Water privatization backgrounder

Democratic vs. corporate control of water: a fight for survival

Perhaps the greatest theft of common resources facing humanity and the planet today is the corporate take over of the world’s water. Global capitalists argue that our water scarcity problems will be solved by turning water into an economic good – a commodity to be controlled by global corporations and sold to the highest bidder in international markets. Yet who really believes that corporations, whose very purpose is to increase profits for their shareholders, will improve water conservation, help get clean water to those in need, and provide a water secure future for all of us?

Every crisis provides an opportunity. The world’s fresh water crises may be the most critical area of concern for global justice advocates. The fight to protect the global commons – particularly the world’s precious freshwater sources – is a fight for planetary survival that takes its lead from communities in the Global South where the fight against privatization of water has already become a life or death struggle. The movement for direct democratic control of our most precious resource – water -- has the potential to unite the vast majority of people against the forces of corporate greed. It’s not too late to assume collective responsibility for our shared water heritage and spawn a new legacy of responsible, ecologically and socially sustainable, stewardship of our watersheds, but we must act now.

The world is running out of freshwater

Despite the seeming abundance of water on this planet, less than one half of one percent of the earth’s water is able to support human life. The rest is trapped in oceans and polar ice. A modern legacy of factory farming and flood irrigation, the building of mega-dams, toxic dumping, wetlands and forest destruction, and pollution and urban sprawl has rapidly depleted the world’s limited supply of fresh water. Already, over one billion people lack access to clean water and 2.5 billion people don’t have adequate sewage and sanitation services. Consequently, over 2,112,000 people – mostly children – die annually from diseases such as diarrhea and cholera.

To add to the threats facing the planet’s lifeblood while the world’s population increases yearly by 85 million new people, per capita water use is doubling every twenty years. This insatiable thirst is being driven mainly by modern industrial farming and manufacturing, which consume respectively 65% and 25% of water used by humans. But humanity is paying the price for the exploitation of this essential resource. By 2020, two-thirds of the world’s population is expected to lack access to clean water if the current development continues.

Conflicts over scarce water supplies threaten to destabilize entire regions and are likely to define the next century in much the same ways that conflict over oil have in recent times. Hotspots where water reserves are dwindling include the Middle East, Northern China, Mexico, California and almost two dozen countries in Africa. Israel, for example, is threatening to re-ignite war against Lebanon if the Lebanese government carries out its plans to tap a tributary of the Jordan River, which is a major source of Israel’s scarce water.

Similar border disputes between the U.S. and Mexico over the Colorado and Rio Grande rivers, which are so over-tapped that they no longer empty into the sea for weeks at a time, may soon escalate as well. In the free trade zones along the US-Mexico border, water is a precious commodity, delivered weekly to many communities by truck or cart. Clean water is so scarce that children are forced to drink expensive soft drinks or bottled water to avoid serious health risks. For the first time in history, more people now live in cities than in rural areas, so the demand for drinking water in urban centers threatens to tap water supplies traditionally earmarked for agriculture, creating a food security crisis.

Profiting from planetary misery

Transnational corporations see this water scarcity crisis as a huge profit-making opportunity. If corporations control the limited supplies of an element that no one can do without, they stand to gain untold fortunes. Water is the new oil. In 2001 the water services industry, dominated by just a handful of corporations, made close to a trillion dollars in profits, which is substantially more than the pharmaceutical sector and almost 40% of the oil industry’s revenues. "Water is the last infrastructure frontier for private investors," says Johan Bastin of the European Bank for Reconstruction and Development. Selling water to the highest bidder will only exacerbate the worst impacts of the world water crisis.

Throughout history, societies have viewed water as a sacred, common heritage to be protected and shared. In fact, only 5% of the world’s water is now privately controlled. Because of its vital nature, the United Nations Declaration of Human Rights recognizes access to water as a basic right of all people. The World Health Organization has identified clean water as the single most important factor in determining public health. For centuries, governments have invested public resources in constructing water and sanitation infrastructure in order to deliver safe and clean drinking water. Outbreaks of water born diseases such as typhoid and cholera were nearly eliminated from the Americas after public water utilities were developed in urban centers. In the United States, for example, 85% of the population receives water from taxpayer-subsidized, publicly owned and operated utilities. Unfortunately, after decades of neglect and mismanagement, the Environmental Protection Agency estimated, in the late 1990's, at that time it would cost approximately $375 billion to repair and upgrade decaying water and sewage infrastructure over the next 20 years.

Corporations and investors are ramping up a concerted, multi-pronged effort aimed at forcing governments to privatize public services and to commodify water in the global commons. Already, much of England and France have privatized water systems. The result has been rate increases, deteriorating service, loss of local control and increased corruption. Since water services were privatized in France, customer fees have increased by as much as 150%. A number of public officials have been convicted of accepting bribes from companies bidding on public service contracts and sentenced to time in prison.

Private corporations seek to increase profit margins by cutting costs; hence lay-offs and inferior services almost always accompany privatization. In England, private companies fired nearly 25% of the work force, approximately 100,000 workers, when they acquired rights to the water system. Delays in service and accidents routinely follow the firing of often the more experienced personnel. Since 1999, Thames Water, the largest water and wastewater company in England, has been convicted of environmental and public health violations two dozen times and fined roughly $700,000 after allowing raw sewage to flow into open waterways, over streets, onto people’s lawns and over children’s toys—even into people’s homes.

