Water privatization

From Wikipedia, the free encyclopedia

Jump to: navigation, search
Unbalanced scales.svg
 The neutrality of this article is disputed. Please see the discussion on the talk page. Please do not remove this message until the dispute is resolved. (September 2009)

Water privatization is a short-hand for private sector participation in the provision of water services and sanitation, although more rarely it refers to privatization of water resources themselves. Because water services are seen as such a key public service, proposals for private sector participation often evoke strong opposition. Globally, more than 90% of water and sanitation systems are publicly owned and operated.

The Cochabamba protests of 2000, also known as the "Cochabamba Water Wars", which were a series of protests that took place in Cochabamba, Bolivia's third largest city, between January and April 2000, happened because of the privatization of the municipal water supply.

The prospect that two-thirds of the world's population will have no access to fresh drinking water by 2025 has provoked the initial confrontations in a worldwide battle for control over the planet's most basic resource.[citation needed]

Contents

[edit] Reasons for privatization

In developing countries, during the 1990s there has been pressure from US Government-backed financial institutions such as the World Bank and IMF to introduce private sector participation in water supply and sanitation, for example through the imposition of loan conditionalities.

[edit] Impact of privatization

Unbalanced scales.svg
 The neutrality of this article is disputed. Please see the discussion on the talk page. Please do not remove this message until the dispute is resolved. (December 2009)

Fredrik Segerfeldt, the author of the book Water for sale, wrote in FT that 97 % "of water distribution in poor countries is managed by the public sector, which is largely responsible for more than a billion people being without water. - - In poor countries with private investments in the water sector, more people have access to water than in those without such investments. Moreover, there are many examples of local businesses improving water distribution. Superior competence, better incentives and better access to capital for investment have allowed private distributors to enhance both the quality of the water and the scope of its distribution. Millions of people who lacked water mains within reach are now getting clean and safe water delivered within a convenient distance."[1]

According to the World Bank, in 2007, 84 percent of water systems privatized in the 1990s were still under private control. 24 countries have regained public management of their water systems.[2]

According to Fredrik Segerfeldt in Financial Times, higher prices from the privatization of water resources can cause increased investments in expanding water systems.[1]

[edit] England

Main article: Water privatization in England

The impact of private sector participation can vary substantially from one case to the other. In the case of water privatization in England, tariffs increased by 46% in real terms during the first nine years and operating profits have more than doubled (+142%) in eight years. On the other hand, privatization increased investments (in the six years after privatization the companies invested 17 billion Pound Sterling, compared to 9.3 billion Pound in the six years before privatization) and brought about compliance with stringent drinking water standards and led to a higher quality of river water.[3] However, it has been also argued that privatisation has led to both a decline in quality and supply with much of the infrastructure being left to decay.[4]

[edit] Bolivia

Main article: 2000 Cochabamba protests

When Bolivia sought to refinance the public water service of its third largest city, the World Bank required that it be privatized. Which is how the Bechtel Corporation of San Francisco, (California, U.S.A.,) gained control over all of Cochabamba's water; even that which fell from the sky. "And these laws and contract also prohibited people from gathering rainwater. So rainwater was also privatized. [Bechtel was given a monopoly privilege to collect rain water, of which citizens were disenfranchised.] Unpaid bills gave the company rights to repossess debtors' homes and to auction them off. People had to make choices: from eating less and paying for water and basic services, to not send children to school, or not going to the hospital and treating illnesses at home; or, in the case of retired people who have very low incomes, they had to go out and work on the streets. Then with the slogan, 'The Water is Ours, Damn it!' people took to the streets to protest, (chanting 'The people, united, will never be defeated!) Then we witnessed how the government defended the transnational interests of Bechtel. People wanted water not teargas! People wanted justice not bullets! There were hundreds of young people, 16 or 17-year olds, who lost their arms or legs or who were left handicapped for life by brain injuries and Victor Hugo Daza was killed." — Oscar Olivera (leader of the Coalition in Defense of Water and Life). The price this beleaguered country paid for World Bank loans, was the privatization of the state oil industry, and its airline, railroad, electric and phone companies. But the government failed to convince Bolivians that water is a commodity like any other. Bolivia was determined to defend the corporation's right to charge families living on two dollars ($2) a day, as much a one-quarter or their income for water. The greater the popular resistance to the water privatization scheme, the more violent became the standoff.[5]

"At the climax of the struggle, the army stayed in their barracks; the police also remained in their stations; the members of Congress became invisible; the Governor went into hiding; and afterwards, he resigned. There wasn't any authority left. The only legitimate authority was the people gathered at the city square making decisions in large assemblies. And, at the end, they made the decisions about water. I think people, all of us, young and old, were able to taste, to quench our thirst for democracy." — Oscar Olivera. Cochabamba's victory cost 6 dead and 175 injured, including two children blinded by teargas. Inspired by Cochabamba's example, popular movements around the world continue to successfully resist water privatization schemes.[6]

