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Water privatization issues

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Your Fundamental Right to Water (Sandy)

From the United Nations to the World Water Council to Mexican President Vicente Fox Quesada to international NGOs and innumerable water advocates, the universal consensus is that water is both a human right and a public good that all governments must guarantee (WWF 2006, 3). In 2002, the UN Committee on Economic Social and Cultural Rights (UNESCR) General Comments on the Right to Water stated: “the human right to water entitles everyone to sufficient, affordable, physically accessible, safe and acceptable water for personal and domestic uses.” General Comment No 15, Committee on Economic, Cultural and Social Rights, Geneva, 11–29 November 2002.

The General Comment listed these key components of water rights:

  • Sufficient and adequate (absolute min of 20 liters/day)
  • Safe
  • Physically accessible (in or nearby the household)
  • Affordable (does not affect the ability to buy other essential goods)

http://www.foodandwaterwatch.org/water/rights.pdf

But what does this mean in terms of creating sound water policy and effective water management? Governments must do more than just provide water: they must also prevent others from interfering with its citizens’ rights to safe water, whether it is from pollution, someone cutting off access to a river, or overcharging for water usage.

Water experts agree that water should be available to all; however, they disagree as to the best means of getting water to the people. Certain sectors feel that water is a public commodity, and as such, should be solely maintained by public and municipal entities. Others feel that the private sector can offer the funding and efficiency not found in many public-run waterworks. Are there benefits to privatizing water management? Is there a difference between the right to use water as opposed to the right to own water? If a community does choose to privatize, what precautions can it take to prevent from being taken advantage of by avaricious corporations? What can citizens do to ensure that they choose a system that will deliver clean, safe water to the greatest number at the best cost?

Our purpose here is to explore different kinds of water ownership and management, public and private, and the pitfalls of both. Privatizing Water

“Privatization is the act of reducing the role of government or increasing the role of the private institutions of society in satisfying people’s needs; it means relying more on the private sector and less on government” (ES Savas, 2). Water may be a fundamental right, but it is expensive. At least providing water to all who need it is an expensive proposition. The need for money to invest in water infrastructure is the biggest factor behind the surge in privatization.

According to the World Bank, the private sector has invested about $700 billion in infrastructure in developing countries over the past decade (World Bank 2004, 43); about 5% of this went into water and sanitation and another 5% into hydropower. However, these investments were heavily concentrated into the relatively low-risk economies in East Asia and Latin America (World Bank 2004, 44).


Definitions: Types of Privatization

PSP): Private Sector Participation The range of PSP is extremely broad and may include:

  • Full privatization: private company purchases water assets and runs operation as a business on a permanent basis
  • Concessions: private contractor manages the whole utility and invests in its maintenance and expansion. The company assumes the commercial risks while municipality retains ownership. These contracts may run 30-40 years or more.
  • Leases: revenue is determined by the tariff. Contractor collects tariffs, pays a lease fee and keeps the difference.
  • Management and service contracts: private company has the responsibility for operation and maintenance; the public sector retains responsibility for investment and expansion (taking all the risks). Municipality pays a fee to the company; contracts typically run 5-10 years
  • Build-own transfer contract: a private company constructs, for example, a sewage treatment plant, and then manages it. At the end of the contract, the assets will either transfer over to the municipality or remain with the company.
  • Consulting services: a short-term agreement for specific tasks, such as installing meters, collecting bills, or repairing plumbing.
  • Public-private partnerships: private company works together as a partner with the public sector and/or NGOs
  • Consortium: several companies and interested parties join together to run a utility; this way they do not compete with one another
  • Small-scale water entrepreneurs: an individual with a cart, or a tanker providing water on a small local level Budds & McGranahan, 2003

Privatization has 4 major objectives:

  • To achieve higher production efficiency
  • To strengthen the role of the private sector
  • To improve the public sector’s financial position
  • To free resources and allocate them to other important sectors, such as social policy

(Prasad 2006 2006, 672)


Who are the Privateers?

A small “handful of companies dominate the global water market” (Bouguerra 2006, 108). Approximately five percent of world’s water utilities, mainly in urban areas, are run by a “tiny number of private companies” (Sjölander-Holland 2005, 17) [see Appendix I for a list of Private Multinational Water Corporations]. “These few multinationals manage to restrict competition, both at the international and local levels. In France, Suez and Vivendi ‘control 85% of the market’.” These two companies alone have a presence in “over 100 countries” (Prasad 2006, 681). Three of the largest private water companies are Suez and Vivendi Environnement, from France, and British-based Thames Water, owned by Germany's RWE AG. Other major players are Saur of France, and United Utilities of England working with US’s Bechtel. These six companies serve 300 million people in 56 countries. Switzerland’s Pictet Bank predicts that by 2015, 75% of European and 65% of US water utilities will be privatized.

