Defining the Geopolitics of a Thirsty WorldSM
In Northeastern Brazil, Drought Runs The Economy Dry

Via WorldCrunch, a report on the impact that Brazil’s drought has had upon some of its region’s economies:

For months now, water taps in some of northeastern Brazil’s cities have been running dry. Not during certain hours of the day. Or certain days of the week. But all the time. Morning and night. Day after day, with the exception of just two days per month.

And it’s not just residents being squeezed by the severe water shortage. Because the crisis is affecting a major industrial area, a whole textile network that feeds the biggest production and outlet center in Latin America could disappear.

Two cities in the Caruaru region, located in the center of the Pernambuco state, are vital for Brazil’s north and northeastern textile industry: Santa Cruz do Capibaribe, where the Moda Center mall and its 15,000 points of sale can attract up to 100,000 people a day in June; and Toritama, the country’s second leading source of jeans. For both these cities, the raw material they most depend on, water, is desperately lacking.

There are solutions to this shortage. But they’re limited. In Riacho das Almas, a city surrounded by the countryside, wells up to 50 meters deep were dug to bring the salty groundwater to the surface. The water is then desalinated and distributed to the people via a system of tokens, which can be redeemed in what look like the old telephone booths Brazilians call “orelhão” (big ear). Each family can use two tokens per day, with each token worth 20 liters of water.

The city has 16 such stations across its rural area. Each of those cost 60,000 reais ($20,000), except for one which works solely on solar energy and cost nearly twice as much.

“It’s a very restrictive situation,” says Roberto Tavares, president of Compesa, a water distribution company owned by the Pernambuco state. “People in urban areas aren’t used to this. When you come into a street and see people lining up with buckets, it’s a difficult thing, both for the people on the receiving end and the ones who distribute,” he says.

Running on empty

Rainfall in the Caruaru region has fallen short of normal levels for four years. With another El Niño planned for 2015, the drought is expected to continue in northeastern Brazil.

The lack of water comes on top of falling sales in the textile industry, which is crucial for the region. Some wholesalers have already been reporting revenue losses of 30% compared to last year, leading to job cuts and shop closures.

On the roads around the industrial hubs of Santa Cruz do Capibaribe (100,000 inhabitants) and Toritama (41,000), the hundreds of Toyota transporters carrying shoppers to the outlet centers have been replaced by water tank trucks, driving ever further to bring the vital fluid. The biggest water reservoirs of the region have mostly dried up, with the ones in Poço Fundo and Jucazinho operating with only 5% of their total capacity.

In some cases, the distance these trucks have to travel has forced prices up by as much as 60%. Transporting 11,000 liters of non-drinkable water can cost up to 160 reais ($50). And with the Poço Fundo reservoir almost entirely dry, those trucks represent a lifeline.

The situation is even more desperate in Toritama, a city that lives essentially off its jeans factories. In Mamute, the biggest laundry in the area, as many as 8 billion liters of water were used every month for jeans only — about 40 liters per pair. The company has had to cut its consumption in half and a great part of that water is recycled. It cut work shifts by two thirds and reduced its workforce, with more layoffs expected in the near future.

“We had a water crisis. Now we have an economic crisis on top of that,” says Edilson Tavares, the owner of Mamute.

On the same street, a company called Rone Jeans faces the same ordeal. “We’re seriously considering laying people off now,” says José Ronaldo Silva, who owns the company and currently employs 75 people. “Even without water and reduced production, our stocks are jam-packed with clothes that quickly go out of fashion.”

In Santa Cruz do Capibaribe, home to Moda Center and its 120,000 square meters of clothing shops, people talk of “collapsing” sales due to the state of the economy in general, but also because of the water deficit. Before the crisis the region was boasting Chinese-style growth numbers. Now it’s following the rest of the country into recession. In the whole of Pernambuco state, 44 cities are in “water collapse” and another 26 in a “pre-collapse” situation.

Nivaldo dos Santos Costa, one of the shopkeepers at Moda Center, says that his sales and monthly turnover of about 8,000 reais ($2,500) have dropped by 50% since the end of last year. His neighbor Lucinete Sobral says that production costs, in the meantime, have increased due to soaring inflation, but that she wasn’t able to raise their prices in compensation. Both voted for Dilma Rousseff in last year’s presidential election, and both now regret that choice.

This entry was posted on Sunday, July 12th, 2015 at 1:21 pm and is filed under Brazil.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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