|Thirst for Justice|
Millions of people across the globe still do not have access to clean water and, despite years of promises, that is unlikely to change soon. John Vidal on the failures of privatisation and the resurgence of the public sector.
Latin America's largest metropolis, with more than 20 million people, is sinking. Mexico City is built on an ancient lake that has been drained of water, and now the underground aquifers are collapsing. But that is only half the problem. In what is developing into one of the world's most pressing environmental problems, rivers of sewage flow slowly through many poor neighbourhoods, the city loses 40-50% of all its water supplies in leaks, and 100 cubic metres of hard-to-dispose waste is generated every second.
Yet every day more than 1,000 people come to live in Mexico City, and the local authorities are overwhelmed. Last year, a million people - the equivalent of a population roughly the size of Birmingham's - depended on water trucks, or "pipas", to meet their basic need for water. The rich bought it bottled, the poorest paid by the bucketful, and there were clashes between neighbours as people stole water from each other. Even though more than 800km of new pipes have been laid in the past few years, 40% of people still refuse to pay or do not receive bills. The whole system urgently needs several billion dollars' investment.
Tomorrow, the world's major water companies, environment groups, local authorities, global bodies, international banks and unions, along with farmers, environmentalists, academics and others, will meet in the city to discuss the world's water problems. They will hear a depressing story. Although hundreds of millions of people have been connected to water mains and many have been supplied with sanitation, twice that many still have no access to clean water - now recognised as a human right.
Moreover, the problems are worsening. The United Nations will tomorrow declare that water quality is declining in most regions, that there is an increasing demand for water to grow crops for burgeoning populations, and that urban areas are exploding. By 2030, some 2 billion people will live in illegal squatter settlements and slums without access to water.
Targets and platitudes
But what may shock people most is that after almost 15 years of promises, goals, targets and platitudes by world bodies, national governments, water companies and others, the world's poorest are still not getting the most basic human need.
There is now no chance that the millennium development goal of halving the proportion of people without access to clean water by 2015 will be met. At this rate of progress, says the World Water Council, "access to clean water cannot be guaranteed until beyond 2050 in Africa, 2025 in Asia and 2040 in Latin America and the Caribbean".
Blame for the failure will be put on large institutions, states and international companies that have the money, or access to it, but that have failed to target the poor. A report by UK charity WaterAid will show that 61% of the European Union's international aid earmarked for water and sanitation goes to comparatively wealthy middle-income countries.
Global water companies will also be roundly blamed. National governments, international finance institutions, and bodies such as the International Monetary Fund and the World Bank, have all pushed them to provide water for the poor, and they have raised approximately $30bn in the past decade. The companies claim there have been many successful privatisations, but there have also been a string of others that have turned sour, leaving people paying high prices, with thousands unemployed and local authorities and governments locked into crippling long-term contracts.
New analysis by the UN will show that water privatisation has gone into reverse, with private sector investment in water services declining, and that many big water companies have begun withdrawing from or downsizing operations in poor countries because of high political and financial risks.
Last week, Suez, one of the largest water companies, said that it was now almost impossible for it to work in Latin America or Africa, and that it would be concentrating on China, India and eastern Europe. Bruised by its experiences in Argentina and Bolivia, it lamented the volatile politics that have left it losing money. Jean-Louis Chaussade, chief executive of Suez Environment, says: "We are not a political organisation, but how can we do our job if the political system in countries changes its mind so often? We need continuity. Ups and downs make long-term planning difficult. Private funding runs into ideological problems."
He says Suez was a victim of national politics, which it could not control, and its own vaunting ambition to undertake long-term projects. "We can't do anything about political changes," he says. "What we have learned is that it's not possible to lock ourselves into 30-year plans. They are too long. We must find lighter, shorter contracts and local partners. Big investments cannot be funded by prices, rates and services, or by private operators alone. We need to finance in local currencies, to strike annual contracts that allow change."
Chaussade refutes the accusation that, like many other international water companies, Suez had been greedy when it expanded massively into developing countries in the 1990s, stirring intense political resistance. It was opposed because the very idea of "owning" water, let alone profiting from its sale, was seen as abhorrent in some countries, but the company also fell foul of water regulators, which, it says, were not independent but came under the influence of politicians. But he accepts some of the blame. "We need to be more humble," he admits. "We have to adapt to local realities."
In the end, though, water privatisation is about money, and the sums did not stack up for Suez. Because companies borrow money on the international market but are paid in local currencies, they often had to raise prices and risk expulsion. It is a risk that few want to repeat.
Peter Hardstaff, head of policy at the World Development Movement in London, says: "The private sector has received a bloody nose over a range of privatisation failures during the last decade. But it does not mean the end of it. Privatisation is now at a crossroads, but just as critical as what the companies decide to do is what donor governments and institutions decide. Privatisation cannot happen without their political and financial support."
But the partial retreat of international water giants from poor countries leaves governments and world bodies in trouble. For years, they have all pushed heavily the privatisation of water, making it effectively a condition of debt relief and loans. Now, says one observer, they must admit they often got it wrong and are going to have to work with the public sector again.
The International Policy Network in London, which has backed privatisation, accepts that in many places it has been badly thought through. Yet in a book published tomorrow, it advocates more, not less, privatisation. A contributor writes: "In countries dominated by opposition to private provision of water, public sector water infrastructure is typically decrepit and failing, while government subsidies and excessive regulation have created perverse incentives. As a result, both access to water and water quality in these countries are dire."
In fact, research by the World Bank and others demonstrates that the public sector is not always incapable of providing clean water. It still provides, in difficult circumstances, water for 90% of the world.
Hardstaff says the critical thing to understand is that water privatisation has been a specific political project. It has required major political and financial backing with aid or loans. Unless this is reversed, there is no reason to think that privatisation will disappear, even though some companies have taken a back seat.
"The contradiction in the argument for privatisation has been absent from political debate," he says. "This states that poor-country governments are not strong enough to run their own utility, so they need privatisation, which only works, according to its proponents, with strong governments to effectively regulate powerful multinationals."
Two things are now happening. The large companies mostly favour public-private partnerships with shorter contracts, closer links with public authorities, local money and no change of ownership. These have the advantage, say proponents, of not locking any party into long-term risks, and bringing in the technical management skills of the private sector while avoiding some of the political landmines. But the public sector is in many countries reforming itself, gaining confidence and learning to raise money and how to stand up to international pressure.
Cities such as Recife in Brazil and Bogota in Colombia have persuaded the World Bank to make loans for public service expansion, something inconceivable 10 years ago. Others, including Lagos in Nigeria, are working with private companies, but on their own terms.
The pendulum is swinging back towards the public sector and, at some point, international donors, banks and governments will recognise that clean water is a human right and that to deny it to people for the sake of a political idea makes no sense. Until then, billions of people will die from water-borne diseases, waste hours of their day collecting water or go into debt to stay alive.
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