The same multinational corporations aggressively taking over the management of public water services around the world are now vying for the lucrative U.S. market, one of the world’s largest with annual revenues estimated at $90 billion. A change to the U.S. tax code in 1997 opened the way to greater private sector involvement in the U.S. water delivery and treatment business. Companies are now able to bid on 20-year contracts that include the operation, design of new plants or upgrades, maintenance and even complete transfer of ownership of water systems to the private sector. Until now, mainly small public utility operators have controlled the U.S. water industry. In rural areas, small, privately owned utilities were common, but multinational corporations are rapidly buying even these out. These companies have weaseled into venues like the U.S. Conference of Mayors where they peddle privatization as a simple, cost-saving solution to cities’ aging infrastructures and regulatory compliance headaches.

On a global scale, water privatization is being pushed by the World Bank and International Monetary Fund in dozens of financially-strapped countries, where global water conglomerates are dramatically raising the price of water beyond the reach of the poor and profiting from the Global South’s search for solutions to its water crises. Corporations, such as Vivendi, Suez, RWE and Bechtel, cherry pick the profitable urban water systems while letting shantytowns and rural areas fall by the wayside. The World Bank has made privatization of urban water systems a condition for receiving new loans and debt cancellation. In Ghana in 2001, the World Bank required urban water rates to be increased 95% to prepare for privatization by making the water system appear more lucrative for international bidders. Following these rate increases, a number of people were jailed for being unable to pay their water bills. Many people who live in urban slums without access to tap water pay even higher prices for water delivered by private tanker truck operators. The poor, particularly women or girls whose traditional duties include collecting water, and babies suffer considerable hardship, illness and even death when they are forced to consume unsafe water after public supplies become too expensive.

Water for All, Not for Sale

All hope is certainly not lost. The fight to protect the world’s water from corporate control is well underway and rapidly gaining new ground. Powerful, vibrant social movements against water privatization have gained a number of key victories in countries including Bolivia, Argentina, NicaraguaGhana, South Africa and the United States. In August 2002, the Nicaraguan National Assembly became the first parliament in the world to suspend private profit making in the use of water. Nicaragua has faced the privatization of its banks, telecommunications and electricity plants, but when the government, at the behest of the World Bank and the Inter-American Development Bank, began to push for the privatization of the major hydro-electric plants and the water utilities in the country, the people of Nicaragua drew the line in the sand. The Nicaraguan anti-privatization law sets an important precedent across the Americas.

In Cochabamba, Bolivia, thousands of workers, peasants, farmers, and students soundly rejected water privatization by ousting Bechtel in 2001 after the company raised water rates by up to 200% and began taking over local wells. This heroic battle was not without grave consequences, leaving one young man dead, and a number of wounded. Bechtel – a company that made $14 billion in profits in 2001, nearly double Bolivia’s entire GDP -- is now using an investment treaty to sue the Bolivian government for $25 million in estimated lost profits. The case is being heard not in a domestic court in Bolivia, but in the World Bank’s secretive International Court for Settlement of Investment Disputes based in Washington, DC. Hundreds of social and environmental justice groups and pro-democracy organizations have called on Bechtel to drop this egregious suit.

South Africa is at the heart of the international movement to demand access to clean and sufficient water as a fundamental human right. Coalitions such as Anti-Privatization Forum and Soweto Electricity Crises Committee are organizing against the illegal cutoffs of water and electricity in poor townships. South Africa is the only country to guarantee basic water rights to every person in their national constitution. Yet more than 10 million residents have had their water cut off since the government implemented a World Bank-supervised cost recovery program. More than 100,000 people in Kwazulu-Natal province became ill with cholera recently after water and sanitation services to local communities were cut off for nonpayment. Privatization has also involved the installation of pre-paid water meters – a technology that was legally outlawed in England.

The Real Solutions are Clear and Simple

The solutions to the world’s water scarcity crises are readily available: expand public and community controlled water utilities, repair dilapidated water systems, save water by installing drip irrigation systems rather than flooding, stop polluting existing supplies, increase water conservation, reclamation and watershed management just to name a few. None of this will happen if corporations are permitted to turn the global commons into profit playgrounds. If we allow the commodification of the world’s fresh water supplies, we will lose the capacity to head off the impending water crises. We will be condoning the emergence of a water elite that will determine the world’s water future in its own interest. In such a scenario, water will go to those who can pay the most, not to those who need it. This is a scenario we cannot afford.

In the United States, organizations such as Public Citizen’s Water for All campaign are helping communities to fight the privatization of water services and corporate takeover of water supplies. They are also uniting the U.S. movements with other countries that are fighting against many of the same corporate actors to keep their water safe and protect water as a human right. This is a global movement that is just beginning to flex its power and develop new strategies to protect the global commons.

This movement shares the views that water is a common good and access to water is an inalienable human right. Water belongs to the Earth and all species and must not be treated as a private commodity to be bought, sold and traded for profit. Because the global water supply is a shared legacy, protecting it is a collective responsibility – not the responsibility of a few shareholders.