted. It is quite possible that the historical growth in world irrigated area has come to a halt, and the area could even be declining.”

Five years ago World Water Org. published a book The World’s Water and the book was an effort to explore, understand, and solve a variety of critical water issues that include the global water crisis, global warming and water, privatization and globalization of water, and water-related conflicts.

They also said: “The central thrust of The World’s Water 2002-2003 is that we must rethink the way we capture, distribute, and use water if we are to meet the challenges of increasing scarcity and growing populations.

Water is one of our most critical resources issues that we will have to deal with in the coming years, and there is the complex connection between water and food production which is being made even more complex because we still don’t fully understand the consequences and the impact of climate change and global warming on the entire food production system of our planet.

Global consumption of water is doubling every 20 years, more than twice the rate of human population growth. According to the United Nations, more than one billion people already lack access to fresh drinking water. If current trends persist, by 2025 the demand for fresh water is expected to rise by 56% more than the amount of water that is currently available.

This article is part 3 of a four-part series.

Ricardo C. Amaral is a writer and economist. He can be reached at brazilamaral@yahoo.com.


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