The Big Swap: Energy and Water Bartering

The 1960’s Indus Water Treaty was the first intervention of a global organization – the World Bank – that focused not only on keeping peace at the border between Pakistan and India but also pursued regional development(United Nations, 1962, p.140; Akhter, 2015, p.68). The World Bank’s proposal – the dam and its subsidiaries built along the basin – left some wariness on the outcome’s success. It split the use of water along the border and limited the type of economic activity of the neighbouring countries sharing the basin (Akhter, 2015, p.65). Nowadays, the Punjab and the North-Western regions are rich in energy – provided by the dam’s hydroelectric power – but is still an arid area where regular water consumption comes in considerably from groundwater pumped through solar panels. Strangely enough, the North-Eastern regions of India face the opposite case with the Ganga River Basin overflowing.

Fig 1. The Indus Rivers and associated infrastructure in 2012 (Source: Akhter, 2015, p.69; Mustafa 2013)

The valley of Ica, located on the desert coast of Peru, south of Lima, has been a significant agricultural and energy producer due to its year-round sunny weather and strong desert winds. The soil nutrients and weather conditions provide crop flexibility that can adjust according to the available water supply (Swedwatch, 2018). Recently however, as a result of climate change, it has been inevitable for farmers – both big and small – to suffer a significant reduction in the water supply of the region’s main rivers. Its neighbour in the Andes, Huancavelica, an impoverished mountainous region with little access and benefits from national development, enjoys enough water flow from the River Pampas (Gestion, 2019). This river runs across the Ica region and into the Pacific Ocean without benefitting the valleys since it does not connect to any main irrigating river where most agricultural activity concentrates. After years of dispute escalated to national authorities, the central government approved a project for constructing a dam and detour of the River Pampas (Gestion, 2019).

Fig 2. Valley in the middle of the desert in Ica, Peru (Swedwatch, 2018)

The Guanacaste region in Costa Rica is part of what is known as the “Corredor Seco” or “dry pathway” that runs from Mexico to Panama along the Pacific Coast. This part of Central America was coined with that name since there is no rainfall for nearly six months, sometimes even more, when natural phenomena like El Niño occur. Climate change has enhanced the once harsh conditions affecting the region’s economic activity, which once relied on agriculture and has now been replaced with the tourist industry and services since the area overlooks beautiful tropical beaches (Morataya-Montenegro and Bautista-Solís 2020; Kuzdas et al. 2014). Although the Costa Rican authorities have, at the national and regional levels,created local networks that try to respond to the smallest farmers’ continuous complaints, they have not succeeded in creating resilience and prosperity (Babcock et al. 2016; Morataya-Montenegro and Bautista-Solís 2020). In contrast, the central and western regions of Costa Rica, overlooking the Atlantic Ocean and the Caribbean Sea, enjoy heavy rainfall and dense vegetation. In these areas, most renewable energy investments occur and make Costa Rica a pioneering country investing in this energy source in Latin America (ICE, 2020).

Fig 3: Geographic Distribution of environmental disputes in Guanacaste, Costa Rica 1997-2006 (Ramirez, 2007)

The problems:

Cases like India, Peru, and Costa Rica, replicate in several other places around the world where they enjoy these same comparative advantages at the national, regional, and local levels. These three cases help us identify the shared characteristics present in other basins that may be affected by climate change and the relationship to the water-energy-food cycle. It can be argued that splitting the benefits of water supply enhances a nation’s uneven development, be it for energy or irrigation, and creates conflict on who and how that section of the population benefits the most from it. Put into context, the farmer’s income and wealth will hardly match that of an engineer. Although this does not mean that a farmer’s wage should necessarily rise, still, the engineer as much as the farmer should have access to the same basic needs of water, electricity, and food to ensure its livelihood. In addition, these cases demonstrate that the local authorities have very little room to take on networking and trade initiatives with neighbouring regions, becoming merely intermediaries between the national government and the communities to whom they respond.

The opportunities:

From public libraries to swapping clothes, bartering has become a popular transaction at the individual and local level. Even if it aims to cover the increasing demand for new items, it has proven useful at limiting the overall use of resources and reducing waste, aligning with a “greener” way of living. However, bartering does not just tackle climate change, but the concept of money itself and its universal capacity to assign value to products and services. Given the current situation, where the economic recession has pushed a large sector of the global population into poverty and governments have increased their borrowing and spending to keep nations afloat, bartering at the regional and local levels may pose a new context solution.  

As mentioned before, by identifying and pinpointing these comparative advantages, where areas are rich in energy but poor in water, neighbouring regions could barter upon the excess or specific quota of the available resources. The benefits of these negotiations are three-fold: they empower the local and regional governments by giving them room to create stronger economic ties, they cover the specific needs and lacks of neighbouring regions within a nation, and relieve the central governments from additional spending, since it will only require their supervision. 

This barter scaling-up may present limitations such as agreeing on the valuation – how much m3/kj or ml/w – and the time and conditions under which it can be set up and run. Nevertheless, since most of these conflicts could arise within the same legal framework -they are after all within the same nation – this type of trade may be a useful emergency coping mechanism and is particularly relevant to accelerate recovery during the covid-19 era.

by Daniella Gotuzzo Barrios

Daniella holds a bachelor’s degree in Business Management with a minor in Finance, and is a master’s student in Emerging Economies and International Development. She is keen on exploring the relations within and between the developed and developing world, particularly those with the Asian and Latin American regions. 


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United Nations Treaties

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