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OVERCOMING THE PARADIGM OF WATER PRIVATIZATION IN DEVELOPING COUNTRIES: VIEWING WATER AS A RIGHT AND A SPECIAL ECONOMIC GOOD.

ABSTRACT
Water is a different kind of economic good because of the nature of human dependence on water and the fugitive and complex qualities of water. Drinking water is becoming scarce on the planet and distribution systems in developing countries are struggling to keep up with demand. Since the mid 1900’s developing countries have been experiencing a new form of economic colonialism vectored by the World Bank and the International Monetary Fund. Strong neoliberal campaigns have rapidly converted water distribution in developing countries to privatized models. Commonly, European and American water firms are profiting at the expense of debt imposed on developing countries to build infrastructure, leaving the World Bank to profit from the interest off that debt. Privatization is severely impacting the poor majority in developing countries who find it difficult to pay relatively high costs necessary to maintain distribution infrastructure of water and keep private water firms profitable. Rights based reform of privatized models is a necessary step to diminishing the distribution gaps in developing countries. A strong international legal framework, holding private water firms accountable to their distribution structure, is desperately needed. The UN International Covenant on Economic Social and Cultural Rights can help to implement this. Furthermore, regional governments ought to promote community based organization and involvement in water distribution before considering privatization. Empowering communities to get involved with water distribution can result in fair distribution, responsible water usage and sustainable watershed management.

Introduction
World communities applying regular economic theory to water resource management continue to conclude that water is not a normal economic good and many difficulties arise when treating it as such (McNeill 1998; Savenije 2002). The inefficiencies of regular economic theory in regards to water management, in part, originate from the way humans engage with water. For humans, water is unique; there is no other material like water, upon which humans show the same dependence (Barlow and Clarke 2002). At a certain point, human dependence on water becomes superficial, but it can be said that every human being needs a certain minimum access to potable water in order to survive. That being said, across the globe, per capita water consumption is doubling every 20 years (Gleick et al. 2002). In industrialized countries, technology and sanitation systems have encouraged people to use far more water than they need, however household use only accounts for 10% of freshwater consumption (Barlow and Clarke 2002). Industry claims up to 25% of the world’s freshwater supplies, and those demands are increasing steadily (Barlow and Clarke 2002). Furthermore, massive pollution of the world’s remaining surface water systems has reduced freshwater reserves to the point that access to safe drinking water is becoming noticeably rare, and this is commonly the case in developing countries where economic growth is expanding too fast for a sustainable infrastructure to mitigate the negative effects (Gleick et al. 2002). Because of these factors, some analysts believe that the single largest issue facing the human population in the 21st century will be water.  “Water promises to be to the 21st century what oil was to the 20th century: the precious commodity that determines the wealth of nations” (Barlow 2002).

The increasing water issues in developing countries have been met with an economic expansion to house newly categorized water markets (Meredith 1992). Water corporations, through world bodies such as the World Bank and the International Monetary Fund (IMF), are influencing national governments to push privatization and commodification of water services as ‘the chosen’ alternative to manage the growth in water consumption and severe water scarcity (Trawick 2003; Goldman 2007). However, the growth in water consumption is highest in the agricultural and industrial areas, where the resources to buy water are readily available for rich farmers and industries (Barlow and Clarke 2002). This increase in consumption is satisfied through the market dynamics often at the cost of the poor who cannot afford the increased water tariffs and therefore are cutoff at the tap (Lobina 2000).

In response to inequities, anti–privatization movements are organized on the premise that water is a basic human right that ought not to be sold for profit (Lobina 2000; Barlow and Clarke 2002). However, the dialogue that follows from conceiving a human right to water, certainly does not lead to a state where water is freely accessible by all (Meredith 1992; Bakker 2007).

Understanding water: the nature of water versus other economic goods.

