Long before it understood the value of oil, the desert kingdom of Saudi Arabia knew the worth of water.
But the leading oil exporter's water challenges are growing as energy-intensive desalination erodes oil revenues while peak water looms more ominously than peak oil, the theory that supplies are at or near their limit, with nowhere to go but down.
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Water use in the desert kingdom is already almost double the per capita global average and increasing at an ever faster rate with the rapid expansion of Saudi Arabia's population and industrial development.
Riyadh in 2008 abandoned what was in retrospect clearly a flawed plan to achieve self-sufficiency in wheat and aims to be 100 percent reliant on imports by 2016.
"The decision to import is to preserve water," said Saudi Deputy
Minister of Agriculture for Research and Development Abdullah al-Obaid.
"It's not a matter of cost. The government buys wheat at prices higher
than in the local market."
Critics complain the policies are still not joined up, however, and say
the risk is that Saudi farmers will turn to even thirstier cash crops.
"Many farmers who used to grow wheat start growing fodder (animal feed)
instead that generates quick cash. But unfortunately fodder's use of
water is four times more than for wheat," said Abdulaziz Rabih al-Harbi,
professor at the King Saud University and a member of the agriculture
committee at the Riyadh Chamber of Commerce and Industry.
"Other farmers grow palms instead of wheat and this also consumes huge
amounts of water and may not achieve the desired goal of efficient water
As one of the kingdom's primary sources of development and employment,
agriculture is a sensitive political issue and so scaling back is not an
But with such a small amount of the country suitable for cultivation, a
comprehensive solution is required, industry officials say.
A water quota for the agriculture sector and a push to reduce wheat
consumption, which is rising by 5 percent a year, are possible
solutions, said Hasan al-Shehri, chairman of the Cooperative Association
of Wheat in the Kingdom and general manager at the Saudi Agricultural
"We need coordination between the ministries of agriculture and water," said al-Shehri.
The lack of water also poses a major challenge to the kingdom's hopes to
develop its mining sector to diversify its economy given the
water-intensive nature of the industry.
"Gold is there but we don't have water," Mohammed Hany al-Dabbagh, vice
president of precious metals and exploration at state-controlled
minerals firm Saudi Arabian Mining Co said.
"Water is as precious as gold."
Saudi Minister of Water and Power Abdullah al-Hussayen said in May the
nation's demand for water is rising by more than 7 percent each year and
that more than 500 billion riyals ($133 billion) of investment in the
water and power sector will be required over the next decade.
Consultancy Booz and Company estimates Saudi water use is around 950
cubic meters per capita each year, compared with a world average of 500
Agriculture is the single biggest user, absorbing 85-90 percent of the
kingdom's supplies, according to Saudi's deputy minister of agriculture
for research and development. Of that, almost 80-85 percent came from
With average annual rainfall around 100 mm (4 inches), Saudi's ancient underground aquifers are its lifeblood.
But just as peak oil theorists believe the world's conventional oil
supplies are at or near their peak, proponents of the peak water view
have said the resource has been irreversibly drained.
Booz and Company has said some of the region's aquifers, also referred
to as "fossil water" as they contain rain that fell thousands of years
ago, have become too salty to drink.
Injecting water into oilfields has also had an impact, although sea water is now generally used to maintain reservoir pressure.
HIGH COST, HIGH ENERGY
The alternative to desalination, the energy-intensive process of
converting salt water to fresh water, robs Saudi Arabia of its other
precious resource, oil, by eating up both fuel and fuel revenues.
Saudi Arabia's Saline Water Conversion Corp (SWCC) produces 3.36 million
cubic meters of desalinated water per day, a daily cost of 8.6 million
riyals based on the SWCC's 2009 figures, the latest available, when
the cost of producing one cubic meter of desalinated water was 2.57
riyals. Transporting it added an extra 1.12 riyals per cubic meter.
Analysts and industry leaders say the authorities need to pass on more
of the costs to the end-user to curb demand and reduce waste, an
argument that holds true for power and fuel but which requires very
careful handling in the case of water.
"It is necessary to raise water tariffs," Isao Takekoh, a director at
the US-based International Desalination Association, said. "But it
should be conducted very carefully and step-by-step because water is,
needless to say, indispensable for human life."
By burning up energy, desalination reduces the amount of crude available
for lucrative export markets. Takekoh estimated energy represented
between 45 and 55 percent of unit production costs.
The International Energy Agency and analysts at HSBC bank estimated
Saudi Arabia's rate of direct crude burning more than doubled from 2008
to 2010 because of a rapid rise in power demand and a shortage of
natural gas. How much of that went to desalination is not known but
experts believe it is significant.
Industry officials and experts say the fact that Saudi Arabia is
adjusting its agriculture policies shows it is aware of the challenges
but like the rest of the world, it needs to move fast.
"Saudi Arabia realized they should start thinking about using their
water in a more efficient way," said Peter Brabeck, chairman of Nestle,
one of the world's largest food companies and a leading campaigner to
avert a world water crisis.
"They understand water has more value than oil in the long term," he said.