Canada At Risk of Both Freshwater and Brain Drain as Thirst for Tech Grows
Stuart Benson
Originally Published in The Hill Times | August 2024
Due to extensive permafrost melt, many Arctic lakes are breached and drained, as pictured in Southwestern Baffin Island. Larger swaths of Canada are regularly dealing with more severe drought conditions, putting water security as a top priority, say stakeholders.
An American threat assessment identified global water security and climate-related disasters like drought as an increasing risk to its national security interests, and Canada needs to catch up, says AquaAction's Soula Chronopoulos
When it comes to protecting the country’s freshwater, Canada seems to be “asleep at the wheel,” and without a greater focus on water tech and matching policies and regulations with the United States to better protect Canada’s “blue gold,” the future could “hit us like a ton of bricks,” according to the head of a water tech accelerator.
“The reality is that we’re running out of water, and we use it flagrantly,” said Soula Chronopoulos, president of AquaAction, a registered charity supporting entrepreneurs addressing water scarcity and pollution issues. “It’s a crisis in the making.”
A 2023 report by the Global Commission on the Economics of Water predicted that global freshwater demand would exceed supply by 40 per cent by 2030. Another report by Bank of America Global Research also indicated that the worldwide freshwater supply could run dry at the current consumption rate by 2040.
Chronopoulos said Canada will need a whole-of-government approach that recognizes water security not only as an environmental and economic issue, but also a national security matter.
When they return from the summer recess, members of the House Environment and Sustainable Development Committee will get to work on drafting a report based on their study of the federal
government’s role in protecting Canada’s freshwater resources. The study began last October, and heard from nearly 180 witnesses.
Chronopoulos testified before the committee on Feb. 8, calling for Canada to treat the water-tech sector as a “core component” of Canada’s freshwater protection strategy. However, due to a lack of focus on the sector from Innovation, Science, and Economic Development Canada’s (ISED) clean tech funding or other specific federal envelopes, “Canada’s water innovators are being lured south and abroad by more enticing jurisdictions, along with their startups, [intellectual property], and jobs.”
While the U.S. and other countries offer significant investments to lure Canadian entrepreneurs, the federal funding has “dried up right at the moment we need it most,” Chronopoulos told The Hill Times.
“They threw the baby out with the bathwater,” she said, referring to the dismantling of Sustainable Development Technology Canada’s $1-billion green fund last October following a whistleblower complaint related to the distribution of COVID-19 emergency relief payments in 2020 and 2021. The money has since been transferred to the National Research Council of Canada (NRC).
Chronopoulos suggests the federal government establish targeted, performance-based grant programs to be distributed by organizations like AquaAction to compensate for that loss of funding, and compete with the wooing of international competitors. She said the federal government should also expand measures like the Green Municipal Fund to include water tech pilot projects and the Clean Manufacturing Tax Credit to include investment in the sector specifically.
“Right now, Canada should be leading in water management, regulation and protection, but we’re not,” Chronopoulos said. “It’s time to treat Canada’s freshwater protection as not just an economic and environmental issue, but it has to be treated as a national security issue just like the U.S. does.”
Canadians are increasingly being “wooed to the U.S.,” she said. U.S. Ambassador to Canada David Cohen recently accompanied AquaAction and eight other Canadian water tech companies to the U.S. Department of Commerce’s SelectUSA Investment Summit on June 22-23.
AquaAction president Soula Chronopoulos says that while the U.S. has recognized water scarcity as a national security threat, Canada is ‘asleep at the wheel’ and unprepared for the low-water economy. Photograph courtesy of Soula Chronopoulos
In the works since November 2023, the mission included meetings with several state economic development organizations during the summit, and invitation-only events in the evening at the Canadian Embassy and Quebec government office in Washington, D.C. “Basically, every department wants to meet to woo us down to the U.S.,” Chronopoulos said.
Chronopoulos said 20 Canadian entrepreneurs and water tech companies will again be courted by American and international players offering global expansion opportunities at the International Water Association’s World Water Congress and Exhibition in Toronto during the second week of August.
