The Real Cost of Things

Here  in the United Arab Emirates, oil is plentiful and cheap. Water is scarce. Here are some UAE water facts.

Desalination costs the UAE about $18 million each day.

The per-capita water use in Abu Dhabi, the wealthiest of the emirates, is as high as 550 liters a day, or around four times that of an average European citizen.

50% of all the world’s desalination takes place in the Gulf.

The Fujairah desalination plant in Abu Dhabi has a freshwater generation capacity of 492 million liters a day, making it the biggest single producer on the planet.

Agriculture here uses groundwater, but 80% of the groundwater here is saline, often eight times as salty as ocean water. Pumping the salt water back into the gulf after desalination has increased the saline content of seawater here by 50% in the last thirty years. Groundwater levels are dropping quickly.

In general, most water consumed here has to be desalinated at great expense. It takes one gallon of oil to produce fifty gallons of drinking water. And it takes 700 gallons of water to produce one gallon of cow’s milk. So it takes 140 gallons of oil to produce one gallon of milk. (These figures may not be accurate. They may be high, they may be low. But you get the idea.) Milk here isn’t especially expensive, which means its true cost is hidden in subsidies for foods, but especially for water.)¬†Actually, UAE residents receive water free of charge. Only foreigners are charged for it.

In the United States, we enjoy cheaper gasoline than in most places in the world (Arabia and Venezuela excepted,) but this is the case only because of indirect and hidden subsidies. If the cost of our frequent military interventions in the Middle-East were factored in, a gallon of gasoline would cost the end users many times what they now pay.

A government which buys votes through unsustainable spending is not doing anybody a favor, in the long run. The proper management of economies allows market forces to determine price, but unless the playing field is level, the game is rigged.

In the States, the people who crow about the wisdom of the marketplace are usually those on the receiving end of tax incentives or other artificial intrusions into the true cost of things. In the shakiest democracies, for example Latin American “Democracies,” the President for Life justifies his vote-buying subsidies by saying it’s a natural expression of his love for the common man, the little guy. Then, when he finally retires to a Villa in Miami, after having looted the state treasury for all he can, the real costs he left behind are reckoned and the economy lies in tatters.

In the Middle East, all decisions are made by fiat. There’s only one guy or family in charge, and if you criticize him openly, you risk imprisonment. They can afford to spend many gallons of oil for a gallon of milk, because at least for now they’re sitting on a subterranean petroleum ocean. Someday that will no longer be the case.