These companies claim that they are not really privatizing water, but rather “managing utilities under in partnership with governments” (Marsden 2006). Jean-Luc Trancart, the Director of Suez, a private water company, would prefer if the “public water company owns the assets and the private sector operates the network. We are selling organization and knowledge, but we should not be spending capital” (Sjölander-Holland 2005, 123). Vivendi's President Olivier Barbaroux claims that "we do not sell water. You take the water and you give it back. Exactly the same amount. What we are doing is bringing the water to your home, making it clean for you to use, and then taking it back and putting it back in nature clean. And that is the service we are bringing" (Marsden 2006).

According to the Center for Public Integrity, privatization has been “concentrated in poorer countries where the World Bank has used its financial leverage to force governments to privatize their water utilities in exchange for loans” (Marsden 2003). An investigation by the CPI shows that these companies often work closely with the World Bank, “lobbying governments and international trade and standards organizations for changes in legislation and trade agreements to force the privatization of public waterworks” (Marsden 2003). Out of 276 loans for water projects between 1990 and 2002, 80 “called directly for privatization.” The IFC (International Finance Corporation) offers a “toolkit” on how to privatize. According to the IMF, financial stability “requires privatization and cutbacks in the public sector” (Sjölander-Holland 2005, 90-93).

However, privatization does not just mean large multinational corporations. More and more, small-scale and informal operators are taking a larger role in private water services, as are civic organizations providing water and sanitation services, “on a small scale and to low-income settlements. These operators are very different types of organizations from large water companies and, typically, play very different roles and operate on very different principles (e.g. on a not-for-profit basis)” (Budds & McGranahan, 2003).


== Reasons for public sector failures: ==

What is the cause of this trend towards privatizing? Why are communities willing to give up their public water works to foreign investors? Many blame the poor performance of the public water works: “The public utility in this country is not performing and corruption is said to be part of their activities, and we have the poor buying water at higher prices, so what do we do?” African water delivery NGO (Urquhart and Moore 2004, 12)

There are a number of reasons offered for the failure of the public sector to carry out its mission to deliver water to its citizens:

  • Lack of funding
  • Inefficiency
  • Condition of the infrastructure
  • Corruption
  • Availability of quality water/capacity
  • Inability of government to pay
  • Inability of consumers to pay
  • Lack of political will: governments don’t make water a priority

One of the more compelling arguments for privatizing is the inability or unwillingness of weak and corrupt governments to deliver water to their citizens. But there may be a chicken and egg syndrome to the weakened public sector. It becomes a vicious cycle: lending institutions like the World Bank force privatization which leads to underinvestment in public utilities, resulting in poorer performance, which in turn “stiffens the resolve” of privatization advocates, leading to the “abdication of state responsibility” (Sjölander-Holland 2005, 248-250). Furthermore, privatization does not always help countries with corrupt governments: in fact, privatization schemes are “most likely to be inefficient in precisely those countries where the bureaucracy is corrupt” (Prasad 2006 686). Many public utility stakeholders felt that if given the same policy reforms, the public sector could perform as efficiently as a private company (Urquhart and Moore 2004, 15).

Local governments often lack investment capital. Local water managers also lack the lobbyists and the money to influence political leaders the way huge corporations can: municipalities are “starved by an international leadership possessed with supporting private companies. Decisions are made on a global level, where those who are affected, the municipal water utilities, do not exert any influence over what happens….They have never been invited.” (Sjölander-Holland 2005, 154). This results in “unequal power relations between influential and well-resourced international water companies on the one hand, and fledgling and/or weak local democratic structures on the other” (Urquhart and Moore 2004, 12).

Private companies often promise to deliver a better service at a lower price. An “ICIJ investigation found, however, that governments often drive up water prices just prior to privatization to give water companies room to immediately reduce prices and win popular approval. Once a company has won the contract and lowered prices, it often quickly attempts to renegotiate for higher rates and reduced performance targets. In Buenos Aires, for instance, Suez-controlled Aguas Argentinas almost immediately put pressure on the government to renegotiate the concession contract for more favorable terms (Marsden 2003).

