The fight to stop the corporate takeover of the world's waterThere seemed to be an abundant supply of freshwater around the world, even if it was unevenly distributed. Most concerns centred on water quality – toxic dumping, destruction of wetlands, industrial pollution – or water equity - the lack of access to clean water in the Third World. In both cases, pressure was placed on governments to stop the destruction of water systems and relieve the suffering of the poor. In both cases, it was assumed that there was water for all if governments fulfilled their responsibility. The notion that water itself would become a major bone of contention was non-existent.
In the last decade, however, two new developments have changed everything. The first development is that it has suddenly become clear that humanity is actually destroying the world’s freshwater supplies. According to what we were all taught in school, this should be impossible. After all, the earth has a fixed and closed hydrologic system. We have the same amount of water on earth now as at the creation of the planet and it constantly moves through the cycle of rain, renewal of groundwater supplies, evaporation, the formation of clouds and the repetition of the cycle. What was unforeseen, however, was that humanity is capable of permanently contaminating potable water sources, so that, although the amount of water is constant, it is not longer useable. Also unforeseen was the exponential removal of water resources from sites that are accessible, such as aquifers, to sites that are not, such as deserts, where water has been diverted in massive amounts to irrigate crops.
In fact, the world is running out of clean water. Humanity is polluting, diverting and depleting the wellspring of life at an astonishing rate. With every passing day, our demand for fresh water outpaces its availability, and thousands more people are put at risk. Per capita water use doubles every 20 years, and we will add another 2.6 billion people to the earth in the next quarter century. As well, technology and advanced sanitation systems in the global North have allowed people to use (and waste) far more water than they need, while lack of sanitation systems in the Third World means that 90 percent of the sewage and wastewater in developing countries is poured untreated into waterways.
Industrial farming accounts for the most water abuse – about 65 percent. Large-scale farms use chemical fertilizers and nitrates and are subsidized by governments to use massive amounts of water in flood irrigation, instead of using conservation techniques such as crop rotation and drip irrigation. Factory farms, growing everywhere, produce huge amounts of lethal waste; in the U. S. alone, factory farms produce more than 130 times the amount of human waste every year, liquefied animal faeces held in huge lagoons that emit over 400 volatile compounds into the air and water. Industry is the next big polluter and waster of water and its demands on fresh water sources are dramatically rising. Many of the world’s growing industries are water intensive: it takes 400,000 litres of water to make one car and 1,500 billion litres of water annually to produce computers in the U.S. alone.
Already, the social, political and economic impacts of water scarcity are rapidly becoming a destabilizing force, with water-related conflicts springing up around the globe. Quite simply, unless we dramatically change our ways, between one-half and two-thirds of humanity will be living with severe freshwater shortages within the next quarter-century.
The second development is that, as a result of the new scarcity of accessible fresh water sources, water is becoming the “Blue Gold” of the 21st century – a precious commodity that will determine the fate of nations and societies. Suddenly, the private sector has become intensely interested in the future of water and is moving in to take control of this finite and depleting resource.
This should come as no surprise, for the knowledge of this looming water crisis comes in an era guided by the principles of the so-called Washington Consensus, a model of economics rooted in the belief that liberal market economics constitutes the one and only choice for the whole world. Unlimited growth is the driving mantra of our time. And nation states are ruthlessly exploiting their water supplies to stay competitive. For example, to fuel its economic “miracle,” China has diverted massive amounts of water from agriculture to industry, having assessed that the country can make 60 times as much money from this use of its water resources. As a result, four hundred of the country’s six hundred northern cities are facing severe water shortages, as is half the population.
Competitive nation-states are abandoning natural resources protection and privatizing their ecological commons. Everything is now for sale, even those areas of life, such as social services and natural resources that were once, not long ago, considered to be the common heritage of humanity. Governments around the world are abdicating their responsibilities to protect the natural resources in their territory, giving authority away to the private companies involved in resource exploitation.
