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Tuesday, August 5

Shoot Yourself in the Foot model of globalized manufacturing and agribusiness: Water Crisis Gordian Knot, Part 14

Looking back I suppose we should have asked, "Are economists farmers? Are they water engineers? Can they read a map?" But there's nothing like hindsight.  Anyhow the idea was to offshore manufacturing to the less advantaged countries, like China, so they could pull themselves up by the bootstraps of factory production. 

It was supposed to be a win-win situation. The advantaged countries would save on labor and factory costs and the disadvantaged would bring in high-value foreign currency from charging the advantaged countries to manufacture in their countries.

The idea took off like a rocket; soon everybody involved in making things for sale wanted his own factory operation in China. But by the time American companies that sold very incidental stuff like baseball caps were getting into offshoring, China had also set up many factories for exporting its own manufactured products.

Then one day somebody in China's government or maybe at the World Bank got out a pad and #2 pencil and a map of China and began doing arithmetic. 

By the time the totting was done it was evident that at the current rate of factory expansion soon there would be no arable land left in China. This because the land was being covered up by factories and the exponential growth of cities to house factory workers. There wouldn't be any water left, either.

That Ain't Just Hay, That's Also Water

Then some genius said, "No worries.  What China is losing in food and forage can be simply imported from the United States." 

Which is how tons of alfalfa for China's cows started getting shipped from California to Beijing. It was actually cheaper for alfalfa farmers in California's Imperial Valley to ship the hay to China than across a couple counties in California. This on account of container ships docking at California are laden with stuff made in China but because of the huge trade imbalance go home almost empty, meaning hay farmers could ship their produce to China for a song. 
   
This new business model didn't make California's cattle ranchers and dairy farmers happy because they now had to stand in line behind foreigners to buy alfalfa. But raising hay for Chinese cows was so much more profitable than raising it for American ones. 
 
There was a catch, however.

The water being used to grow the alfalfa for shipping to China didn't actually belong to California's Imperial Valley. It belonged to the Colorado River; the valley farmers only had rights to use a certain amount of the water. 

Trouble is, agricorporations in six other U.S. states also had rights to the same river water, not to mention entire cities in those states -- cities like Phoenix and Los Angeles.

In fact, so much Colorado River water had been going to vitally important things like keeping umpteen Phoenix golf courses green and Los Angeles swimming pools filled that one day while rafting on the Colorado somebody said, "Is it my imagination, or is my canoe paddle scraping sand?"

So then everybody got out the maps and pads and #2 pencils and tried to figure how long before the Colorado, which is called America's Nile, would turn into a wading pond. 

The irony is that alfalfa is a drought resistant plant. It can go months without being watered. How many months?  I can't recall whether the National Geographic article I learned about all this stuff from (Exporting the Colorado River to Asia, Through Hay; January 23, 2014)  mentioned how many. But the point is that treaties for the Colorado's water use were written many decades ago, and the way they're worded means farmers can lose their rights to the water if they don't use it. 

This has meant that Imperial Valley alfalfa grown for shipment to China and other countries in China's predicament got watered, whether it needed it or not.

This wasted zillions of "acre-feet" of Colorado River water, which is how water engineers measure water. Frankly the river can't support that much waste anymore, not when golf courses, swimming pools, drinking water, waste treatment facilities, etc., for large cities in desert climes are piled on top of agriculture's huge drain on the river.
 
In fact, a big push was launched last week to save what's left of the Colorado and it involves spending $11 million dollars -- although if the states that joined the U.S. Bureau of Reclamation in throwing money into the pot don't resolve the water treaties issue, good intentions and millions of dollars could amount to nothing
more than cosmetic fixes.   

Agra-Foolishness

Now we arrive at the pièce de résistance.  At least the Chinese weren't so foolish as to attempt to copy the American model of globalized agricultural exports.  Nations like Mexico and Pakistan were.  This, despite the fact that those nations started out water stressed, then pile on outdated water infrastructures.

For Pakistan, this means endless squabbles with India and Afghanistan about water rights and also pumping the nation's farmbelt wells like crazy. That last means killer floods during heavy rains because the farmland has sunk so much due to the pumping, and because the efficient flood management system the British Raj set in place were allowed to fall into disrepair.  It also means the flood waters carry off huge amounts of topsoil.

In Mexico, it means pumping aquifers so low to export agricultural produce to the USA under NAFTA that a "historic" drought in 2012 wiped out thousands of small farms and cattle and dairy ranches. And drove into the stratosphere the cost of drilling wells because all the easy water was drilled and used up; now the drilling has to be done deep.

Mexico and Pakistan are just two examples but I think those are enough to convey the looniest aspect of the Shoot Yourself in the Foot ("SYF") model. 