Others feel that: The private sector has not kept its promises nor complied with contracts...tariffs have been raised despite investment schedules not being met, services not being improved, corners being cut in favor of profits, and a reliance on expatriates who do not understand the local context or infrastructure. Donors, government agencies, regulators, and NGOs noted that, in theory, the private sector is not inherently better than the public sector (Urquhart and Moore 2004, 15).

Rather than uncritically accepting privatization programs, Jan-Erik Gustafsson, Associate Professor at the Department of Land and Water Resources at the Royal Institute of Technology in Stockholm wonders why development agencies don’t “help to build up national competence in the water sector” instead, insisting that overemphasis on privatizing undermines the “negotiating powers of poor countries.”

There are still those who feel strongly that because “the supply of a water is a natural monopoly, it should be managed by the public sector” (Sjölander-Holland 2005, 243), and believe, as Bouguerra (2006) does, that “only a public service has the three qualities of universality, equal access and unbroken service.” Can private corporations, who must ultimately answer to stockholders, guarantee this public good?

The World Bank is one of the strongest advocates for privatization: about 40% of all the projects it finances involve some form of private sector participation (World Bank 2004, 19). They feel that “private international financing is particularly important for small countries that do not have the capacity to raise funds from domestic public or private sources,” and insist that the private sector “has stimulated the development of more transparent, impartial regulation and greater disclosure of information: in short, greater accountability to consumers and taxpayers” (World Bank 2004 19). But even the IMF and World Band recognize that PSP [private sector participation] is not always superior to the public sector. Others argue “that if the World Bank applied the same energy and money to improving local utilities, [and] allow[ed] them to maintain control of their water systems, the local utility would actually perform better than private companies” (Marsden 2003).

The debate between the privatization advocates and the public sector supporters can become polarizing. Passionate accusations fly from both sides. But the truth is, both private and public sectors have failed to “reform, improve efficiency and financial sustainability, curtail political patronage, or expand access to or quality of services (Urquart & Moore 2004, 4).

While privatization may lead to “profitability of firms, productivity increase and efficiency,” most studies find that prices increase following privatization (Prasad 2006 675). Is increased efficiency coming at the expense of those least able to afford the service? Pedro Arrojo Agudo, President of the New Culture of Water Foundation, stressed that “access to drinking water is not so much a financial problem, but rather a political and democratic one…part of the problem has been prioritizing profit over access to water as a human right” (WWF 2006, 4).


== Profit Motive vs. Public Good ==

The 1st World Water Forum, held in Marrakesh, Morocco, in March 1997, “cautioned against treating water as a marketable good, and prioritized water and sanitation; shared water management; ecosystem conservation; gender equality; and efficient use of water “(WWF Bulletin 2006, 1) Larbi Bouguerra lists six reasons why the free market actually “makes the water problem worse:”

  • the primacy of profitability
  • the role of frenetic competition
  • the global race to build financial and industrial giants, which tends to poison economic and geopolitical struggles between countries for the control of natural resources
  • the role of absolute territorial sovereignty
  • contempt for the community interest
  • contempt for the principle of fair and reasonable use of the resource—as in the dispute between Turkey and Syria and Iraq

(Bouguerra 2006, 120)

Private water companies, like all for-profit ventures, by their nature focus on markets that will earn them the most profits. This may result in focusing on areas with the greatest potential as opposed to areas that need water service most. For example, private companies “rarely have an interest in supplying rural areas of developing countries with drinking water” insists Patrick Point, claiming that “foreign capital is only interested in large markets with very limited risk” (Bouguerra 2006, 99).

The countries with the greatest needs do not receive the most aid: “lower-middle-income countries received over half of the total ODA [Official Development Assistance] for water and sanitation between 1990 and 2003” (Prasad 2006, 676). Additionally, “bankers and multinational water companies are looking for large-scale projects, with contract values of US $100 million upwards, in middle- to higher-income cities with at least 1 million inhabitants (for comparison, the usual water project size is between US$ 10–50 million)… Smaller urban centers are unlikely to be attractive unless they are high-income areas, or if they can be bundled with other locations or simultaneously served with a number of utility services” (Budds & McGranahan 2003).

Always more cost effective?

The most common justification for privatizing public works is the greater efficiency that many people believe private enterprises deliver. Public bureaucracies, so the argument goes, are bloated and inefficient and corrupt. But are PSPs really that much more cost effective? Not all private operators make their profits from being efficient: for example, they can justify tariff increases because of their inefficiencies, especially if the regulator is not vigilant or well informed.