Faced with the suddenly well-documented fresh water crisis, governments and international financial institutions are advocating a Washington Consensus solution: the privatization and commodification of water. Price water, they say in chorus; put it up for sale and let the market determine its future. For them, the debate is closed. Water, say the World Bank and the United Nations, is a “human need” not a “human right.” These are not semantics; the difference in interpretation is crucial. A human need can be supplied in many ways, especially by those with money. No one can sell or trade a human right.
And so, a handful of transnational corporations, backed by the World Bank and the International Monetary fund, are aggressively taking over the management of public water services in countries around the world, dramatically raising the price of water to local residents and profiting especially from the Third World’s desperate search for solutions to its water crisis. Some are startlingly open: the decline in fresh water supplies and standards has created a wonderful venture opportunity for water corporations and their investors, they boast. The agenda is clear: Water should be treated like any other tradable good, with its use determined by the principles of profit.
It is in the light of these developments that the issue of who owns water and who will make the necessary decisions about its future has become a new priority for the international social justice movement.
The Corporate Players
There are ten major corporate players now delivering fresh water services for profit. Between them, the three biggest - Suez and Vivendi Environment of France and RWE-AG of Germany – deliver water and wastewater services to almost 300 million customers in over 100 countries, and are in a race, along with the others such as Bouygues SAUR, Thames Water (owned by RWE) and Bechtel-United Utilities, to expand to every corner of the globe. Their growth is exponential; a decade ago, they serviced around 51 million people in just 12 countries. And, although less than 10 percent of the world’s water systems are currently under private control, at the rate they are expanding, the top three alone will control over 70 percent of the water systems in Europe and North America in a decade.
The revenue growth of the big three has kept apace. Vivendi earned just US$ 5 billion a decade ago in its water-related revenues; by 2002 that had increased to over $12 billion. RWE, which moved into the world market with its acquisition of Britain’s Thames Water, increased its water revenue a whopping 9,786 percent in 10 years. All three are among the top 100 corporations in the world; together their annual revenue in 2001 was almost $160 billion and growing at ten percent a year – outpacing the economies of many of the countries in which they operate. They also employ more staff than most governments: Vivendi Environment employs 295,000 worldwide; Suez employs 173,000.
The companies are creating sophisticated lobby groups to encourage the passage of legislation friendly to their interests. In France, the big two have long had close political ties with national and local governments. In Washington, they have secured beneficial tax law changes and are working to persuade Congress to pass laws that would force cash-trapped municipalities to consider privatization of their water systems in exchange for federal grants and loans. The United States alone is expected to spend $1 trillion in the next three decades to upgrade their aging waterworks. Financial fund managers are taking note of the expanding water market. Switzerland’s second oldest bank, the Pictet Bank, recently started its Global Water Fund in the U.S. after launching a similar one in Europe in 2000. The bank offers a basket of water companies and predicts that by 2015, seventy-five percent of Europe’s water utilities will be privatized.
Similar funds are fuelling a new type of water financing called "Cross-Border-Leasing" or CBL, prevalent in Germany and now spreading to other European countries. Private banks and investors put huge amounts of money into registered U.S. companies who are eligible for generous American tax write-offs for foreign investment. The investment
pool then "leases" public services such as water delivery from cash-strapped German municipalities for 99 years, giving the local municipal councils a percentage of the "savings" from the tax dodge. CBL effectively robs the public sector, allowing international banks to launder their money, thus avoiding paying taxes in their home countries or the U.S. It also sets the stage for privatization from municipalities forced to abandon their public services.
The performance of these companies in Europe and the developing world has been well documented: huge profits, higher prices for water, cut-offs to customers who cannot pay, little transparency in their dealings, reduced water quality, bribery, and corruption.
