From Dragon to Janus: exploring tax policy for the water-energy nexus
by Deborah Jarvie, 26 March 2018

Society often curses the two ‘unpleasant certainties’ in life, ‘death and taxes’. We rarely praise ‘life and taxes’, whereby taxes are recognized as instruments capable of supporting our existence rather than acting as mere burdens. This article presents a proposal from a substantial Canadian study that tax law holds the potential to play a major role in protecting the world’s finite fresh water supplies, without which, life on earth would not exist. Beyond the notion of ‘no water-no life’, many of today’s energy sources could not be produced without fresh water, and without energy, many of our social structures as they exist today would cease to exist.

Accessible fresh water (potable water) represents a miniscule portion of all of the water on earth. If the quantity and quality of this water deteriorate to a level that is insufficient for life sustaining purposes, the natural process of purification through the earth’s connected lakes, rivers, streams, and underground aquifer systems can take centuries or millennia to recharge. As we face ever-increasing demands on both water and energy production, these limits pose a real cause for concern.

The number of cubic meters of fresh water available per person globally has dropped over the past decades, while freshwater demands by industry for energy production purposes have increased. Industrial water withdrawals may be returned and recycled through the hydrologic cycle; however, in this process a portion of the water becomes ‘consumed water’, which means that it is no longer fit or available to serve as potable water. In Canada, over 9% of all water withdrawals are consumed each year, and the International Energy Agency (IEA) predicts that the water consumed through energy production globally will increase by 60% to 2040.

There is a conflict between the two viewpoints of what might be coined a two-headed dragon—‘water for life’ or ‘water for energy’.

Read the full article at Austaxpolicy blog.