Sweden supplies its water “at a third of the price and at half the operating costs, and deliver a return on capital three times higher, than the levels achieved by Britain’s privatized companies,” and Puerto Rico, Trinidad, and Budapest suffered “serious deficiencies on the part of Vivendi, Severn Trent and Suez-Lyonnaise….in maintenance, repair, administration, operation finances” (Bouguerra 2006, 107). One problem of foreign multinationals is the loss of the skills and expertise of a locally publicly owned utility where the “competence remains within a municipality” rather than relying on an outside international corporation (Sjölander-Holland 2005, 227).

Critics of privatization also complain that the larger companies create unfair advantages for themselves, engaging in practices such as paying the World Bank “to be included in a list of prequalified bidders or to restrict their number” or get a “low assessment of public property…or to be favoured in the selection process” (Bouguerra 2006, 109).

However, even advocates of public control of water admit that a certain amount of private sector is useful: “if it were not for the small-scale independent providers (SSIPs), poor people would not have access to clean water.... The presence of small-scale independent providers (SSIPs) reflects the inadequacies of existing water supply and sanitation networks.” However, advocates do not feel that even SSIPs offer long term solutions: “some stakeholders perceive SSIPs to be part of the problem, others perceive them to be the only available solution in the short term” (Urquhart and Moore, 10).

Ultimately, do we really want to trust the delivery of such a fundamental need as water to a sector that by its nature picks and chooses its customers based on their profitability? And finally, there is the question of scale. Since water is a universal need, it needs to be managed by an entity that is able and willing to deliver it to all its citizens. As David Boys of PSI insists, “the private model lacks the capacity to reach the goal of half of 1.2 billion people by 2015….even if they get a lot of money from the international financial institutions. We will be forced to use the public sector, whether we like it or not” (Sjölander-Holland 2005, 152). And regardless of who the provider is, ultimately it is the responsibility of the government, through laws and regulations, to ensure that its citizens are not denied access to clean, safe water.

Whatever form of water delivery and management a community chooses, there are things it can and should do to ensure that they hold water companies (private or public) responsible to its citizens. Not all private companies are ruthless. As one private business subcontractor from Brazil protested, “Look, the businessman is not the enemy of the state! We share the same goals of having a healthy, safe society” (Urquhart and Moore 2004, 9). By the same token, not all municipal water utilities are inefficient. How does a community decide whether and when it is best to privatize their water supply? Most studies call for some level of partnership between the various sectors. Even the World Bank, with its push to privatization, still devotes attention and resources to public utilities. They realize that public utilities still are the primary providers of water to the vast majority of people in developing countries.

== Social Acceptance ==

“Social acceptance” is critical for the success of PSP” (Urquart & Moore 2004, 7). But it would be difficult for even the most well-meaning foreign corporation to fully understand all the political, social and environmental nuances of a community. Even the World Bank admits that some of their “greatest and most publicized failures have involved the financing of dams that were planned and built without sufficient attention to social and environmental consequences” (World Bank 2004, 8). Any municipality considering bringing in an outside company needs to ask questions such as whether the company respects local social and cultural values, or whether any trade agreements they are entering into undermine their local sovereignty. The World Bank is focusing now on what it calls “participatory management” approach, “incorporating the views of stakeholders in project design and establishing social impact and poverty monitoring.” Additionally, 54% of World Bank water projects now also address gender issues (World Bank 2006, 64-65).

As one NGO points out, the “domestic private sector was more responsive to the needs of the poor, and more flexible in its institutional arrangements and payment collection methods (Urquhart & Moore 2004, 11).

Evaluating Contracts: a Checklist

Large corporations use their financial leverage and power to force governments to sign contracts that are largely one-sided, benefiting only the companies, and leaving the risks to the community or the public sector. Often, the “state is not strong enough to resist the demands of the water giants” (Bouguerra 2006, 99). Before a community enters into a contract agreement, they should look at it carefully and ask the following questions:

