09/08/2010 07:36 am ET Updated May 25, 2011

Water: Canada's Most Valuable Resource

Canadians will never go thirsty. With over one million lakes, including part ownership of the Great Lakes, and massive ice fields, Canada is home to nearly nine per cent of the world's supply of fresh water. But with a population of less than one per cent of the world's total, Canada has a lot of room for water exports. In time, those exports might be more valuable than the 170 billion barrels of oil that are trapped in the country's tar sands.

The notion of exporting water is still a taboo subject in Canadian policy circles; the country took great pains to keep water out of the North American Free Trade Agreement. But, like most things, acceptance may be a matter of price. And the price of water is rising steadily, making Canada's freshwater bounty more valuable every day.

As with tar sands oil, the natural market for Canadian water is the United States. While places like Buffalo and Cleveland have access to just as much water as any place in Canada, that's not where folks have been moving to lately. Increasingly, states like California and Florida are turning to desalination to meet their freshwater needs. At around 65 cents per cubic meter, the going rate of desalinated water in the US provides a very attractive pricing point for potential Canadian water exports.

At those prices, one study calculated that the province of Quebec, home to roughly one third of Canada's renewable sources of fresh water, could reap something in the neighborhood of a $6.5 billion annual tariff by selling as little as 10 per cent of its one trillion cubic meters of fresh water every year. That's a multiple of the dividend Hydro-Québec pays the province from selling hydro-electric power. And those kinds of revenues could even convince Canadians that it's even better to be an aqua-power than a petro-power. It certainly leaves a much smaller carbon trail.

Of course, pricing water, let alone exporting it, remains anathema to the majority of Canadians. But, at the same time, the enormous water usage involved in the country's largest energy project, the Alberta tar sands, has made it painfully clear that a free-water policy is a recipe for waste and environmental degradation.

Would 250,000-plus-barrels-a-day producers like Suncor and Syncrude be so eager to pollute four barrels of fresh water in the production a single barrel of oil if they had to pay the same price that many Americans already pay for desalinated water? My guess is that if tar sand producers had to absorb those kinds of water costs, it wouldn't take long before shareholders got management focused on finding ways to use a whole lot less water.

Americans are increasingly paying their northern neighbor to fill their gas tanks. In time, they may pay them even more to fill their taps.