The outreach by foreign interests has increased significantly this year after the U.S. Office of the Director of National Intelligence released its 2024 Annual Threat Assessment, which recognized water scarcity as a national security threat.
The report cited the intersection between the physical effects of climate change and geopolitical tensions and vulnerabilities related to water, food, and other resource scarcity as an increasing risk to U.S. national security interests, and the need for humanitarian and financial assistance to low-income countries hit by climate-related disasters.
Chronopoulos said she doesn’t expect any significant cross-border conflicts over water between the U.S. and Canada any time soon, but there may have already been a minor “shot across the bow,” with a 100-year, $1-billion deal the city of Chicago signed to sell Lake Michigan water to Joliet, Ill., in early May.
While Lake Michigan is the only Great Lake entirely within American territory, Chronopoulos said it would only be a matter of time before other American cities on the coast of binational Great Lakes begin eyeing those waters, particularly as demands increase in southern states like California, Texas, and Arizona.
Chronopoulos also noted that almost every major hydro producer in Canada reported financial losses in the 2023-24 fiscal year, citing low water levels from droughts and reduced snowmelt, leading to decreased energy production. In February of this year, the U.S. sent more electricity to Canada than it received, and in March, those exports reached their highest levels since 2010.
Chronopoulos said that despite welcoming the federal government’s net-zero investments, Canada’s focus on moving to a low-emissions economy is neglecting to sufficiently prepare the country for success in a low-water economy.
“Canada needs to go beyond the emissions and carbon tunnel syndrome to see the forest instead of the trees,” Chronopoulos said. “We must adapt to water scarcity and treat it as the security threat it poses before it’s too late.”
Liberal MP Sophie Chatel (Pontiac, Que.), a member of the House Environment Committee, told The Hill Times the freshwater study report would be tabled early this fall, and agreed that Canada would need a wider-ranging strategy to address all of the impacts of water scarcity and its downstream effects.
“Everything relates to water,” Chatel said, noting that water security is simultaneously a food security issue, pointing to the increasing demand for water in Western Canada and the southwestern U.S.
According to the most recent federal drought assessment for May 2024, 45 per cent of the country was classified as either abnormally dry or in moderate to exceptional drought conditions, including 59 per cent of Canada’s agricultural land.
Image courtesy of Canadian Drought Monitor, published by Agriculture and Agri-Food Canada
Although the creation of the Canada Water Agency (CWA) in 2023 was “a big win and a great step forward for Canada,” Chronopoulos said she hopes the committee will recommend providing the agency with greater tools and increased interdepartmental co-operation between ISED and Environment and Climate Change Canada.
During her committee appearance, she suggested that the NRC and CWA increase collaboration on research and innovation in the sector, as well as that the NRC develop and upgrade facilities specifically for water technology.
Chronopoulos explained that the CWA currently needs more resources to fulfill its mandate, which instead falls under the remit of ISED, including programs like the Clean Growth Hub and the Supercluster Initiative.
“It’s crucial to align the CWA’s science and data strategy on fresh water with ISED’s tech programs,” Chronopoulos told MPs, adding that it would be useful if the associated ministers “issued that direction to their officials.”
In an emailed response to The Hill Times’ request for comment, the office of Innovation Minister François-Philippe Champagne (Saint-Maurice–Champlain, Que.) thanked the Environment Committee for its work, and said that it looked forward to reviewing its recommendations.
“ISED continues to work collaboratively to establish the Canada Water Agency, and will continue to work across government departments to protect Canada’s freshwater resources,” wrote Audrey Champoux, Champagne’s director of communications.
Environment and Climate Change Minister Steven Guilbeault (Laurier–Sainte-Marie, Que.) told The Hill Times that the “essence” of the CWA is to foster better interdepartmental co-operation, as well as with other levels of government and First Nations, but agreed Canada would need to “start looking at water in a different way than we’ve had for many decades.”
“Even in a very water-rich nation like ours, we are already seeing this becoming an issue across the country,” Guilbeault said before heading into caucus on June 19. “This is something we’ll need to pay much closer attention to.”