  • Who bears the brunt of the cost: the corporation or the community? Is the private company investing its own capital, or is it relying on public monies? The water industry often does not invest much of its own capital, instead relying on the World Bank, the IMF, development banks and foreign aid agencies (Sjölander-Holland 2005, 83). “Management contracts often cover nothing more than mere distribution and the recovery of costs, leaving the government to foot the bill, or incur the debt, for repairs and new infrastructure” (Bouguerra 2006, 99). Is the loan agreement going to put the community in deeper debt? Does it guarantee the private company a certain level of profits? If the contract goes to the lowest bidder, there may be a risk that the contractor deliberately underestimated the actual cost of the service, requiring renegotiation and ultimately higher costs than what was originally agreed upon.
  • Do profits stay in the community, and get reinvested, or do they leave the country to pay foreign stockholders? Profits earned by the water fees should be used for expansion of services and repair of infrastructure rather than to pay shareholders. There should be a plan in place to ensure access to the poor: how do the companies manage to get water to people who cannot pay?
  • What conditions are placed on any loans and grants, particularly on loans from international agencies? Do the conditions undermine effectiveness, efficiency, and accountability? (Urquhart & Moore 2004, 10). Do the conditions undermine the authority of the local governing agencies? Do the conditions place unfair burden or hardship on the government or the citizens and water users? Does the lending institution or the contractor insist on dealing only in foreign currency (such as US dollars), which can raise the costs? Be careful to “avoid maximizing investments in foreign currency that favor foreign companies, and focus more on investments in local currency for domestic firms” (Urquhart & Moore 2004, 8).
  • Who shoulders the risks involved? The corporation or the community? Who bears the burden if a project fails? In order to avoid risks, private companies may “cherry-pick” more affluent or less risky customers. “It may rely on subsidies, soft loans, and a renegotiation of the [contract] in order to provide services to the poor….Thus it is public funds that support the private sector in providing services to the poor.” (Prasad 2006 688) Will the community be forced to guarantee the company a certain amount of profit? Will it be forced to compensate the company for any losses it may incur? Does the corporation guarantee that services will be provided? Some feel that these public-private partnerships mean “the public takes the risks and the private sector takes the profits,” and are moving the “public sector away from its social responsibilities” (Urquhart & Moore 2004, 17).
  • What is the length of the contract? 10, 15, even 40 year contracts are normal—does this lock a community into an agreement that may be untenable down the road? What does it take to get out of a contract? Is a company permitted to pull out of a contract if it turns out not to be profitable? In Tucumán, Argentina, Aguas del Aconquija pulled out because it would be difficult to ensure that “people could afford to pay.” If it becomes “too costly, who is left to provide the water?” (Sjölander-Holland 2005, 40). Private corporations “do not hesitate to sue the public authorities for any breach of contract, or even when they simply deem their profits to be lower than expected” (Bouguerra 2006, 99).
  • Does the contract limit citizens in their access to water? Does the system encourage equitable delivery? Do the rich communities get better served than poor ones? Does the private company have any motivation to provide water to the poorest citizens, or is the priority of the investment to privilege wealthier communities? Is there equitable charging, where the poorest pay the least, and those with higher incomes pay more for the water they use? In 1999, Agias del Tunari was awarded a 40-year contract to manage water supply and storage in Cochabamba, Bolivia. Water rights for small farmers was taken away; they were charged for irrigation water, and not permitted to dig wells or “obtain water other ways;” the government and “foreign companies did not respect Indians’ traditional ways of supplying themselves with water” (Sjölander-Holland, 23-25). This ultimately led to violent rebellion and termination of the contract.
  • Are local organizations, unions, citizens groups involved in the contract negotiations? Regarding the water riots in Cochabamba, Bolivia, “one of the greatest mistakes was not to involve the population in decisions on water services” (Sjölander-Holland 2005, 27). Perceptions of water as a ‘free good’ run deep in Bolivia (Heid 2006, 5). The service provider should strive to create a “climate of trust” with their customers, and to involve them as much as possible in the process. “Cooperation with existing community structures such as women’s groups, churches and other organizations” is also important in developing this trust, as are policies such as subsidies for those who can’t pay (ibid, 73). A “rallying point for Cochabamba citizens were the …“water committees,” community-based institutions organizing local water supply….A new water law, Ley de Saneamiento Básico... passed in April 2000...recognizes self-organized community organizations, such as the water committees, as legal water service providers” (Heid 2006, 5).
  • Does the management system encourage conservation? Is the water being obtained at costs to the environment? Are watersheds being handled sustainably? Is the water being treated for pollution and contaminants? Managing wastewater is an important but often overlooked component of water management: installing sewers is not attractive to private companies, as it is more difficult than installing a water supply (Sjölander-Holland 2005, 208). What safeguard policies are in place (environmental, social, biodiversity, etc)? Is money being invested in repairing existing infrastructure or only in new development? Repairing leaky pipes is less expensive than new pipes.
  • Is the bidding process open and transparent and truly competitive? Are there bidding fees or other charges tied to the contract that amount to bribery? Is there genuine competition for contracts? Are local firms permitted to bid? Or only large international companies? Does the municipality charge an “entrance fee” to enter into a bid, awarding the company who pays the highest entrance fee the contract? Consider that the money spent on the entrance fee cannot then be invested in service improvements (Sjölander-Holland 2005, 130). "A lack of transparency…appears to be the most contentious area (e.g. who is being paid how much to deliver what?).…Participants who have a tendency to withhold data tend to find themselves in conflict more frequently than those who are more open….What information do partners need to meet the objectives of the partnership? What information, if not disclosed, would impair or destroy the relationship? …. Do partners hold common views on record keeping practices?” (Evans and Kaplan 2004, 13)
  • Is the municipality/local government strong enough to stand up to a huge multinational firm? Is there fraud, bribery or corruption in the local government? If the local governments are too weak or corrupt to stand up to a large multinational corporation, citizens and local community groups must be even more vigilant and rigorous about taking control of their water situation. Are there international pressures forcing the local government to accept water privatization? How can a community stand up to such international pressure? Does it take a Bolivian-style riot for the local population’s voices to be heard?