Following the Cochabamba Riots of 2000 in Bolivia, Cochabamba's water system is now run by an organization of community and government representatives. Though at a World Bank secret[7][8] tribunal, Bechtel is seeking "compensation for damages" from Bolivia in the amount they would have profited had Bolivian citizens kept paying 1/4 of their income for water. Bechtel is demanding "at least US $25 million" — which is equal to 1.7% of Bolivia's public spending (as such a sum could finance 125,000 new connections to the public Cochabamba water system); "or 125,000 new water connections in Cochabamba."[9]

[edit] Multinationals

Multinational corporations are heavily involved in water privatization. According to Masons Water Yearbook 2004/5, 545m people (9% of the world population) were served by private providers. Argentina and Bolivia have since rescinded water privatization schemes. The three companies of water privatization are:

The next biggest players are Aguas de Barcelona (35.2 million); SAUR (33.5 million); and United Utilities (22.1 million).

However, increasingly, domestic water operators are entering the market in Middle Income Countries (e.g. Brazil, Colombia, Malaysia, and China).

[edit] Opposition to water privatization

Privatization proposals in key public service sectors such as water and electricity are often strongly opposed. Opponents may include political parties, civil society groups, and wide groups of citizenry. Opposition to privatization includes fear that giving multinational corporations control over the necessities of life would be disadvantageous; that as a result profits would be valued over service, and expensive centralized projects will be undertaken to the exclusion (of even outlawing) of small wells or rain water collection. Past and current water privatization regimes and proposals have denied peoples' rights to collect rain water.

According to PSIRU, a research unit at the University of Greenwich, this has been the case in England and Wales.[10] Usually campaigns involve demonstrations and political means. Those disadvantaged by water privatization have revolted in protest (e.g. Cochabamba Riots of 2000 in Bolivia). Other recent examples include Ghana and Uruguay (2004). In the latter case a civil-society-initiated referendum banning water privatization was passed in October 2004. A law banning privatization of public water supply was also passed in the Netherlands in September 2004, with broad cross-party support.

[edit] See also

[edit] References

  1. ^ a b Private Water Saves Lives, Fredrik Segerfeldt, Financial Times, August 25, 2005
  2. ^ World Bank / Public-Private Infrastructure Advisory Facility:Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries, by Philippe Marin, 2009, Overview, p. 6-7
  3. ^ Water privatization and regulation in England and Wales, by Caroline van den Berg 1997
  4. ^ Colin Robinson: A 'crisis'in water? The wrong sort of privatisation, Economic Affairs, Volume 18 Issue 2, June 1998, Pages 25 - 29
  5. ^ THE CORPORATION, documentary, (part 18 of 23) "Expansion Plan."
  6. ^ THE CORPORATION, documentary, (part 22 of 23) "Psycho Therapies."
  7. ^ Public Citizen - press room: "The World Bank’s water conference comes just weeks after the announcement by a secret World Bank trade tribunal that it would not allow the public or media to participate in or even witness proceedings in which Bechtel is suing the government and people of Bolivia for $25 million. The panel, whose chair was appointed by World Bank President James Wolfensohn, rejected an international citizens petition calling for an opening of the case, endorsed by more than 300 citizens groups from more than 43 countries. (Click here to view a release issued by the petitioners at the time of the decision.)"
  8. ^ Earthjustice - news: "The President of the tribunal arbitrating the case responded last week to a petition filed by Oscar Olivera and a coalition of other Bolivian citizens and public interest organizations seeking to participate in the case. (View the petition) The President's letter asserted that the tribunal had no power to permit affected citizens to participate, a stance inconsistent with other arbitral tribunals and U.S. courts, where interested parties are regularly allowed to submit "friend of the court" briefs. The letter also indicated the tribunal's rejection of the groups' requests that documents and hearings in the case be open to the public. (View the letter denying access) The tribunal is comprised of one member appointed by AdT, one appointed by the Bolivian government, and a third – the tribunal's president – appointed by the President of the World Bank. "The panel explicitly rejected all of our requests for public participation in this closed-door process," said Martin Wagner, an attorney for the US-based law firm, Earthjustice. "It is inexcusable that a panel considering an issue as fundamental as the right to water should be able to exclude the very people whose rights will be affected by the case."
  9. ^ Olivera.pdf at TheCorporation.com
  10. ^ PSIRU on UK water privatization (Microsoft Word format).

[edit] Sources

[edit] Further reading

[edit] External links

Multimedia
Retrieved from "http://en.wikipedia.org/wiki/Water_privatization"
Languages