A vivid example took place in July 2002, when the corporate conglomerate, Suez, terminated one of the largest private water concessions in the world. Suez ended its 30-year contract to provide water and sewerage services to the city of Buenos Aires, which served a population of 10 million people, when the Argentine financial crisis turned company profits into losses. The Buenos Aires privatization deal, consummated in 1993, had been widely lauded by the World Bank, the Argentine government, and the water industry as an international success story.
During the first eight years of the contract, weak regulatory practices and contract re-negotiations that eliminated corporate risk enabled the Suez subsidiary, Aguas Argentinas S.A., to earn a 19 percent profit rate on its average net worth. Water rates, which the company said would be reduced by 27 percent actually rose 20 percent. To counter union resistance to the price increases, the company gave the workers 10 percent ownership. In exchange, the union consented to a 50 percent staff reduction. Then, Aguas Argentinas reneged on its contractual obligations to build a new sewage treatment plant. As a result over 95 percent of the city’s sewerage is now dumped directly into the Rio del Plata River.
Local citizens were outraged. Hundreds of thousands signed a plebiscite to force the water company to leave. Now, similar citizen—led plebiscites are being held in Rosario and Santa Fe. Working from tiny offices or homes, citizens are turning the tide on water privatization in Argentina. They cite the fact that the companies pay no taxes, refuse to comply with their original contract, have consistently raised prices so that many Argentineans can no longer afford water, charged inflated rates of interest, cut environmental corners resulting in historic levels of water toxicity, and cut services to pensioners, the unemployed, and schools.
A few years earlier, an equally disturbing situation emerged on the other side of the globe, this time with Vivendi and Thames Water. Fifteen months after Adelaide, Australia, signed a contract in 1995 turning over its waterworks to a consortium controlled by Thames Water and Vivendi, the city was engulfed in a powerful sewage smell, which became known a “the big pong” (stench.) An independent investigation by the University of Queensland found that the consortium’s drive to minimize costs had caused it to cut corners on equipment and monitoring, which led to the fouling of a major holding lagoon. This problem came on top of huge rate hikes—59 percent in seven years—and lay-offs of 48 percent of the city’s water staff. In another case, high levels of the parasites Cryptosporidium and Giardia forced the residents of Sydney to boil drinking water during the winter of 1998. An independent government review laid the blame at the feet of Australian Water services, a consortium of Suez and Australian financial interests, citing the company’s cost-cutting measures. Christopher Shell of the University of New South Wales said that the private water plant was “geared to operate as cheaply as possible. Finance was the driver, not productivity.”
Another privatization disaster story emerged as recently as early 2003 when the largest water privatization in the United States was overturned amid a growing chorus of dismay. In 1999, Atlanta, Georgia contracted with United Water (a Suez subsidiary) to run the city’s water system for 20 years. City officials cite service that was ”poor, unresponsive and fraught with breakdowns,” including an epidemic of water main breaks and regular “boil-only” alerts caused by brown water pouring from city taps. Mayor Shirley Franklin said that now the city will once again run its own water to ensure it is “in safe hands.”
The chorus of dismay erupted into an actual uprising in Cochabamba, Bolivia, when Bechtel set up a subsidiary, Aguas del Tunari, which immediately raised the price of water out of the reach of the vast majority of the population. The contract even gave the company the right to charge people for the water they took from their own wells and collected in barrels from the rain. In fact, Bechtel and the British-led consortium of investors put up less than $20,000 of up-front capital for a water system worth millions. Consumers suffered rate increases while the company was expected to earn an annual income of $58 million. A general strike was called by a five-foot, slightly built machinist named Oscar Olivera, who immediately came under death threats from the military. Hundreds of thousands of citizens took to the streets in a confrontation with the army that left many injured and a 17-year-old dead. Bechtel was forced out, and the water services in Cochabamba are now run by a citizen-controlled non-profit.