The nature of water seems intuitive. It evaporates and rains down, filling watersheds, rivers and oceans; and this cycle is in a continuum. Every human activity is either directly or indirectly dependant on water and yet we have no control over the nature of water. This uncontrollable dependence puts water in demand, therefore giving water value. From an economic perspective, if something has value it is an economic good, but as Hubert Savenije (2002) puts it, “water has a combination of characteristics that make it different from any other economic good”. For example, water is essential, without water there is no life, no economy and no environment. The same can be said about air, land, fuel and food (Savenije 2002). Furthermore, water is scarce because water availability is limited by the hydrological cycle. Water is also fugitive. The characteristic of water being essential and scarce are typical of any economic good (Hukka and Katka 2003). However, the added characteristic of water being fugitive makes water different. “It flows through our fingers unless we store it and its availability varies over time…water is essentially a flux (Savenije 2002). Other interesting characters of water include the fact that water is a system; if you interfere upstream, there are downstream implications. Furthermore, water is too bulky and incondensable, making the transportation of water expensive. Water is also non–substitutable; “for fuel, one can choose between oil, gas, coal, wood, hydropower or solar power…for food one can choose between bread, pasta, rice, or maize. However, for water, there is no alternative and no choice” (Barlow and Clarke 2002; Savenije 2002). Finally, water is not freely tradable because of its bulkiness (Savenije 2002). Water markets can only function if they are very localised and take advantage of the downstream flow of water. “World wide, water is traded in the form of its products: grains, timber, meat, fodder, fruits, flowers… this is called the trade of ‘virtual water’, where 1 kg of produce roughly corresponds with 1 m3 of water” (Savenije 2002). It follows that food ought to be the only good traded where water is involved and therefore the political reasons why food is grown in water scarce areas ought to be lessoned. All these characteristics of water result in water being complex. The fact that there are so many complications with water being defined as an economic good makes water at least a very special economic good (Savenije 2002).

Privatizing water: a brief history of water policy in the undeveloped world.

In 1990, few people in the global South received their water from US or European water firms, but by the year 2000 more than 460 million people did, with that number predicted to increase to 1.2 billion people by 2015, transforming water in Africa, Asia, and Latin America into capitalized markets as precious, and war–provoking, as oil (Barlow and Clarke 2002). In this short time, a new global water policy was constituted quickly and dispersed widely leaving the global south often with no other viable option but to conform and privatize (Petrova 2006; Goldman 2007).

In the year 2000 in South Africa, the government cut off the previously free water supply to one thousand people in the rural KwaZulu Natal because they did not pay a $7 reconnection fee when their water utilities were privatized. A deadly cholera outbreak resulted directly after the government–enforced water cutoffs infecting more than 140,000 people (Goldman 2007). Though the South African governments seems at fault, there is a larger phenomenon at work here which unfortunately sees a world lacking access to affordable and clean water as an image that may create new opportunities in the business of development (Hukka and Katka 2003). South Africa had a privatized water management system, which perpetuates a mentality that water is an economic good, and like any other economic good, will not be supplied if one cannot pay.

Michael Goldman (2007) uses the term ‘green neoliberalism’ to explain this phenomenon as water being conceived as capital. This is a rapid ideological revolution, which in part explains a highly successful campaign to promote a major shift in water policy, vectored by the World Bank and the IMF into the Global South, where most of the world’s ‘under–capitalized’ natural resources and their service sectors still exist.

