In Part 1 we just looked at some current data about supply and consumption of water in Saudi Arabia on a broad scale. In part II we are going to get a little more granular on the data and tie it into the broader picture.
THE COST OF DESALINATION
Desalinated water provides just 7% of the national supply currently, but when it comes to urban water, desalination is supplying 61%, and at massive cost. In 2013, desalination in Saudi Arabia required 1.5 million barrels of oil per day, or approximately 547 million barrels of oil per year. At the current rate of 56$ per barrel, this presents an opportunity cost of 30.6 billion USD.
The projections from the water ministry are that domestic consumption of water & electricity could consume 50% of the country’s oil & gas production by 2030 if there are no changes made in national water policy.
The cost of desalination, however, is not just financial. In the UAE, salinity of the persian gulf has increased from 35,000 ppm to as high as 56,000 ppm. As salinity increases in the gulf, it may balance the pH of the acidifying sea, but the sea’s corals and fisheries will be “highly stressed,” which is a sanitized way of saying decimated (link is to pdf). Furthermore, the technical difficulty of removing so much salt will make desalination either technically impossible, (a possibility) or simply much more expensive (guaranteed). That situation is exacerbated by the fact that both the persian gulf and the red sea have very small inlets; both are largely self contained, with water that changes over from the ocean once every 8-9 years. In other words, even with advances in desalination technology, it’s still going to become more expensive to desalinate a liter of water as time goes on.
CONSUMPTION & POPULATION TRENDS
Saudi Arabia’s population is growing at around 2%, but its consumption of water and electricity have been tracking around double that amount.
Meanwhile, water consumption per household is increasing at a rate of 7.5% per year, and demand for electricity is increasing at 8% per year. If both trends continue, demand for water and power per capita will double in a decade, and the number of capitas will increase from 35 million to 45 million.
Over that same decade, conventional agricultures in Saudi Arabia may face a major collapse. With some 100,000 million cubic meters (mcm) of water left in the fossil aquifers (based on National Geographic’s estimate), and an annual withdrawal from those aquifers of 14,500 mcm per year for irrigation (taken from the Water Ministry’s 2025 National Water Strategy), time is short on this front.
The pain associated with these collapses will be real, as farming communities abandon their land to the desert. The removal of water subsidies already had some farming communities in Hail turning to other employment in 2012. As subsidies for wheat end, and eventually alfalfa, whole agricultural communities will have to look elsewhere. So while it may seem to someone from outside that growing wheat or alfalfa in the desert is neither environmentally nor financially sound, there are now 40+ years of history in some of these places with wheat as the economic base.
Putting It All Together
Saudi Arabia faces a gordian knot entangling its economy, energy, water, food, & population growth. Its rentier economy continues to depend almost singlehandedly on oil and oil derivatives, which provide 90% of the country’s revenues. But in the coming decades, it faces enormous decisions dealing with water, agriculture, energy, economy, and increasing costs:
- The fossil water will run out eventually, which will lead to a collapse of all KSA’s conventional agricultures, leading to greater food imports (which are currently 80%) and a fragile dependence on global food prices.
- Demand for electricity and urban water are set to double over the next 10 years.
- In that time the population will probably increase by some 10 million people.
These are some of the reasons why Citigroup estimated that Saudi Arabia could become a net oil importer by 2030. Whether or not Saudi Arabia can weather these changes quickly enough and untangle its gordian knot will depend entirely on what actions it takes until then. But it will require nothing less than massive changes in pricing structures, subsidies, gains in efficiency, and the creation of new economies to replace one based almost entirely on oil.
On an ending note, I want to emphasize that I do not have an apocalyptic viewpoint of KSA’s future. It is rarely the case that when trends point to disaster that people in charge don’t take action to avert those disasters, and so trends that seem alarming now rarely play out the way they might appear to. Thus, the purpose of this post is not to spread fear; it is to lay the groundwork for understanding the current situation, so that the critical nature of the solutions’ designs are apparent.