There was more push-back from Ghana‘s citizens when they recently delayed a plan for water privatization as the government announced a 95 percent hike in water fees in a country where 70 percent of the people earn less than a dollar a day. And in Puerto Rica it was the government, not the citizens, who issued a strongly worded report in 1999 against a Vivendi subsidiary, Compania de Aguas, for failing to adequately maintain and repair the state’s aqueducts and sewers. In 2001, the government issued another warning to the company, citing 3,181 deficiencies in the administration, operation, and maintenance of the water infrastructure.
Corporations are also involved in the privatization of water by other means. The bottled water industry is growing at a rate of over 20 percent a year. Last year, nearly 100 billion litres of bottled water were sold around the world – most of it in non-reusable plastic. Fierce disputes are being waged in communities around the world where companies like Coca Cola and Nestle are aggressively seeking new sources for their “boutique” water, draining aquifers and even buying up whole water systems. Corporations are also involved in the construction of massive pipelines to carry freshwater long distances for commercial sale while others are constructing super tankers and giant sealed water bags to transport vast amounts of water across the ocean to paying customers. The mass movement of water could have catastrophic ecological implications. Nevertheless, the World Bank says that “One way or another, water will soon be moved around the world as oil is now.”
The Institutional Players
These private water companies could not have expanded in the way they have without the protection of a number of powerful institutions with whom they work closely. The main sources of financing of private water services in the Third World comes from the International Monetary Fund (IMF), which often demands that a debtor country privatize its water services in order to obtain debt relief, the World Bank, which can withhold project funding unless a country cooperates, and a myriad of regional banks, such as the European Investment Bank, the Inter-American Development Bank, the Asian development Bank and the African Development Bank.
The World Bank serves the interests of water companies through the International Bank for Reconstruction and Development, which provides loans to governments and can impose conditions in exchange for money, and the International Finance Corporation, which provides direct capital funding. Lending about $20 billion to water supply projects over the last decade, the World Bank has not only been the principle financer of privatization, it has also increasingly made its loans conditional on privatization. A yearlong study by the International Consortium of Investigative Journalists, a project of the Washington-based Centre for Public Integrity, released in February, 2003, found that the majority of World Bank loans for water in the last five years have required the conversion of public systems to private as a condition for the transaction.
Not content to work one on one, the water companies and the World Bank have joined forces through the United Nations to create a set of international think tanks, lobby groups, advisory commissions and forums that have come to dominate the water debate and set the stage for a private future for water. The Global Water Partnership was established in 1996 to reform water utility systems and water resource management around the world and is funded in part by the World Bank. The World Water Council, also formed in 1996, sees itself as a policy think tank whose main task is to provide decision makers with advice and assistance on global water issues. Made up of 175 member groups, the WWC organizes a World Water Forum every three years that has become a major platform for the water corporations as well as a major arena of contention for anti-privatization civil society activists. The World Commission on
Water for the 21st Century, formed in 1998, is composed of 21 “eminent” persons and is mandated with fostering sustainable use of water resources.
Representatives of the global water corporations are strategically placed at the top levels of all three of these agencies. As well, through their industry association, the International Private Water Association, the water companies work closely with the World Water Council, the World Bank and the United Nations.
International Trade
These corporations and their associations - including the U.S. Coalition of Service Industries and the European Forum on Services – also work closely with the World Trade Organization (WTO) and regional trade institutions to further the liberalization of national laws in relationship to water. The WTO is mandated to remove tariff and non-tariff barriers to the free flow of goods, including water, across national borders and is currently negotiating free trade in water through its services negotiations called the General Agreement on Trade in Services (GATS.) On behalf of its powerful private sector, the European Union is requesting that all countries put their water services on the table under the heading of “Environmental Services.”
Key to the current negotiations is a proposed expansion of Article V1, concerning “Domestic Regulation,” which would force a “necessity test” on any government regulation relating to maintaining a public service. The burden of proof would fall to governments to show that their laws are in accordance with “relevant international standards” (set by the WTO) to ensure domestic laws are “the least trade restrictive of all possible measures.” If a government’s standards on drinking water, for example, were challenged by another government on behalf of its for-profit water corporations as a barrier to trade, the defending government would have to prove that it had considered all possible private service providers and that it studied the effects of its decision on all of the different international service providers and markets. Then it might have to opt for the approach that was most favourable to foreign private water service providers. Many governments would be tempted to allow private companies just take over these services rather than put themselves through the burden of building such a strong case that might be struck down by a trade tribunal in the end.