The world bank has described the water crisis of the developed countries as, “one in which the public sector has failed to deliver and has therefore prevented development from ‘taking off’ and the economy from modernizing” (Goldman 2007). If the government cannot deliver something as basic as water, the western perspective assumes that is a strong indication of a general failure of public–sector capacity. Water scarcity therefore becomes simultaneously indicative of a problem of “poverty, of modernization, and of governance…the developing world government is typically portrayed by the Bank and its partners as stuck in arrested development…often depicted as corrupt, inept, and politicized” (Goldman 2007). From this perspective, the developing country’s government is the prime element limiting that country from entering the global economy. Therefore, to ensure that the country fits the western ideal, and can properly integrate itself into a global market “the best decision the World Bank can make is to insist that as a pre–condition of future access to capital, the government…must package degraded public assets for sale on the international market” (Goldman 2007). Water, is but one of the many services and goods up for sale, for their inefficiency not only affects the health of the poor majority, but the whole country’s ability to participate in the global economy. Today, as a result of World Bank economic policy, a highly indebted poor country cannot borrow capital from the World Bank or IMF without a domestic water privatization policy as a precondition (Barlow and Clarke 2002; Petrova 2006)

This new political rationality of development sees full privatization as the only solution to best serve the public. Yet notice that with the sale or lease of a public good clearly comes the presence of a “whole set of neoliberal capitalist forces that intervenes in government/citizen relations and North/South dynamics” (Goldman 2007). The imposition of the World Bank’s water policy is resulting in the “entrance of new transnational codes of conduct and procedures of arbitration, accounting, banking, and billing…new ethics of compensation…new expectations of the role of the public sphere; and the normalization of transnational corporations as the local provider of public services and goods” (Goldman 2007). Under the guise of poverty reduction and ecological sustainability a form of economic colonialism is happening which is further made evident by understanding that the global market for municipal and industrial water and sewerage goods and services is currently estimated to be US $400 billion per annum (Owen, 2001).

With a clear mandate, the World Bank has promoted its global water policy using three main tactics. The World Bank has cultivated elite transnational policy networks to excite and ensure support (Petrova 2006). The World Bank has “implemented large development loans targeting the privatization of the public service sector delivering water and sanitation in order to lock undeveloped countries into privatization agreements” (Goldman 2007). And finally, it has implemented strict green–neoliberal conditionalities upon its borrowers for access to foreign capital. Due to World Bank forces, the paradigm of the privatization of water has made dealing in water one of the most lucrative markets for transnational capital investors (Barlow and Clarke 2002).

Institutionalizing water as a human right.

Water is said to be the last frontier of privatization around the world (Petrova 2006). However, numerous case studies around the world highlight the drawbacks of water privatization such as poor quality of water, unsustainable water mining and lack of transparency and accountability (Meredith 1992). More often than not, the privatization of water is resulting in violation of basic human rights. Resistance to privatization has resulted in the world’s largest water firms being forced to pull out of their most lucrative Southern markets due to public mobilizations (Bayliss and Hall 2002; Barlow and Clarke 2002). With the ideal that water is a basic human right, mass demonstrations attempt to combat the grotesque inequities and health crises that have resulted from the privatization and misuse of developing countries’ water systems.

The discourse surrounding the human right to water is a relatively new human phenomenon, catalyzed by the water issues that seem to be plaguing the expanding human populace (Bakker 2007). Presently, the Universal Declaration of Human Rights does not expressly mention a human right to water and a declaration of government ministers adopted at the Third World Water Forum in Kyoto in 2003 notably lacked language recognizing the right to water as a human right, indicating a lack of international consensus on the issue (Barlow and Clarke 2002; Goldman 2007). However, the UN International Covenant on Economic Social and Cultural Rights (ICESCR) has stated that a right to water is implicitly outlined through other rights in the ICESCR (Goldman 2007). Specifically, the ICESCR has declared that the right to water is implicit within the right to an adequate standard of living and the right to the highest attainable standard of health (Petrova 2006). For the ICESCR the right to water is defined by its availability, quality, and accessibility, that is to say that “water, and water facilities and services, must be affordable for all” (Petrova 2006). Furthermore, the right to participate, and the right to provide effective remedies to local water management problems have been defined by the ICESCR because it is believed that governing parties have some “immediate obligations” in relation to the right of water, “such as the guarantee that the right will be exercised without discrimination of any kind…and the obligation to take steps…toward the full realization of the rights to an adequate standard of living and to the highest attainable standard of health” (Petrova 2006). By giving the community rights to get involved, the potential for discrimination of water distribution is diminished. Furthermore, the ICESCR has defined clauses that serve to protect against the actions of corporations operating water facilities. In particular, “where water services…are operated or controlled by third parties, government parties must prevent them from compromising equal, affordable, and physical access to sufficient, safe and acceptable water” (Petrova 2006). Furthermore, “arbitrary or unjustified disconnection from water services or facilities,” and “discriminatory or unaffordable increases in the price of water” constitute direct violations of government obligations to respect the right to water (Petrova 2006). ICESCR defines these protections because it recognizes that they are directly relevant to potential violations that might arise from water privatization.

