How does a country run out of water?

In today's Finshots we talk about how Lebanon may soon run out of water.

Yes! Water.

The Story

Lebanon is a water-scarce country. As one report in the World Bank notes— “Groundwater is exploited at unsustainable levels, and the coastal aquifers suffer from seawater intrusion.” There’s simply not a lot of water going around.

And the infrastructure supporting the treatment and distribution of water can only be described as outdated at best. 50–80% of the water is wasted (due to leakage) and potable water is considered a luxury in many parts of the country. So much so that water is frequently rationed. In Beirut and Mount Lebanon, citizens only receive 13 hours of water supply during the rainy season and up to 3 hours during the dry season.

And these are statistics from almost a decade ago.

Since then, corrupt politicians and inefficient bureaucrats have only made matters worse. Water is now a privatized commodity and most people who do get access to safe potable water rely on private wells and tankers. As one article notes —

It is estimated that less than half of Lebanese are connected to official water supplies, which often do not work properly or at all. As a result, nearly one in three Lebanese buys alternative sources of drinking water, usually from mobile water trucks or in bottles, and those who cannot afford to purchase their water fall through the cracks, relying on poor-quality water for their households.

But here’s where things really get depressing.

Lebanon is also in the middle of an economic crisis. After the country emerged from a brutal civil war back in the ’90s, the government propped up the economy by banking on tourism, foreign aid, and remittances — courtesy of Lebanese citizens working abroad. But as the Arab states descended into chaos a decade ago, foreign aid slowly began to disappear. And when the global financial crisis did some more damage back in 2008, other sources of foreign income also began to vanish.

Now bear in mind foreign exchange reserves are the lifeblood of many economies. Importers only trust the dollar and you can’t convince them to ship you anything unless you pay them with green-backs. But since dollar assets were in short supply, the government began struggling to pay for food, fuel, and other basic necessities.

A catastrophe was looming large and something had to be done.

So the Lebanese central bank took charge and decided to commit to an egregious program, labelled by some as a “nationally regulated Ponzi scheme.” They promised to offer lucrative interest rates on dollar deposits and enticed people to part with their dollar assets.

In the meantime, the government kept telling citizens that they could get a dollar for about 1500 Lebanese pounds. That this was the exchange rate at which you could freely swap the local currency in any bank across the country. The only problem — It was a false promise. The country’s currency was worthless. In the absence of locally produced goods and services, the Lebanese pound held little value.

And soon enough, this detail became apparent.

Inflation soared and everybody began ditching the local currency. The only thing worth anything was the dollar assets and people weren’t going to give it to banks anymore. So with foreign reserves dwindling once again, the government was on the verge of bankruptcy.

The end was near.

But just when you thought things couldn’t possibly get any worse, a huge explosion ripped through the Lebanese capital killing more than 200 people and decimating large parts of the area. This was from 2020 and I am sure you remember that horrific video where you see a shockwave ripping through everything on its path.

Horrible scenes.

So yeah, that happened, and it finally brings us to the present day.

The Lebanese state is battered. It is bruised. And it has no money. They can’t even power the pumps to remove water from its source. They don’t have funds to pay the maintenance workers or to buy chlorine to treat the water. They have nothing left and if somebody doesn’t bail out the country, it’s game over. The public water distribution system will break down and nearly 7 million people may have to scamper for water.

What a tragic set of events, isn't it?

Until next time...

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