How Should Privatization Be Managed?

Communities are entitled to water that is safe, affordable, accessible and sufficient. Water should not be treated primarily as an economic good (Right to Water.org). However, the right to water does not mean that water has to be given away free of charge. The recovery of costs is a critical component of a successful water program: the water utility should pay for itself. Ideally, consumers should pay without government subsidies. If you price the water too low, it could result in non-coverage (as in Africa) or a deteriorating infrastructure (as in Russia) (Sjölander-Holland 197). There is consensus that underpriced water leads to undervalued water, which could result in waste and misuse. The system should be sustainable, which means the community can afford to maintain the project after it is built.

The World Bank’s view is that the sustainability of water systems “rests on the twin pillars of demand-responsive service and [adequate] cost recovery….if systems are to deliver quality service, somebody has to pay for it” (World Bank 2006, 125). However, the ability to pay should not be a condition to not provide water to citizens. “Liberalization has led to a new approach to water supply. Formerly, to get access to water, need was the vital factor; today the ability to pay is crucial” (Sjölander-Holland 2005, 70). “Governments should not permit companies to charge customers in advance or use tariffs or fees to cover expenses not related to customer water use” (Sjölander-Holland 2005, 62).

Water needs to be priced fairly, enough to keep the system working, so that revenues generated can be reinvested back into the distribution system. Transparency and accountability of pricing is critical: the “company’s accounts should be in the public domain: all price increases have to be justified” (Sjölander-Holland 2005, 198).

Community Involvement

Getting buy-in at the community level is probably the most critical way to answer many of these questions. Indeed, it is the only way. Regardless of whether water will be provided through the public or private sector, only when communities actively control the process will the goal of equitable and affordable delivery be achieved. When WaterAid comes to a community’s aid, the first thing they ask the community is how they are going to solve the problem (Sjölander-Holland 205). They work with the communities to “map out what services they get and where” (WaterAid.org).

As in the case of Bolivia, “successful replication would depend on the initiative of local leadership, securing adequate financing, and the presence of a similarly strong level of community organization.” If a community does choose to use a private company, care must be taken to avoid the “public perception that a private company is benefiting from a public resource,” which may end up becoming “a source of controversy” (Heid, 2006, 16).

Similarly, the World Health Organization lists these factors for successful water projects:

a) Community involvement at all levels of the planning, design, implementation, management, and running of projects, with attention to the role of women

b) Community self-improvement; and

c) Better management of information (Bouguerra 2006, 178)

Communities can gain greater control of the water market if the financing sources are local, coming from household investments and community financing, rather than international investments, and which focus on sustainability rather than profits (Sjölander-Holland 206).

