Public Eye on Davos 2004
Water is a Common Good (16.01.04)
Water is a Common Good
Speech of Marianne Hochuli, Berne Declaration
International conference "The Public Eye on Davos", 21 January 2004
We tend to treat water as if this precious resource could never dry up. Perhaps, though, in the past year, the UN year of water, some of us were sensitized to the fact how basic water is for our lives and that of our planet. The remaining quantity of fresh water available amounts to less than half a percent of all the water on earth.
Water reserves are depleted to their limits. The reasons:
Because water is becoming scarce, it is getting more and more valuable. Therefore, private companies are increasingly showing interest for this valuable resource.
Private control of water?
In the past years, large corporations discovered the blue gold. Trade with the precious liquid is among the most lucrative businesses at a global level. In 2000 the turnover was around 400 billion dollars, about 40% of the turnover in the oil business.
For a long time water was considered a common good that had to be collectively managed, and from the utilization of which no one was to be excluded. Water supply so far was mainly the responsibility of national or municipal authorities or local groups. In the last few years, however, this concept is beginning to change, in particular after the
World Water Forum in The Hague in March 2000
with the debate whether access to water is a basic requirement or a fundamental human right.
The main participants in this forum were some of the largest transnational corporations - presenting themselves as those who would save the world from the global water crisis. Among the mightiest of these are the French concerns Vivendi and Suez, the German RWE, but also Nestlé and Unilever (producers of bottled water). Their goal was to define access to water as a basic requirement. This would confer to the private sector with its market mechanisms the rights to exploitation of and the responsibility for the supply of this vital resource on a commercial basis. If the access to water is defined as a human right, however, governments will be responsible to guarantee that all people receive water on a non-commercial basis. No one must be excluded from its utilization.
The result of the debate in The Hague was that access to water is a basic requirement
Inherent to this definition is a new concept of the duty of the state: The supply is to a large extent left to private enterprises, with the obligation of the state limited to the making available of general requirements such as the conditions for investments and regulations. Water is to be managed as a commercial good. Thus, the public good is declared a privately tradable commodity.
In the meantime, public water supplies have begun to be privatized worldwide.
Different Forms of Privatization:, e.g.
Why did towns and municipalities begin to privatize water supply systems?
in our latitudes:
Privatization is also advanced, in particular in developing countries,
It is absurd: Privatization as a rule is financed by public institutions. The former public enterprises are dismantled, changed into independently operating units and trimmed down, many employees are fired, liabilities refinanced or taken over by the state. With loans e.g. from the Worldbank, the infrastructure of water supply and sewage systems in selected cities and urban areas are refurbished. Then, parts of these or entire systems are opened to bids from private enterprises. These receive financial support during the starting stage, subsidies during the operating stage, tax benefits, tax exemption and restitution of investments for construction and operation. The private enterprises expect financial guarantees from the public authorities in order to minimize their own risk (PSI). These processes are also called «the adorning of the bride»
The contractual clauses of many water concessions commit the state to guarantee profits to the private operators for the duration of the contract. When privatization is finally completed, there is hardly any possibility for public control left - even though the public economy is liable for the financial guarantees. Most of these contracts have a duration of 20 to 30 years. In cases of default, water corporations in Valenda/ Spain, Argentina, Hungary, or Cochabamba in Bolivia, threatened to file claims for compensation of damages, a fact which makes the cancelation of such contracts horrendously expensive.
In the case of Cochabamba, Bechtel filed a claim with the international center for arbitration of investment litigation against the government of Bolivia for damages in the amount of about 40 million US $. Also the city of Manila (Philippines) is sued by Maynilad Water (a conglomerate of Suez and the affluent Lopez family) for 303 million dollars, because the city wants to nullify the contract because of insufficient services.
Privatization: its supposed advantages given are in particular lower prices and increased efficiency - the reality is different:
the envisaged profits lead to higher prices
Privatization of water supply will be further promoted in the future by the WTO agreement on services GATS
Within the WTO - at the request of the industrialized countries in particular - by the end of 2005 an extensive deregulation of the service sector is to be achieved. Services include numerous services in connection with water supply, sewage disposal as well as the protection of nature and rural areas. The EU in particular with its multinational water corporations is interested in the deregulation of the water market.
Requests were made to more than 70 countries
At a global level NGOs are demanding from their governments that water - as well as all other public services - be exempt from WTO regulation. Water must not be considered a commercial good but, in the contrary, the access to water has to be acknowledged as a fundamental right internationally.
