Water Security in the Promised Land

The slimy green tinge to the Sea of Galilee, mainly caused by algal blooms from agricultural runoff, is just one of the more obvious manifestations of the water problems facing Israel. It's also one of many damning acknowledgments made in a government study last week.

The water report of the Israeli National Investigation Committee (NIC), commissioned by the parliament in 2008, might make for interesting reading in the wider region. Israel's lessons in combating water problems should prove useful in other arid locations, including the rest of the Middle East and the western United States.

Israel is one of the driest countries on Earth, with an average of about 276 cubic meters of water per person per year in the past decade. Compare this to nearly 100,000 in Canada, 7,400 in the continental U.S., about 3,500 in France, and 2,500 in the U.K. More arid nations like Tunisia come with a lowly 482. But few nations are worse off than Israel--neighboring Jordan is one of the few, with an average 179 cubic meters of water per person per year. The Jordan river basin, which includes the Sea of Galilee and the Dead Sea that border Israel, is one of the most water-scarce river basins on Earth.

The rest of the world can certainly learn from Israel's technology and its imperative of tackling water shortages.

About 80% of Israel's water is in the north of the country, with much of the south being the Negev desert. In the southeast, bordering Egypt, the Gaza strip has an average of only 54 cubic meters of water per person. About 40% of the fresh water in Israel comes from the Sea of Galilee, while another 40% is split evenly between the eastern coast aquifer and the Palestinian-dominated West Bank mountain aquifer. Much of the remainder comes from technological processes such as cloud seeding to increase rainfall, and from costly desalination plants.

Water demand in Israel and the Palestinian territories was already outstripping sustainable supply before the current drought, which is now entering its fifth year. Like nearly every country in the world, the farm lobby is strong in Israel, and the NIC report criticized past agricultural ministers and water commissioners for allocating too much fresh water to farming, even as the drought worsened, and for the politicized nature of these decisions. For example, the NIC report recommended that the State Hydrological Service should be removed from the State Water Authority's control, to ensure impartiality in reporting and forecasting water measurement.

Israel's unique territorial and security hurdles do justify a degree of political control over water, but that does not excuse farmers paying artificially low prices for water, which inevitably means waste. Also, Israel's huge exports of citrus fruits--a moderate-value, but thirsty crop--effectively ships valuable water out of the country for a modest return to a politically favored group.

Mind you, Israel's agricultural favoritism is less egregious than in other countries'. Take the U.S., where water that is almost free to farmers is squandered on even more low-value and water-intensive crops, such as alfalfa. Also, Israeli farmers generally deploy the least wasteful irrigation techniques, such as micro-drip systems, which conserve as much water as possible. On the drive from Tel Aviv, heading northeast to Tiberias and then west to Haifa, I saw only one irrigation system which appeared to be even slightly wasteful.

The NIC report applauds the government's efforts last year to increase water prices by 40%, but sensibly suggests that price increases should have been gradually introduced to allow more efficient changes in behavior. Unfortunately the report, like the government, follows a socialist pricing model that keeps prices artificially low, prescribing that prices should cover transport, environmental, and other costs, rather than be based on demand. The chairman of NIC noted that pricing decisions should remain in the hands of professionals, rather than politicians who were too influenced by populist pressures--of course "professionals" means engineers and accountants, not the water users themselves.

Israelis are skilled both in technology and governance, but trying to resolve water allocation issues by engineering and politics is doomed to failure: Price determinants and economic incentives must change and move further into the hands of private market players for water to truly be used efficiently. Engineers can minimize water loss, or augment supply through the vast schemes currently in place, or spend the billions of dollars on future desalination plants and water reclamation projects that the Knesset agreed earlier this month. But none of that will resolve future problems as long as water prices bear so little connection to demand. In fact, the scarcer water gets, the more politicians will take control of allocations, and base pricing on political considerations and not efficiency.

If Israel's authorities care to look further afield--to Chile and Australia, for instance--they will find models for successful and popular water allocation: Markets in water rights, where government-guaranteed quotas can be exchanged among individual holders, traded between farmers, municipalities, mining firms and other businesses. In these markets, prices change dynamically according to availability and need and, best of all, water prices are set by the very individuals who own and use it.

The rest of the world can certainly learn from Israel's technology and its imperative of tackling water shortages. Every household in the country has learned the government's slogan: "Don't Waste a Drop." But what's easily said is rarely done without the right market incentives. As pollution increases in the region, potable water will become even more precious. The only way for Israelis and Palestinians alike to secure their future water supplies are for the final tab on the resource to reflect that.

Roger Bate is the Legatum Fellow in Global Prosperity at AEI.

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