Below is a list of criteria for community control of water resources, as provided by WaterAid:

  • Privatization should not be imposed upon poor as a condition to aid or debt relief. National and local governments must manage and regulate water and sanitation services and ensure the accountability of the organizations delivering them.
  • National and local governments are ultimately responsible for providing their citizens with water and sanitation, and they should make the decisions on how services are provided in their country in a transparent and consultative way with users and other stakeholders
  • Even when the private sector is involved, ownership and control over water systems and water resources should never shift from the public to the private sector
  • Solutions should be pro-poor, affordable and sustainable. All service providers (whether public, community or private) must be regulated and their performance monitored, preferably with the involvement of users, to ensure they are accountable
  • Users must have their say in the provision of their water and sanitation facilities
  • The role of small and medium size private water providers (whether for-profit or not-for-profit) must be acknowledged and regulated, as poor people often rely on these providers as their only source of water (Water-Aid-Water for Life)
  • Even the World Bank is focusing more on decentralizing water management and developing water user associations (WUAs). Their belief is that users have more interest in a project’s efficiency and are more willing to pay for its costs if they can influence its operations. They also feel that WUAs can be more successful than governments in recovering costs (World Bank 2006, 65).

Water user associations must be involved in every step of the planning and development process. Thames Water (owned by RWE), which manages large projects, “including construction and infrastructure maintenance,” works in partnership with NGOs who “mobilize skills and advocacy at the local level,” where they can build trust with local community-based organizations, as well as “with municipal authority to improve service.” While it may seem altruistic of Thames to work this way, in partnership with all these sectors, their motive is primarily to spend less capital and avoid the risks of bill collection, and to avoid “the perception that the world’s poorest people are paying for water to one of the world’s richest companies” (Sjölander-Holland 2005, 202).

New Ways of Thinking

Obviously, new solutions are required. Public agencies and private companies can coexist in ways that are beneficial to both sectors, and most importantly, to the people to whom they want to deliver water. “International donors, aid agencies and development banks must focus on local authorities, governments, public utilities and civil society, instead of being fixated on private solutions in developing countries” (Sjölander-Holland 2005, 145). Municipalities also need to cooperate with each other and form public-public partnerships to “create better resources to raise competence and recruit good staff” (ibid, 242). Public Services International would like to send local public managers to international water conferences so that they can share their experiences of effective public water management. However, local organizations don’t have the budget to send their managers to these conferences, so the dialogue ends up “dominated by the private sector” (Sjölander-Holland 2005, 157).

Some estimates believe that as much “$36 billion is needed to procure safe drinking water and adequate sanitation for the whole of humanity.” As daunting as this figure is, keep in mind, that this is still merely 4 per cent of what the world spends on military and weapons expenses (Bouguerra 2006, 181-182).

Rethinking water issues goes beyond just figuring out the best technical solution to supplying water. All of us, especially those of us in developed countries, must “rethink our lifestyles and become more frugal,” as Bouguerra insists: “consumerist lifestyles that waste and pollute water resources need to be revised; we must realize that they can never be extended to the whole of humanity without causing serious environmental, political and social-economic imbalances. We must strive to “promote an ethics of water management and distribution that allows us all to live in peace and cooperation with one another” (Bouguerra 2006, 182-183).

Water is your right. It is one of the most basic and fundamental essentials of life. The responsibility for ensuring that each citizen has access to safe, clean affordable water belongs to you.


Citizens’ Responsibility Checklist:

  • Demand your right to have access to water
  • Learn about the choice of water providers (whether private or public, groundwater, wells, or pipe water)
  • Make sure your water provider is acting fairly and equitably and giving you the access you need at a fair and reasonable price
  • Keep your water connection maintained and in repair: inform the provider when the connection is faulty
  • Use water sustainably
  • Educate yourself on proper water sanitation
  • Dispose of waste safely responsibly
  • Create user associations: organize!


Resources

Bouguerra, Mohamed Larbi, Water Under Threat, Zed Books, London & New York, 2006

Budd, Jessica and Gordon McGranahan, “Are the debates on water privatization missing the point? Experiences from Africa, Asia and Latin America,” Environment & Urbanization, Vol 15 No 2, October 2003

European Commission publication “Guidelines to Successful Public/Private Partnership,” PPP, March 2003 http://ec.europa.eu/regional_policy/sources/docgener/guides/ppp_en.pdf

“Bolivian Government lays out a new alternative vision on water.” Food & Water Watch, March 16, 2006. Available at http://www.foodandwaterwatch.org/water/waterprivatization/latinamerica/bolivian-government-lays-out-a-new-alternative-vision-on-water

Evans, Barbara, McMahon, Joe and Caplan, Ken. “The Partnership Paperchase: Structuring Partnership Agreements in Water and Sanitation in Low-Income Communities” Building Partnerships for Development in Water and Sanitation, www.bpdws.org, September 2004, available at http://www.bpd-waterandsanitation.org/bpd/web/d/doc_77.pdf ; Accessed November 25, 2006