Even as the rules stand now, the only way a county can be exempted from GATS rules is if the service in question is operated entirely on a non-commercial basis, delivered directly from government to people. Once any municipality decides to privatize its water service, under the “National Treatment” rules of the WTO, all the private companies of any WTO member country has the right to compete for that business.
Civil Society Fight Back
In the last five years, an international civil society movement of human rights and anti-poverty activists, environmentalists, public sector workers, small farmers, indigenous peoples and many others, has been formed to stop the corporate theft of the world’s water. Its most important component is local resistance. In communities all over the world, local groups have sprung up to fight the privatization of municipal water services, halt the mining of groundwater by the big water bottling companies, and stop the commercial export of bulk water from their territories.
In Africa, where lack of access to clean water kills millions of people every year, many community groups have formed to wrest back control of local water sources. In Ghana, Mozambique, Senegal and Zambia, civil society groups are fighting World Bank structural adjustment programs that include the privatization of water services. In South Africa, where water is guaranteed as a fundamental human right in the constitution, the Anti-Privatization Forum (APF), a huge township-based grassroots movement, works closely with the South Africa Municipal Workers Union (SAMWU) to fight the practice of water metering. A Suez subsidiary runs Johannesburg’s water services, including delivery to the townships, on a “full-cost recovery basis.” This means that instead of charging for the actual cost of the water, the company charges enough to turn a handsome profit for investors; as a result, millions of residents who cannot pay the exorbitant prices have had their water cut off or had meters placed in front of their homes. In some townships, local groups are now dismantling the meters or removing devices the company installed in the water pipes to constrict the flow of water in certain communities.
All over Asia, a fierce ballet is shaping up around the privatization of water, with a surprising number of victories. Suez subsidiary Maynilad Water is abandoning its concession in Manila, the Philippines, in the wake of public backlash over heavy price increases. The research foundation IBON has played a central role in this victory. In Jakarta, Indonesia, strong protests by environmentalists and students are keeping up the pressure on the government over a contract made with Suez under the old Suharto regime to run that city’s water system. The Indonesian Forum on Globalization, among others, continues to dog the company about high prices and low water quality. In India, the Research Foundation for Science, Technology and Ecology, is working on a number of fronts: Suez is privatizing the Ganga and denying farmers irrigation water; Vivendi is privatizing two major rivers in Jamshedpur; and Coca Cola’s privatization of a huge watershed in Kerala is denying people access to safe drinking water, just to name a few of the struggles there.
In Latin America, there are community groups fighting for access to water or against privatization in almost every country. La Coordinadora de defensa del agua y la vida in Bolivia is perhaps the most famous, having led the fight to oust Bechtel and its water subsidiary after the “water war” of 2000; activists from both this groups and the citizen-led public water company, SAMAPA, still speak to groups all over the world about what happened in their country. Water professionals from CORSAN, the proudly public water company of Porto Alegre, Brazil, have been sharing their expertise with the citizens running SAMAPA. Suez’ 2002 decision to end its 30-year contract to provide water services in Buenos Aires was in part a response to intense pressure from civil society groups such as Assemblea provincial por el agua. Under the leadership of President Lula de Silva and a very strong civil society movement, Brazil is considering taking back all private water concessions into public hands. Friends of the Earth Uruguay is leading a national plebiscite for a referendum on water privatization in that country which has great popular support, and Friends of the Earth Costa Rica is leading the fight in that country.