As to why the USA, an agricultural exporting giant, would need to import produce, there are probably several reasons but here are three:  

(1) poor water management in U.S. agricultural states such as Arizona and California;
(2) high consumer demand for out of season produce and "exotic" produce like mangos; and
(3) the fact that people in Washington's foreign policy establishment aren't farmers, either, and neither are they water engineers. 

With regard to (3), the practice of the U.S. importing produce it doesn't actually need from countries that can ill afford to play the mega agri-export game often works out to a Washington tactic to keep completely insane government administrations in other countries happy.  (Okay, you buy weapons from us, we'll buy your mangos and avocados.)

Flinging Around Virtual Water and Yet More on Alfalfa

The SYF model also includes the practice of throwing away imported water, or what the water scientists call "virtual water" -- products and produce in which water has been used in the manufacturing and growing processes.  As to how this happens, because produce sold in grocery stores in the USA (and other Western countries) that's past its "fresh" date, or even looks wilted to the consumer, gets fed to garbage trucks and garbage dumps. Where it rots.

The only living creatures that benefit from eating the tossed produce are rodents, birds, and the occasional gourmand bear. (Dear, see if you can find some arugula in the dumpster.)
    
This doesn't include the acre-feet that water stressed countries use up in washing produce meant for export and otherwise processing it.  And don't forget that all the crates made to pack the produce for export also represent virtual water.
 
Nor does it include the methods by which the less advantaged countries irrigate crops they export (and use for their own consumption).  I think it's the National Geographic article on saving the Colorado River that mentions Egypt's farmers are experimenting with drip tape and burying irrigation pipes in the ground. This to prevent Nile River water used for irrigation from evaporating in the desert sun. Glad they're finally getting around to conserving Nile water in ways they should have adopted decades ago.

Now if only more California farmers would also use drip tape. Guy T. Saperstein, a past president of the Sierra Club, who from a diatribe he penned in May clearly hates Chinese cows, American cows, California Democrats, alfalfa, meat eaters, and milk drinkers in that order, fumed that California's farmers snub drip tape.

As to what he has against the Democrats:
Agriculture uses 93% of California's water and almost half of that is devoted to growing alfalfa for shipment to the Far East, mainly China, to feed their cows. California is, in effect, shipping almost half its precious water to China.

And none of this would have been possible without the help of Democrats. The extravagant waste of California water by California agriculture is the result of cheap water, water subsidized by state and federal water projects begun more than 50 years ago.  

When water is cheap and the state is willing to continue building water infrastructure like viaducts and tunnels there is little incentive for California agribusiness to do anything but continue to feed California politicians.

Yes, California agribusiness supports Republicans too, but the Democrats get most of the big agriculture money because Democrats have delivered the water for Big Ag. Jerry Brown's father, Pat, delivered the California Water Project in 1959, and Jerry Brown supported the Peripheral Canal 30 years ago and supports the Twin Tunnels project today.
I think Saperstein might get an argument on the 93 percent statistic he quotes although this doesn't necessarily mean he's wrong, and in any case most of the water does indeed go to agriculture.  And he neglected to mention that water used in the Imperial Valley for alfalfa growing isn't exactly California's.

Also, according to a June 8 Los Angeles Times report on the alfalfa issue (U.S. farmers making hay with alfalfa exports to China),  Japan is a big buyer of California's alfalfa and obviously has been for a long time. That would make sense, given the country never had much arable land to begin with and that much of it went to building factories for the Japanese Manufacturing Miracle in the last century.

And I'm sure Saperstein would have been interested to learn from the LA Times report that alfalfa production has actually declined in California:
China has now pushed past Japan as Asia's biggest buyer of U.S. alfalfa and is second only to United Arab Emirates as the globe's top importer, according to data from the U.S. Department of Agriculture. Sales of alfalfa shipped abroad amounted to $586 million last year, part of the nation's record $144 billion in agricultural exports.

The thriving trade had largely gone unnoticed, not unlike more established export oddities to China such as scrap paper and chicken feet. But when three years of drought upended farms in the [American] West, alfalfa became one of the most sought-after commodities in the bovine business.