Women and water supply
In most civilizations, women and men have different roles and responsibilities with respect to utilization and distribution of water. Women and girls are often responsible for the provision of water for cooking, cleaning, health care, hygiene and, if they own land, for tending the fields. Specifically in large parts of Africa, women use more than one fourth of a day to carry heavy water containers. Due to this heavy task they often suffer from phsysical problems, and there is little or no time and energy left for education, a job outside of the house, cultural and political activities, or for rest and recreation. This is a vicious circle: without education, there are less opportunities to find a job and less chance to escape poverty.
Male work is more often seen as a part of the productive economy with paid labor. This means that where men are in charge of agriculture, investments are made with preference into irrigation projects rather than into clean drinking water close to the house.
Women suffer more often from diseases caused by contaminated water because they are longer in contact with water and under time pressure often have to get water from closer sources where the water may not be clean.
They also carry more of the burden of caring for other sick members of the family. If there are additional costs for medication, this bears on the household budget, poverty increases.
The negative consequences of privatization of the water supply can have a disastrous impact on women:
In particular in the context of development cooperation it is realized that women absolutely need to be promoted and included in the process of decision making, that their local knowledge has to be made use of and technologies adapted to it. This insight is laudable, but this perception also has to prevail in economic institutions, or else the constructive endeavors will be nullified by inappropriate economic policies.
Situation in Switzerland:
Approximately 3000 water supply systems are supplying the population with drinking water. A debate was started on whether this situation is still efficient. Towns and municipalities have begun to transform their waterworks into joint stock companies.
But especially after the bill on deregulation of the electricity market was rejected in a referendum in the fall of 2002, the euphoria of privatization was somewhat dampened. In some towns in the East of Switzerland (Kreuzlingen, Frauenfeld, Wil, Wettingen) projects of privatization also failed. The population clearly believes that privatization makes no sense. The present system is functioning and economical.
In December 2002, Franziska Teuscher, representative of the Green Party in the national council, submitted for the second time a parliamentary initiative requesting that water be declared a public good and any profit-oriented ventures of drinking water supply prohibited. The competent commission will have to debate the question and propose a bill to the national council within six months.
Proposals: The right to access to water is to be guaranteed in the federal constitution. At an international level: an international agreement is to define access to clean water as a human right and water is to be protected as a public good.
UN: The economic and social council in the year of water emphasized the right to access to water as essential for a decent quality of life and demanded that water be considered a social and cultural good and not in the first place a commercial commodity.
Resistance from civil society: Nestlés attempt to obtain exploitation rights for the
drinking water source of the municipality of Bevaix in the canton of Neuchâtel were thwarted thanks to the mobilization of a large part of the population.
Nestlé in Brazil: by demineralizing thermal sources the concern is tapping plain drinking water. The product is bottled and exported all over the world under the nice sounding name «Pure Life». With ecological consequences: the groundwater level is sinking, one of the mineral sources has already run dry. Here as well, civil parties filed a suit. The decision is pending.
But an other lawsuit has been decided, which might be decisive:
Nestlé is drawing one billion liters of water from Lake Michigan, selling it bottled as «Ice Mountain Water». For this right the company paid a flat licence fee of 75 dollars. The fundamental question has to be asked here whether the resource water may be traded as private property. Nestlé argues that bottled water is a product and no longer a resource. The Michigan Citizens for Water Conservation brought this case to the court and they won against Nestlé. But now Nestlé has appealed and will continue to pump spring water during the appeals process.
International conference "The Public Eye on Davos", 21 January 2004
We tend to treat water as if this precious resource could never dry up. Perhaps, though, in the past year, the UN year of water, some of us were sensitized to the fact how basic water is for our lives and that of our planet. The remaining quantity of fresh water available amounts to less than half a percent of all the water on earth.
Water reserves are depleted to their limits. The reasons:
 | the population on earth is increasing at a high rate |
| | an increasing number of people move to the cities where the limited water supplies cannot meet the requirements of a growing population |
| | per capita consumption of water is growing exponentially. In particular in the affluent industrialized countries, much more water is consumed than would be necessary (private consumption ca. 10%) |
| | 20 to 25% are consumed by industry, with an enormous increase, e.g. for the manufacturing of cars and computers |
| | irrigation in agriculture claims ca 70%. As this method of agriculture is highly subsidized by the state and the taxpayers, especially in industrialized countries, there is little incentive for agricultural enterprises to change to more careful methods. |
| | large quantities of water are lost due to leaking pipework |
| | an other serious problem is the pollution of surface waters. Cutting down of forests and the destruction of damp biotops, introduction of pesticides and chemical fertilizers in waters |
| | at present, there is a shortage of water in 31 countries. More than a billion of people have no access to clean drinking water, and almost three billion have no plumbing. |
Because water is becoming scarce, it is getting more and more valuable. Therefore, private companies are increasingly showing interest for this valuable resource.
Private control of water?