North America has been more recently targeted by the big water companies. But groups are forming everywhere to fight back. Opposition to water privatization in the U. S., led by Public Citizen’s Water for All campaign and the Service Employees International Union (SEIU), has turned back or limited major privatization projects in New Orleans, Atlanta, Lexington, Chattanooga and Charleston. Citizens groups forced Perrier to abandon a huge water takings project in Wisconsin, and Sweetwater Alliance and Michigan Citizens for Water Conservation are fighting a similar project in their state. In 2003, environmental groups turned back a proposal by Cadiz, California’s largest farming company, to sell aquifer water under the Mojave Desert to Los Angeles for profit, and citizens groups stopped a plan by another private company, Alaska Water Exports, to export massive amounts of water from the Gualala and Albion Rivers to San Diego using giant inflatable bags. In Canada, the Council of Canadians Blue Planet Project, the Polaris Institute, and the Canadian Union of Public Employees joined forces to turn back water privatization projects in Toronto and Vancouver and stop three proposed water export schemes.
In Europe, the movement is led by ATTAC, Public Services International (PSI), Corporate Europe Observatory, Contratto Mondiale sull’acqua (Global Water Contract) and Friends of the Earth International lead the movement. Water privatization started in Europe and the big three water companies, as well as the biggest bottler – Nestle – are all European. As well, the European Union is very aggressive in promoting its companies’ interests around the world. So these groups – particularly PSI and its research division have taken a leading position in researching these corporations and sharing the information with groups around the world.
Many of these groups from around the world came together at the 3rd World Water Forum in Kyoto Japan in March, 2003. There, the World Water Council held the largest gathering ever on the issue of the future of the world’s water. Under the common project “Water is Life,” hundreds of activists attended every session, held press conferences, staged protests and made it clear that the consensus desired and promised by the organizers was not going to happen. In fact, on the web-site of the WWC, the final report clearly states that on the issues of the privatization of water and the role of corporations in the future of water, there was deep division at the Forum – a remarkable achievement for the civil society activists who attended.
Conclusion
This struggle is in its infant stage. Unlike the campaigns around food security or global warming, the fight to protect the world’s water is very young. In many ways, civil society is winning this contest. As people become aware of the issues, they instinctively take the position that water should be regarded as a fundamental human right and must not be allowed to be used for personal gain or private profit. As well, there have been some very powerful victories in the early stages of this struggle. However, we must be clear about the stakes involved.
Faster than most realize, water is becoming a cartel to be controlled by a small but powerful global elite. Unless we are successful at stopping this juggernaut, there will come a time in the not-too-distant future when all decisions regarding water will centre on commercial, not environmental or social justice considerations. This is not to excuse the poor way in which some governments have treated their water heritage, by squandering it, polluting it or using it for political gain. But the answer to poor or corrupt governance is not a non-accountable transnational corporation, but good governance. In its study, the International Consortium of Investigative Journalists found that if the World Bank had applied the same energy and money to improving local utilities, while allowing them to maintain control of their water systems, the local utility would actually perform better than private companies.
The answer to the world’s growing water crisis lies on the twin foundations of conservation and equity. Even the most conscientious of private companies cannot run a business on those ethics. There are some areas of life that should be marked a part of “the commons” and set aside from the rules of the marketplace. Water is one of them. Water belongs to the earth and all species and is a fundamental human right; no one has the right to appropriate it for private profit. Water must be declared a public trust, and all governments must enact legislation to protect the freshwater resources in their territories. Until that time, expect showdowns between water corporations and local communities. And expect them to get more violent. Expect also the rise of a powerful civil society movement to challenge the lords of water. No one gave them the world’s water. People and nature will take it back.
Maude Barlow is the National Chairperson of The Council of
Canadians, Canada’s largest public advocacy organization, and a Director with the International Forum on Globalization. She is the best-selling author or co-author of 14 books, including, with Tony Clarke, Blue Gold, the Fight to Stop Corporate Theft of the World’s Water, which has been published in 17 countries.
Author: Maude Barlow