Cattle ranchers with withered pastures were now in the market for the pricey forage, alongside dairy farmers. At the same time, production has been steadily declining in California, replaced by more profitable crops such as almonds and wine grapes. The Golden State produced 6 million tons of alfalfa hay last year, down from a high of 8 million in 2002, according to the USDA.
[...]
Agricultural exports to China soared to $25.8 billion last year from $5 billion a decade earlier. China is the biggest buyer of U.S. soybeans, which is used to feed livestock and make cooking oil. U.S. dairy exports to China — fueled in part by U.S. alfalfa — grew to $706 million last year, up from $137 million in 2009, according to the U.S. Dairy Export Council in Virginia.
But Jay Saperstein has seen with his own eyes, or talked with people who've seen firsthand, the huge waste of water in California agriculture:
Drive down Interstate 5 in the middle of summer in 100+ degree weather and you will see huge sprinklers spraying water in the middle of the day and fields being flooded in the process, losing huge amounts of water to evaporation. Very few crops and very little acreage is watered with drip irrigation in California compared to other arid regions of the world.
Shoot Yourself In the Foot Global Business Logic

Now to put it all together. As it applies to the USA, SYF globalized manufacturing and agribusiness has two interlocked parts:

One part is that the U.S. exports huge amounts of its water in the form of agricultural produce from water-stressed U.S. states to less advantaged foreign countries.  In return, the USA gets cheaply manufactured products.

The other part is a reverse of the above process.  All those cheaply manufactured products equate to water shipped to the USA (in virtual form) from less advantaged countries, most of them water-stressed, in return for American dollars.

Nature's Logic

That's how the model works.  However, neither the developing countries nor the U.S. agricultural states that export large amounts of produce to Asia can afford to export that much virtual water in the present era, which in great measure manifests the 4-Ds:

Drought
Desiccation
Deforestation
Desertification

These are compounded by Nature having hissy fits in drier regions; e.g., massive attacks from bark beetles that desiccate trees and massive attacks from toxic fungi that decimate certain food crops.

So there is a compounding effect with the 4Ds: the more drought, the more beetles attack trees, leading to more desiccation, leading to more deforestation, leading to more desertification, repeat the cycle, which leads to the cycle accelerating.

Then there are the 5-Ws:

Water misuse in huge amounts
Water waste in huge amounts
Water evaporation in huge amounts
(from aboveground irrigation systems and man-made reservoirs)
Water having to serve megapopulations
(human and livestock and pets)
Water turned brackish
(when marshlands guarding estuaries against the salty seas are decimated)

This era is also meeting with steadily rising global temperatures that work out to increasingly sparse rainfall in the drier regions and increasingly heavy rains in the wetter ones. The latter leads to increasingly big floods that wipe out crops and wash away huge amounts of topsoil.

Add to that the galloping expansion of cities, which sucks up huge amounts of water just in waste-processing facilities alone.  According to a recent report from the United Nations, since 2010 more than half of humanity now lives in cities, with the number growing by almost 60 million every year.  The expansion of cities from the human influx means a lot of paved-over arable land.  And many of the cities house manufacturing hubs that follow the SYF model of globalized manufacturing and agriculture trade.

Add to that decades of dam-building, which helped prop up the SYF model and its agriculture-exporting variation in water-stressed countries.

None of the above touches on what's called the carbon footprint, which many climate scientists believe is playing a part in rising global temperatures.  Greenhouse gasses and all that.  But a large carbon footprint, which is made by huge amounts of electricity and diesel fuel/ gasoline use, intersects with large-scale water usage in mega- manufacturing and agricultural operations. As with dam-building, electricity and cheap carbon-based fuel help players in the SYF game fling around their water resources more than common sense would dictate.

Now it's time to get out the #2 pencil and maps and do some figuring:

Megapopulations+SYF model+4Ds+5Ws = waterwise we're screwed.

Nature's Bottom Line v. Global Business Bottom Line

The SYF business model has always been unsustainable in water-stressed regions both in the USA and other
countries.  So while manufacturing outsourcing helped lift many millions of people in 'developing' countries out of abject poverty and greatly reduced the cost of manufacturing in the wealthier countries, it also opened a Pandora's Box.

However, the model didn't cause the water crisis; it just accelerated it and exacerbated its secondary effects.  Without or without globalized manufacturing processes and mega-sized agricultural trade, the converging of megapopulations on limited water resources is the driver of water's bottom line.

The bottom line also limits how much recycling and conserving of water can be done in this era to offset the impact of megapopulations on water resources.

So while some urbanized populations can, through inspired water management policies and draconian enforcement, save themselves from dying of hunger and thirst, the big picture is grim. How grim, at present?  I'll take up the question in the next post.

Note: I am grateful to National Geographic's illuminating reports on saving the Colorado River and the alfalfa issue. With regard to the latter, I couldn't have seen the SYF model without Ben Jervey's report, Exporting the Colorado River to Asia, Through Hay. While it doesn't make the ramifications of the model explicit, it revealed to my eyes what was hidden in plain sight about the mutual self-destructiveness of manufacturing outsourcing on an unrestrained scale.   

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