Scarce `blue gold'

Published : Feb 13, 2004 00:00 IST

At the New Delhi session of the World Water Forum, experts and activists analyse the key components of the world's water problem, including the commodification of water by multinational companies.

BEFORE heading to the World Social Forum (WSF) in Mumbai, hundreds of `water warriors' from across the globe descended on New Delhi for the People's World Water Forum (PWWF). The Forum was created in response to the 3rd World Water Forum in Kyoto, Japan, last March, which failed to address the needs of developing countries and the billions of people across the world without access to basic water supply. The final Ministerial Declaration in Kyoto stated: "Water has to be treated primarily as an economic good, not only as a social good." A major source of controversy was the Camdessus Report 2003, which recommended that the solution to water financing in poorer nations was privatisation.

Water privatisation is a relatively new phenomenon. Scarcity in recent years has turned water from an ignored and abundant resource into an expensive commodity. "Water is now being increasingly referred to as the `blue gold' in analogy with crude oil, which is termed `black gold'," said the organisers of the PWWF. Nowhere is this more evident than in the booming bottled water industry, which charges premiums on water many hundred times over its original value.

London-based Thames Water was among the first companies to get into public water supplies in the 1980s, and has since progressed from national to international player. To date 5 per cent of global water is in the hands of a few, mainly European, firms. The largest are French multinational companies (MNCs) Vivendi Universal and Suez, the company that is building the Sonia Vihar water treatment plant in Delhi.

The concern of water activists is that commodification of water by multinationals will lead to decreased local control of water supplies and denial of access to those least able to pay.

While global water corporations are obvious targets of attack, activists at the PWWF were more concerned with the position being taken by the World Bank. Up until the 1980s, the World Bank had recommended public funding of water services in developing countries. But in the past decade its attention has turned towards privatisation. In May 2003, it announced: "The Bank Group will continue its model of encouraging private sector participation as a means to increase the efficiency and performance of infrastructure service providers; financing inefficient public utilities without a clear reform agenda will remain part of the past." This strategy has prompted the World Bank and International Monetary Fund (IMF) to apply privatisation conditions to government loans, effectively forcing the hands of poorer nations.

In their report `Financing and Provision of Basic Infrastructure', Tim Kessler and Nancy Alexander explain the difficulties faced by political leaders. "When local governments face increasing social demands without receiving corresponding increases in resources or capacity, they have strong incentives to unload these political liabilities onto the private sector," says the report.

Rational though this aim may be, experience has shown that private firms tend not to dip their fingers into the messy and risky business of water distribution infrastructure. It is rare for water companies to be in control of an entire water network. Usually privatisation is in the form of Private Sector Participation (PSP) or Public Private Partnership (PPP). "They want to get into the big projects of dams - it's easier to manage than water distribution," said Maude Barlow from the Council of Canadians at the PWWF. "The intensive, time-consuming nature of project financing leads to large economies of scale," according to the Camdessus Report. "Although there may be many small water projects, banks will typically want to see projects exceeding $50 million to $100 million as a financed cost."

It seems unlikely that altruism by the private sector will stretch to installing costly distribution networks and a cheap water supply to the urban poor, who live mainly in unauthorised areas with no water infrastructure. "Private sector companies have organised to make profit, not to fulfil socially responsible objectives such as achieving universal access to water and sanitation," states the Public Citizen, a research organisation in the United States.

In some cases where water networks have passed into private hands, there have also been substantial price rises. When Bechtel raised water prices in Cochabamba, Bolivia, to approximately a fifth of a family's income, there was a violent uprising that left six people dead.

Tariffs represent a bitter point of contention not only between activists and MNCs but also among activists themselves. In the conference rooms of the PWWF, opinion rested with the camp that believed water should be free for all, funded by taxes. In Delhi, however, where water is so cheap as to be effectively free, this has only led to gross wastage in areas where there is plentiful supply. Delegates from Kathmandu in Nepal and Penang in Malaysia complained of exactly the same problem. "The water shortage in Kathmandu is because water is almost free," complained Prakash Amatya, a Nepalese non-governmental organisation (NGO) worker.

PUBLIC water funding through direct cost recovery has been proven unsuccessful in almost all cases. In 1995 South African municipalities began cutting off water supply to entire communities which could not pay their water bills. When a cholera epidemic broke out in KwaZulu in 2000, free minimum water allowances were hastily implemented. It was suggested by delegates at the PWWF that this graded system, with a minimum water requirement being supplied for free and steep charges on extra use, could constitute an acceptable compromise. In cities like Delhi, however, where the rate of tariff collection falls below 70 per cent and the level of pilferage is high, the issue of tariffs cannot be addressed until there are network improvements. It is this `chicken and egg' situation that has left governments in the developing world short of public water funds. There was a popular suggestion by Ricardo Petrella from the International Committee of the Global Water Contract, which campaigns against privatisation, that governments could divert a proportion of their defence budgets to water resources. Ideal though it may be, the negligible political feasibility of this proposal reflected the tendency of the PWWF to get bogged down with unworkable solutions.

There is evidence that water corporations are already backing out of the developing world because of tough civil pressure, said David Boyes from Public Service International. But even if campaigners achieve the formidable task of convincing governments to keep water in public hands, they face the legal obstacle of General Agreements on Trade in Services (GATS) under the World Trade Organisation, which includes water as a service. As a signatory, India is obliged to open its water market to foreign firms. A large band of water warriors have therefore concentrated their efforts on removing the legal foundations for water privatisation. The international and national human rights framework, which repeatedly cites the importance of water for sanitation, is their most powerful weapon. The right to water is laid out in Articles 11 and 12 of the International Covenant on Economic, Social and Cultural Rights. In the 29th session of the United Nations (U.N) Committee on Economic, Social and Cultural Rights in 2002, it was decided that "water should be treated as a social and cultural good, and not primarily as an economic good".

Nevertheless, the importance of individual responsibility for water formed a significant part of the PWWF. "We need to empower communities and individuals to be responsible stewards of water," said activist Michael Blazewich. Representatives from the American Water Stewards Network recognised the importance of education in water conservation, especially from a young age.

Citing every human rights declaration and eulogising over the sanctity of water, however, will not deny the fact that financing is a key factor of the water supply problem. Whether privatisation is the solution is a moot point, but history bears its own evidence. The U.N. report, `The Challenge of Slums' recognised that "the main single cause of increases in poverty and inequality during the 1980s and 1990s was the retreat of the state".

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