The protecting of human rights to water from the potential violations by privatized water utilities through the mechanism of government responsibility may be inadequate against the power differential between multinational water companies and the very impressionable governments of developing countries. “Governments of developing countries may be weak, corrupt, or fearful of scaring off foreign investment” (Trawick 2003). It is therefore necessary to support legal mechanisms for holding private water providers directly liable for infringing on the human right to water. In order to accomplish this, with the help of the ICESCR, an international legal framework aimed at controlling the management quality of privatized water firms is in desperate need.

Overcoming privatization and integrating solutions.

Private public partnerships

In today’s dominant discourse, the distinction between public and private is assumed to be sharp and clear. However, the most conventional historical readings of the world’s largest water projects, for example the Suez Canal, Indus river waters, the St. Lawrence Seaway, and the Hoover Dam projects all reveal that this “distinction between public and private is blurred” (Gleick et al. 2002). Most of the world’s largest water projects have been joint public/private ventures in which “governments have typically been the lead investors and movers behind them, while private firms have done the infrastructural and contract work” (Gleick et al. 2002). Whether they are feeding industrial farming, mining, public services, or energy production, most grand water schemes have had highly subsidized government support. If this is the case, then current private water management firms at work in developing countries appear to be pushing too strongly neoliberal agendas against the governments whom they ought to be working with, which is resulting in infringements on the rights of the people of those countries.

Maria McFarland Sánchez–Moreno and Tracy Higgins (2004) argue that “privatization does not need to constitute a violation of the right to water…instead, privatization might indeed contribute to the realization of the right to water”. Nevertheless, the privatizing of water in developing countries has been resulting in rights infringements. Commenting on the privatization of water in Cochabamba, Bolivia, Sánchez,–Moreno and Higgins (2004) have argue that tje Bolivian government might have violated public right to water by approving rate increases without providing for mechanisms to protect its poor residents (McFarland and Higgins 2004).

Under the monitoring obligations laid out by the ICESCR, a private water provider has a duty to conduct studies of the human rights impact of proposed privatization contracts (Petrova 2006). Such duty would compel private water providers to put their “superior institutional resources into designing pricing solutions, such as differential pricing and subsidies for low–income users to ensure affordability and access to minimum amounts of water for all” (Hukka and Katka 2003). In addition, there are procedural rights to information and participation of affected people. Water providers would be required not only to make available the results of human rights studies to stakeholders, but to consult the local communities affected by their activities (Petrova 2006). Imposing a relationship of duties and rights between multinational water providers and affected communities could help to more efficiently construct a water system that would be work around weak or corrupt governments and generate tangible working relationships between the private water firm and the public intended to be within the water system. Certainly it would be ideal that the capital gains from developing world privatized water systems would be re–invested into the water system, but in an effort to preserve the valuable infrastructure the private water firms help to establish and maintain, the ICESCR requirements could help privatized water firms to transition towards a human rights approach to water distribution and incorporate public participatory management.

Public sector reform and cooperative models.

