Water - for money or for people?

Posted: 8 September 2004

Author: Darryl D'Monte

Global water consumption is increasing at more than twice the rate of population growth. Such is the precious resource that water has become that many companies, like the French company Vivendi, are cashing in on this commodity, earning the company over US$12 billion in revenue in 2002. But concern is now growing over the privatisation of this natural resource in the developing world by Western private water companies. This has left many of the world's poorest cut off from water supplies as a result of the high charges imposed. Darryl D’Monte reports on this disturbing trend.

Ever since former World Bank Vice President Ismail Serageldin famously declared that the next world war would be fought over water rather than oil, the impending scarcity of this most precious resource has gripped public imagination. In reality, Serageldin was guilty of exaggeration since conflicts over water, typically, build up over a long period and do not turn into flashpoints, unlike in the case of oil.

Women at a waterpump, Tidi, Rajasthan,
Women at a waterpump, Tidi, Rajasthan,
Women at a waterpump, Tidi, Rajasthan, India. Photo © Kai Friese/People & the Planet.
Nevertheless, the spectre of a world without sufficient drinking water continues to loom large. One of the UN's Millennium Development Goals is to halve, by 2015, the number of people currently without access to a safe source of drinking water (estimated at 1.2 billion people).

Globally, the consumption of water is doubling every 25 years, at more than twice the rate of population growth. And recurring droughts remind everyone that water is literally a matter of life or death.

Ironically, many commercial interests have realised that this situation presents a unique opportunity. In most industrial countries, people drink bottled water daily. As Maude Barlow, head of the Council of Canadians and one of the fiercest critics of water privatisation, points out, the bottled water industry is growing at 20 per cent per year. In 2002, nearly 100 billion litres of it were sold worldwide.

Pricing water

In recent international meetings, many agencies like the World Bank have been pressing for the classification of water as an economic good rather than a public good. Because it is not priced at full cost, these protagonists argue, water is wasted. What is more, the poor actually end up paying more than the rich do.

According to the World Commission on Water (WCW) for the 21st Century, poor people in developing countries pay an average of 12 times more per litre of water than fellow citizens connected to municipal systems. In addition, the poor pay exorbitant sums to water vendors in some cities: 83 times more in Karachi and 63 times more in Jakarta. Subsidies end up benefiting the rich, argue the protagonists of privatisation.

Given that so many developing countries are opting for privatisation of several services, water is very much on the agenda. Till 2003, water companies still ran only about 5 per cent of the water utilities around the world, but served 300 million people, as against just 51 million in 1990. According to a book, The Water Barons, published by The Centre for Public Integrity in Washington DC, the French company Vivendi earned over $12 billion in water-related revenue in 2002.

France has made the biggest inroads in this sector. Vivendi has more than 110 million customers in over 100 countries and Suez (French again) controls water services in 130 countries with 115 million customers. Britian's Thames Water, which has been acquired by a German conglomerate, has 70 million customers and earned $2 billion in 2002. The World Bank has often made countries privatise their water operations as a pre-condition for receiving loans for water supply.

Indeed, under the prodding of the World Trade Organisation, countries are being coaxed to open water services to private participation. In 2003, the European Union asked 72 countries to permit such entry under the General Agreement on Trade in Services.

In India, Degremont, a partner of Suez, has got a concession to take water from the Upper Ganga canal to supply to Delhi. With the Congress coalition ruling the country, it is likely that fewer such concessions will be granted, given the opposition from Left parties (which support the ruling coalition).

'Earth's heritage'

The private sector in India, like in other countries, obtains its water mainly from underground sources, which are less polluted. One of the most heated disputes has been the extraction by Hindustan Coca-Cola Beverages of water from aquifers in Plachimada in Palakkad district, Kerala, since 2002. The local communities have complained that their wells have not only been depleted but are contaminated as well. Following a state government order, the company stopped drawing water in February 2004, till the monsoons.

Those who assert that access to safe drinking and water resources is a human right, not just a human need, believe that it must remain in public hands. "Water is part of the earth's heritage and must be preserved in the public domain for all time and protected by strong local, national and international law," argues Barlow. "At stake is the whole notion of the 'commons', the idea that through our public institutions we recognise a shared human and natural heritage to be preserved for future generations."

One of the most controversial cases of water privatisation took place in 2000 in Cochabamba, a town in Bolivia, the poorest country in Latin America. Aguas del Tunari, a consortium comprising Bechtel and United Utilities of the US, took over the city's waterworks without any bidding. It announced water rate increases of up to 150 per cent, leading to riots. Army troops opened fire and one person was killed. The government had to cancel the contract.

Exploiting water

Recently, the People's World Water Forum, which comprises of 60 NGOs from across the world, launched a campaign from Delhi, attacking MNCs like Coca-Cola and Suez for exploiting global water resources. PWWF members debunked the World Bank theory that the poor would benefit once water is privatised. Niel Robinson, a minority rights activist from the US, said at the launch that after the privatisation of water in the US, many poor people who were unable to pay for water had their supply cut off. She said the worst affected have been people of colour, women-headed households and the poor.

Fortunately, in some countries, opinion is veering around to permitting the State to retain possession of water resources in a sector that impacts people's lives so fundamentally. Even the World Bank is coming round to this view and advocates "public-private partnerships" instead.

However, few developing countries have the skill to negotiate such contracts and monitor them. It does seem that such privatisation of water services will increase in the current era of economic liberalisation around the world.

Darryl D'Monte is Chairperson of the Indian Forum of Environmental Journalists.

Source: Women's Feature Service