In the past years, large corporations discovered the blue gold. Trade with the precious liquid is among the most lucrative businesses at a global level. In 2000 the turnover was around 400 billion dollars, about 40% of the turnover in the oil business.
For a long time water was considered a common good that had to be collectively managed, and from the utilization of which no one was to be excluded. Water supply so far was mainly the responsibility of national or municipal authorities or local groups. In the last few years, however, this concept is beginning to change, in particular after the
World Water Forum in The Hague in March 2000
with the debate whether access to water is a basic requirement or a fundamental human right.
The main participants in this forum were some of the largest transnational corporations - presenting themselves as those who would save the world from the global water crisis. Among the mightiest of these are the French concerns Vivendi and Suez, the German RWE, but also Nestlé and Unilever (producers of bottled water). Their goal was to define access to water as a basic requirement. This would confer to the private sector with its market mechanisms the rights to exploitation of and the responsibility for the supply of this vital resource on a commercial basis. If the access to water is defined as a human right, however, governments will be responsible to guarantee that all people receive water on a non-commercial basis. No one must be excluded from its utilization.
The result of the debate in The Hague was that access to water is a basic requirement
Inherent to this definition is a new concept of the duty of the state: The supply is to a large extent left to private enterprises, with the obligation of the state limited to the making available of general requirements such as the conditions for investments and regulations. Water is to be managed as a commercial good. Thus, the public good is declared a privately tradable commodity.
In the meantime, public water supplies have begun to be privatized worldwide.
Different Forms of Privatization:, e.g.
| | complete sale of the public water systems and water treatment plants, as in GB |
| | tthe most common form, also called Public Private Partnership, where the government awards concessions or leases to water corporations, who then deliver the services required and assume the costs for operation and maintenance of the system. In compensation they levy a charge and keep the surplus profit for themselves. |
Why did towns and municipalities begin to privatize water supply systems?
in our latitudes:
| | in the course of neoliberalism, company taxes were reduced considerably almost everywhere. Many municipal authorities no longer have the necessary tax revenue to meet their obligations, they suffer budgetary deficits and debt pressure. |
| | derelict water pipe and sewer systems |
| | many municipal and city authorities hoped for budgetary relief |
Privatization is also advanced, in particular in developing countries,
| | by structural measures required by IMF and Worldbank, who demand privatization of water supply systems as a condition for new credits |
| | global financial crisis |
| | decrease in public aid for development |
| | tax evasion |
It is absurd: Privatization as a rule is financed by public institutions. The former public enterprises are dismantled, changed into independently operating units and trimmed down, many employees are fired, liabilities refinanced or taken over by the state. With loans e.g. from the Worldbank, the infrastructure of water supply and sewage systems in selected cities and urban areas are refurbished. Then, parts of these or entire systems are opened to bids from private enterprises. These receive financial support during the starting stage, subsidies during the operating stage, tax benefits, tax exemption and restitution of investments for construction and operation. The private enterprises expect financial guarantees from the public authorities in order to minimize their own risk (PSI). These processes are also called «the adorning of the bride»
The contractual clauses of many water concessions commit the state to guarantee profits to the private operators for the duration of the contract. When privatization is finally completed, there is hardly any possibility for public control left - even though the public economy is liable for the financial guarantees. Most of these contracts have a duration of 20 to 30 years. In cases of default, water corporations in Valenda/ Spain, Argentina, Hungary, or Cochabamba in Bolivia, threatened to file claims for compensation of damages, a fact which makes the cancelation of such contracts horrendously expensive.
In the case of Cochabamba, Bechtel filed a claim with the international center for arbitration of investment litigation against the government of Bolivia for damages in the amount of about 40 million US $. Also the city of Manila (Philippines) is sued by Maynilad Water (a conglomerate of Suez and the affluent Lopez family) for 303 million dollars, because the city wants to nullify the contract because of insufficient services.
Privatization: its supposed advantages given are in particular lower prices and increased efficiency - the reality is different:
the envisaged profits lead to higher prices
| | in France, prices have increased by 150% since the water supply was privatized |
| | in Spain there was a price increase of 105% between 1989 and 1995 while the profits of the water corporations showed a growth of 692% in the same period |
| | an increase in efficiency is not documented anywhere, Chile for example was considered a model before 1996 |
| | there is no incentive to reduce waste, more consumption means higher profits |
| | the corporations are interested in business with financially potent customers in large cities, «picking the raisins in the pie» |
| | agreed investments were not made, water supply pipes and sewage systems in the country were not adequately serviced (Argentina, Bolivia, Budapest, Brazil, Great Britain, Philippines/Manila, Puerto Rico) |
| | reduction of personnel |
| | pollution from the pipework (Argentina, USA) |
| | privatization leads to a considerable power gap between the corporations and their negotiating partners in local authorities. Often the power of decision is passing more or less into the hands of the private corporations. It becomes difficult for the responsible political authorities to implement control or to monitor the compliance with quality requirements |
Privatization of water supply will be further promoted in the future by the WTO agreement on services GATS
Within the WTO - at the request of the industrialized countries in particular - by the end of 2005 an extensive deregulation of the service sector is to be achieved. Services include numerous services in connection with water supply, sewage disposal as well as the protection of nature and rural areas. The EU in particular with its multinational water corporations is interested in the deregulation of the water market.