To combat the initial imposition of foreign water management firms, communities around the world are implementing case specific structures that meet their regional public and industrial demands and re–focus the mandate of water distribution policies in the region with a human rights foundation. In Porto Alegre, Brazil, a publicly owned not–for–profit company is operating independent of government subsidies (Baierle 1998). The model in Porto Alegre is spreading throughout northern Brazil and has been given the title of participatory water management. Any profit resulting from metered water tax is reinvested into the company to maintain the infrastructure and the integrity of the system. With a primary mandate to provide clean drinking water to the community, no quality is sacrificed for the bottom line. Furthermore, poor communities are prioritized because they particiate in the direction of the project (Baierle 1998).

Santa Cruz, Bolivia operates a model that has been titled a consumer co–operative (Nickson 2000)). This type of models have been opening up water access in smaller communities across the globe, working especially well in urban and rural slums where the government fails to supply basic services (Nickson 2000). Santa Cruz’s consumer co–operative has been called one of the best–managed water utility in Latin America. The mandate of co–operatives like the one in Santa Cruz is formed with a socially responsible approach. One of the features of the Santa Cruz co–operative is to charge less for the first 15 cubic meters of water consumer per household each month, leaving customers to build a sense of responsible water use (Nickson 2000). If customers are unable to pay their water distribution fees, they are not disconnected, but encouraged to get involved in the management of the system. This community based approach that incorporates community member input and expertise results in an efficient and transparent administration, which has virtually eliminated corruption (Nickson 2000).

Similar to the consumer co–operative model, the city of Dhaka, Bangladesh has formed a trade union co–operative, which makes use of the already intact and working management of a union to effectively maintain the water utilities for a population of over 10 million inhabitants (Hak 2006). The cooperative was instigated by public outcry when the World Bank proposed privatization of the water supply in 1997. The water supply contract was given to the trade union after a trial basis which proved the trade union to be much more efficient, community oriented and socially responsibly than the private firm in contest (Haq 2006). The union cooperative’s achievements included a considerable expansion of the number of people with access to running water as well as a sizable reduction in water losses.

It appears that communities who pursue democratic, community based models for water distribution ought to be supported and initiated due to the obvious success of these models. Global policy makers will find it difficult to apply a general model to all cases of water distribution dilemmas because of the large number of variables making every community different in regards to the challenges of managing water utilities (Trawick 2003). Because of this, a generalized policy for water management in developing countries is almost impossible to implement. However, promoting the general characteristics of the above models may be helpful to build other proper functioning, rights based, water management systems in more communities. These community managed models remain simple, equitable, sustainable and transparent; they offer a participatory approach with decision making in the hands of local people and they cultivate a community that understand the watershed, and the results of abusing one’s source of water.

Conclusion

With a coherent international legal framework, the international community can scrutinize the activities of multinational water companies. With this framework setting the standard, a human rights reform in water privatization seems attainable. Having a human rights approach results in the primary motivation to gain capital to take a back seat to the fair distribution of water. Furthermore, with human rights as a mandate, the participation of the local people affected by privatization would protect the interests of affected communities, but also reduce the political risk for private investors, possibly preempting some of the privatization fiascos, like the water war in Bolivia (McFarland and Higgins 2004). Also, a human rights approach would contribute to the goal of universal access to water by clarifying that water is “a legal entitlement, rather than a commodity or service provided on a charitable basis” (Petrova 2006).

The transitions towards rights based models will be challenging, but with the knowledge that better and socially responsible alternatives can be achieved by investing in community based participatory approaches to water management which ensure equitable and sustainable use of water, water management firms and can start moving in the direction of a universal rights based model even before an international legal framework obliges them to.

Responsible water usage can only be achieved by empowering local communities and creating local accountability. Public cooperatives, or human rights based private firms in partnership with the public can help to promote sustainable watershed management. Furthermore, this type of participatory management, along with the possible reinvestment potential of capital gains, will develop a conscience to invest in technologies that will increase efficiency in irrigation, industrial usage and improve water harvesting techniques, such as rain water harvesting, check dam building, holistic watershed management, integrated river basin management and irrigation efficiency improvement.

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