Water is one of the vital natural resoures humans can’t live without. According to the World Bank estimate, almost two thirds of the global population will run short of pure drinking water by 2025. There’s a debate all over the World regarding privatization of water, driven by government authorities and large corporate in different countries. This topic is controversial – will the water privatization help to distribute the priceless “oil of the 21st century” in a fair and wise way or should the officials concentrate on protecting water supplies and fighting pollution rather than try to privatize the necessary infrastructure.
/> Water is not the rarest natural resource but one of the most precious. Only about 2.5 percent of the global water supplies is fresh water suitable for drinking and cooking (Food Empowerement Project, 2012.) The water consumption is doubling every 20 years as the World population grows (Interlandi, 2010.) According to United Nations statistics, 47% of global population will live in areas of high water stress by 2030; about 1.8 billion people don’t have access to clean water and use polluted and contaminated water. The global water supply is declining due to increase in consumption, misuse and pollution.
The main debate across the World regarding water supply usage and control, are in domains of water privatization, commodification and water sovereignty.
There’s a position supported by various institutions, multinational companies and some countries’ authorities, that the water scarcity issues can be simply solved by turning the clear water into economic commodity that can be controlled by large corporations and sold at international marketplaces. The proponents of this view state that in this case distribution of this scarce resource will be done in a fair way. The McKinsey experts (2009) state that closing the supply-demand water gap involving privatization and other transformation programs along with various other efficiency management programs will provide additional efficiency gains.
On of the most powerful apologists of water infrastructure privatization is World Bank Group. The World Bank’s water privatization policy was stated in a paper named "Improving Water Resources Management" (1992). The Bank’s experts think that the water privatization is the best solution for upcoming water crisis. Since the 1980s, the World Bank and IFC have been implementing the water management projects in various developing countries across the Globe as a part of privatization programs involving utilities privatization (Lappe, 2014.) In countries of the Global South the World Bank is helping to implement for-profit system of access to water, taking advantage of the "Washington Consensus" development model. The privatization programs are supported by lending. For example, the majority of the World Bank loans for water required the conversion of public watter supply systems to private as a necessary condition for the deal (Barlow, Clarke, 2004.)
There are two dominating models of water privatization – the British and French models, both resulted in monopolization of water industry (Citizen’s Guide to Water Privatization, 2004.) several key players delivering water on the for-profit basis, for example, Suez, Vivendi, RWE-AG, Bouygues, Bechtel-United Utilities covering dozens of countries with millions of population (Barlow, Clarke, 2004) increasing their revenues measured with billions of dollars annually.
The opponents of water infrastructure privatization think that with such programs of privatization of public goods, the international organizations and country authorities limit access of millions of people to the vital resource and promote interests of mulninational coroprations seeking superprofits. The main argument of the privatization opponents is that when the private sector enters the water provision area, it reduces human fundamental rights (such as the access to water as a vital resource) and also causes even greater disparities in water access than there’re now in place (Lappe, 2014.)
The second objection against privatization is that the private sectors has priorities different from providing the population with access to water resorce, that’s why the private companies don’t find it profitable to develop and maintain the necessary infrastructure that requires extensive investment. The reason is that the for-profit companies seek for cost efficiency and profit maximization, that’s why the infrastructure investment is limited to absolutely necessary amount. Within cost-cutting program, there’re often job-cuts like, for example, in England, after private companies got rights for the water systems (Citizen’s Guide to Water Privatization, 2004.)
The data support this point. The World Bank data for private participation in infrastructure shows 34% decrease rate for all private water contracts made within the period 2000-2010 (Lappe, 2014.) Privatization process driven by theinternational organizations ignores historical evidence. As the above mentioned World Bank data show, one third of the contracts were terminated due to fail of the private “water corporations to fulfill their commitments to invest in infrastructure and expand access” (Corporate Accountability International, 2012.)
Overview of the recent developments in area of water privatization in India (World Bank, 2014) showcases several issues. For example, a private water project funded by IFC in Nagpur, India, brings about serious concerns regarding high prices, inequal distribution of water and shutdowns of water supply service (Lappe, 2014.) There’s also a conflict of interests involvinf the World Bank and IFC, advising the local governments in privatization questions and at the same time promoting interests of multinational corporations getting the water supply contracts.
The next argument is that privatization can deteriorate the quality of water for end-consumers. The private companies should not alert the state authorities about health hazards, so environmental and healthcare standards are often compromised, as it happened in Walkerton, Canada, where people suffered from an incident with from contaminated water (Public Citizen, 2001.)