Requests were made to more than 70 countries
At a global level NGOs are demanding from their governments that water - as well as all other public services - be exempt from WTO regulation. Water must not be considered a commercial good but, in the contrary, the access to water has to be acknowledged as a fundamental right internationally.
Women and water supply
In most civilizations, women and men have different roles and responsibilities with respect to utilization and distribution of water. Women and girls are often responsible for the provision of water for cooking, cleaning, health care, hygiene and, if they own land, for tending the fields. Specifically in large parts of Africa, women use more than one fourth of a day to carry heavy water containers. Due to this heavy task they often suffer from phsysical problems, and there is little or no time and energy left for education, a job outside of the house, cultural and political activities, or for rest and recreation. This is a vicious circle: without education, there are less opportunities to find a job and less chance to escape poverty.
Male work is more often seen as a part of the productive economy with paid labor. This means that where men are in charge of agriculture, investments are made with preference into irrigation projects rather than into clean drinking water close to the house.
Women suffer more often from diseases caused by contaminated water because they are longer in contact with water and under time pressure often have to get water from closer sources where the water may not be clean.
They also carry more of the burden of caring for other sick members of the family. If there are additional costs for medication, this bears on the household budget, poverty increases.
The negative consequences of privatization of the water supply can have a disastrous impact on women:
| | 70% of the poorest population are women. Price increases for water lead to more poverty. |
| | privatization already has lead to a reversal in solidarity among women, example South Africa. |
| | as we shall see in the example of Bulgaria, the employees in the administrative sector of water supply are mainly women. They are especially hard hit by dismissal |
| | women have hardly any say in the question of privatizations, nor in budget debates |
In particular in the context of development cooperation it is realized that women absolutely need to be promoted and included in the process of decision making, that their local knowledge has to be made use of and technologies adapted to it. This insight is laudable, but this perception also has to prevail in economic institutions, or else the constructive endeavors will be nullified by inappropriate economic policies.
Situation in Switzerland:
Approximately 3000 water supply systems are supplying the population with drinking water. A debate was started on whether this situation is still efficient. Towns and municipalities have begun to transform their waterworks into joint stock companies.
But especially after the bill on deregulation of the electricity market was rejected in a referendum in the fall of 2002, the euphoria of privatization was somewhat dampened. In some towns in the East of Switzerland (Kreuzlingen, Frauenfeld, Wil, Wettingen) projects of privatization also failed. The population clearly believes that privatization makes no sense. The present system is functioning and economical.
In December 2002, Franziska Teuscher, representative of the Green Party in the national council, submitted for the second time a parliamentary initiative requesting that water be declared a public good and any profit-oriented ventures of drinking water supply prohibited. The competent commission will have to debate the question and propose a bill to the national council within six months.
Proposals: The right to access to water is to be guaranteed in the federal constitution. At an international level: an international agreement is to define access to clean water as a human right and water is to be protected as a public good.
UN: The economic and social council in the year of water emphasized the right to access to water as essential for a decent quality of life and demanded that water be considered a social and cultural good and not in the first place a commercial commodity.
Resistance from civil society: Nestlés attempt to obtain exploitation rights for the
drinking water source of the municipality of Bevaix in the canton of Neuchâtel were thwarted thanks to the mobilization of a large part of the population.
Nestlé in Brazil: by demineralizing thermal sources the concern is tapping plain drinking water. The product is bottled and exported all over the world under the nice sounding name «Pure Life». With ecological consequences: the groundwater level is sinking, one of the mineral sources has already run dry. Here as well, civil parties filed a suit. The decision is pending.
But an other lawsuit has been decided, which might be decisive:
Nestlé is drawing one billion liters of water from Lake Michigan, selling it bottled as «Ice Mountain Water». For this right the company paid a flat licence fee of 75 dollars. The fundamental question has to be asked here whether the resource water may be traded as private property. Nestlé argues that bottled water is a product and no longer a resource. The Michigan Citizens for Water Conservation brought this case to the court and they won against Nestlé. But now Nestlé has appealed and will continue to pump spring water during the appeals process.