Heid, Elisabeth. “Agua Para Todos – Water for All: Case Studies of the 2005 Seed Award Recipients,” GPPI (Global Public Policy Institute) The Seed Initiative Partnership Report 2006: "Partnerships for Sustainable Development: On the Road to Implementation"

IFC: The International Finance Corporation: the private sector arm of the World Bank Group: www.IFC.org

International Bank for Reconstruction and Development/World Bank, Reengaging Agricultural Water Management, Challenges and Options, Washington DC, 2006

Khalfan, Ashfaq. “The human right to water: Recent progress and continuing challenges” Human Rights Tribune des droits humains, Volume 11, N. 3, accessed at http://www.hri.ca/tribune/onlineissue/V11-3-2005/Right_to_Water.html, Autumn 2005

Marsden, Bill. “Cholera and the Age of the Water Barons” The Center for Public Integrity available at http://www.publicintegrity.org/water/report.aspx?aid=44, February 3, 2003. Accessed November 25, 2006

Prasad, Naren. “Privatisation Results: Private Sector Participation in Water Services After 15 Years,” Development Policy Review Journal, November 2006. Vol. 24 (6), pp 669-692

“Right to Water,” World Health Organization with UN Commission for Human Rights, February 2003: accessed online at Right to Water.org: http://www.righttowater.org.uk/code/advocacy_5.asp

Savas, E.S. “Privatization and Public-Private Partnerships” New York: CQ Press, 2000

Sjölander Sjölander-Holland, Ann-Christin, The Water Business, Zed Books, London & New York, 2005

Urquhart, Penny and Moore, Deborah. “Global Water Scoping Process: Is there a case for a multistakeholder review of private sector participation in water and sanitation?” Consumers International, Environmental Monitoring Group, Public Services International, RWE Thames Water, and WaterAid, with support from German Technical Cooperation (GTZ). April 2004

World Bank Report: “Water Resources Sector Strategy: Strategic Directions for World Bank Engagement,” The World Bank, 2004

World Water Forum Bulletin: “A Summary Report of the 4th World Water Forum.” Published by the International Institute for Sustainable Development (IISD) in collaboration with the 4th World Water Forum Secretariat; accessed online at http://www.iisd.ca/download/pdf/sd/ymbvol82num15e.pdf, March 25, 2006


Water advocate Websites

www.cohre.org/water

European Center of Enterprises….and General Economic Interests (CEEP)

Financing Water for All http://www.financingwaterforall.org

Food and Water Watch.org: accessed online at http://www.foodandwaterwatch.org/water/rights.pdf

Global Water Partnership http://www.gwpforum.org

Public Services International (PSI) http://www.world-psi.org

South African Municipal Workers Union http://www.SAMWU.org

WaterAid http://www.wateraid.org

World Business Council for Sustainable Development http://www.wbcsd.ch

World Water Council (WWC) http://www.worldwatercouncil.org


Appendix I: Guidelines for the right to water:

  • Respect: not unfairly interfere with people’s access to water, e.g., by disconnecting water supply when one is unable to pay
  • Protect: safeguard from pollution or unaffordable price increases
  • Fulfill: take all steps to realize right to water; legislation, pricing policies, programs and monitoring of programs
  • Right to non-discrimination and equality: International obligations to “help respect, protect and fulfill the right to water of persons in other countries.”

http://www.foodandwaterwatch.org/water/rights.pdf


Appendix II: Private Multinational Water Corporations:

Veolia Environment/Veolia Water (Vivendi) http://www.veoliawater.com China, Australia, Czechoslovakia

Suez Lyonnaise des Eaux: France [http://www.suez.com Ondeo (Suez’s water subsidiary) SITA waste management

Thames Water owned by RWE (Germany)

Saur (France)

International Water (Bechtel and Edison, US)

Azurix (owned by Enron)


Appendix III: “Quality Public Services” campaign

Public Services International’s “Quality Public Services” campaign, whose objectives include:

  • ensuring that public services are adequately funded
  • meeting social objectives (such as poverty eradication and empowerment)
  • ensuring that all public sector workers enjoy fundamental workers’ rights
  • creating a movement to pressure governments and global institutions to cease the dogmatic drive to privatization and instead ensure the viability of quality public services (Sjölander-Holland 2005, 157)

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