So many experts stand to the point of view that only public sector can maintain the necessary infrastructure and provide the population with affordable and safe water supplies distributed fairly basing on the “people first” principle. Only publicly controlled water systems can provide the population with universal and equal access to water and transparent distribution procedures.
The next argument against water privatization is that the private companies are not motivated to save water and conserve water supplies. The for-profit companies receive revenues per amount sold, so they’re interested to increase supply to maximize their income. So as the water resource become scarce, the companies will puch the prices upwards causing economic shocks. The private companies protect interests of their shareholders, and the consumers’ rights and interests are not among the top priorities. “Local water conservation or pollution prevention initiatives, or even improvements in standards of water quality, may come in conflict with international institutions’ - GATS, NAFTA of FTAA - provisions that prohibit restrictions on a company’s ability to profit” (Citizen’z Guide to Water Privatization, 2004.) So, privatization of water systems can not be reversed.
Another issue with privatization is that there’s no perfectly competitive market for water resources. The water contracts in developing countries are served by a few companies supported by funding provided by IFC, and the competition between is not intense. So there’s no reason for suppliers to offer attractive pricing models for consumers. The real cases support that argument. Since privatization of water services took place in France, the tariffs increased by 150 per cent. At the same time, the quality of service deteriorated, local control have been lost, and corruption was fostered (Public Citizen, 2004.)
One of the hazards imposed by water supply systems is bulk water exports from water-rich countries to the countries with lack of water resources. Exports aiming at receiving higher profits (in comparison with internal consumption) can result in ecological imbalance in the natural environment caused by massive extraction of water from its natural location. Overextraction can cause depletion of water supplies and pollution.
The ongoing water systems privatization faced vibrant protesting campaign in the various countries including the U.S., Nikaragua, Argentina, Bolivia, South Africa, Ghana, Thailand. These campaign share the view that the pure water is a public resource, and people’s access to it can not be limited or controlled by for-profit corporations. As the clear water is “a shared legacy” (Citizen’z Guide to Water Privatization, 2004), it shouldn’t be treated as a commodity; protecting and preserving of water supplies is a collective responsibility of humanity as a whole and of the public authorities.
The participation of private investments in funding the water infrastructure development and water efficiency programs implementation can not be avoided. Of course, private investments expect high returns, but at the same time, the public sector itself has no capabilities to provide the investment in amount enough to cover all the needs. So private investors should be involved in these investment programs.
Various transformation and restructuring programs are considered to be a good alternative to water privatization. These programs can improve efficiency and, thus, free the money resource necessary for infrastructure upgrade. And the main point is that dealing with water resources requires “public oversight to ensure that people, not profits, come first” (Public Citizen, 2001.)
- Corporate Acountability International (2012). Shutting the Spigot on Private Water: The case for the World Bank to divest. Retrieved from http://www.stopcorporateabuse.org/sites/default/files/resources/shutting_the_spigot_on_private_water_corporateaccountabilityinternational.pdf
- The World Bank (2014). Running Water in India’s Cities: A Review of Five Recent Public-Private Partnership Initiatives. Retrieved from https://www.wsp.org/sites/wsp.org/files/publications/Running-Water-in-India-Public-Private-Partnership-Initiatives.pdf
- Food Empowerement Project (2012). Water Usage & Privatization. Retrieved from http://www.foodispower.org/water-usage-privatization/
- UN Water Statistics http://www.unwater.org/statistics/en/
- Interlandi, J. (2010). “The New Oil: Should private companies control our most precious natural resource?” Newsweek. October 08, 2010. http://www.newsweek.com/2010/10/08/the-race-to-buy-up-the-world-s-water.html#
- Public Citizen (2004). Citizen’s Guide to Water Privatization. Retrieved from http://www.citizen.org/documents/citizenguide.pdf
- Lappe, A. (2014). World Bank wants water privatized, despite risks. Retrieved from http://america.aljazeera.com/opinions/2014/4/water-managementprivatizationworldbankgroupifc.html
- Barlow, M., Clarke, T. Water Privatization. The Global Policy. Retrieved from https://www.globalpolicy.org/component/content/article/209/43398.html
- McKinsey 2030 Water Resource Group (2009). Charting Our Water Future. Retrieved from http://www.mckinsey.com/App_Media/Reports/Water/Charting_Our_Water_Future_Exec%20Summary_001.pdf
- Public Citizen (2001). Top 10 Reasons to Oppose Water Privatization. Retrieved from http://www.citizen.org/documents/Top_10_%28PDF%29.pdf