impeding access to water through public
finance
‘Just a few
years ago, privatization was heralded as an
elixir that would rejuvenate lethargic,
wasteful infrastructure industries and
revitalize stagnating economies. But today,
privatization is viewed differently - and
often critically. Skepticism and outright
hostility toward privatization are not
limited to a few radical
protestors.’
World Bank
economist Ioannis N. Kessides, June
2004
Public banks like the World Bank have
been at the centre of the corporate drive
to commodify and privatize the natural
world and associated services. As a result,
these resources are increasingly difficult
to access. Water is undoubtedly at the top
of the list.
The World Bank, the International
Monetary Fund and various regional banks
have been proactively pushing water
privatization in the poorest, most indebted
countries, where the negative impacts are
most strongly felt. Such privatization
takes place at the water capture level
through to service delivery.
Through loan conditions, and direct
financial support, international financial
institutions (IFIs) promote industrial use
of water sources. Examples of such
investments are water-greedy gold mines and
destructive large hydro dams. Industrial
use and contamination of large quantities
of fresh water endanger water supplies for
local communities. Indigenous peoples and
women bear the biggest burden as they are
most dependent on access to water for their
livelihoods and activities.
Furthermore, the banks and the Fund
routinely insist on the privatization of
water services as a precondition for loans
and for debt relief. The World Bank argues
on its web site that in developing
countries “The private sector, under
contract with the public sector, has often
yielded better results” than the public
sector in providing access to reliable
water services. The World Bank’s private
sector development strategy of April 2002,
explicitly designates public services as
‘frontier’ sectors for private investment.
This year’s report of the World Panel on
Financing Water Infrastructure, led by
former IMF Managing Director Michel
Camdessus, argues for IFIs to increase
guarantees and other public subsidies for
private investors in water infrastructure
and supply.
Regional banks follow a similar approach
to water delivery. The Asian Development
Bank (ADB), although viewing water as a
‘socially vital’ economic good, extols the
virtues of private sector involvement. The
ADB argues that water should be allocated
to and used by those who can best afford it
– so called ‘high-value’ users.
Furthermore, the ADB supports the
establishment of markets for transferable
water rights.
Policies, programs and projects of IFIs
endanger people’s right to water. In this
publication, the case studies from the
Philippines, Indonesia, Ghana, Bolivia and
Uruguay show that through IFI involvement,
water is being taken away from people.
Shockingly, the poorest may even find
themselves buying bottled water, if a lack
of access to piped water forces them to buy
it from street vendors. ADB-induced water
privatization in Manila resulted in a 500%
price increase, continued leakages, bad
access to clean water and a cholera
outbreak (see case study above). In rural
areas, the ADB policy on transferable water
rights lead to Asian farmers selling their
water rights for other, more productive
uses. Such developments have significant
knock-on effects for people’s livelihoods
and food security.
The case against water privatization is
growing. Case after case shows that
promises of greater efficiency are not
being fulfilled. More and more people find
themselves priced out of the water market,
water delivery and water quality have
hardly improved and water sources are being
depleted rapidly. This failure to deliver
is unacceptable. People are rising up and
demanding control over their water
resources. In the now famous rejection of
water privatization in Cochabamba, Bolivia,
the World Bank initially insisted that
water services be privatized as a condition
for receiving a $25 million loan. The World
Bank explicitly two water privatization
stated that ‘a proper system of charging’
be used and that ‘No subsidies should be
given to ameliorate the increase in water
tariffs in Cochabamba’. This left families
with an income of around $100 per month
spending $20 on water. Not surprisingly,
the residents of Cochabamba took to the
streets and forced the company in question
– Bechtel - out of the country. Together
with community groups, trade unions and
irrigation farmers, the government agreed
to set up an alternative transparent public
utility with a high degree of participation
and sense of ownership.
Fearing a growing public relations
problem, the World Bank is now backing away
from the term privatization in public
documents and statements. Importantly, a
June 2004 report from a World Bank
economist argues that the privatization of
infrastructure has been ‘oversold and
misunderstood’. According to the report,
the success of privatization efforts varies
greatly by sector, and water supply is
clearly one of the ‘more problematic’
sectors.
Water privatization, combined with the
opening up of water markets that are about
to be ‘locked-in’ by the WTO’s services
negotiations, has only clear benefits for
Northern-based water transnationals such as
Thames Water, RWE, Suez and Veolia
Environnement. These corporations stand to
gain access to multiple new markets across
the world.
FoEI challenges the view that water is
little more than a tradable commodity.
Water is vital for human life and
livelihoods and for the ecological balance
of our planet. A person’s right to a
“standard of living adequate for the health
and well-being of himself and his family”,
enshrined in the UN’s Universal Declaration
on Human Rights in 1948, has to include
access to water - because without water,
life is not possible. As such, FoEI calls
on public banks with the mandate to
alleviate poverty through sustainable
development to put people’s right to water
at the forefront of their activities.
more information
www.ifiwatchnet.org
www.foei.org/ifi
www.waterjustice.org
www.wateractivist.org
