Drinking Water (28 page)

On top of all this, the water she carries back is teeming with parasites and bacteria. Seventy percent of the patients seen at the village clinic suffer from diarrhea they contracted from drinking Toiro River water and following poor hygienic practices. The villagers in Foro are too poor to buy soap for washing their hands after using latrines, if they even have a latrine to use.

With a significant proportion of women’s time and family income dedicated to gathering domestic water—walking to the
river, waiting for the tanker trucks to arrive—opportunities for economically productive activities such as education or other employment are squeezed out. It is no exaggeration to say that the introduction of piped water can transform the social and economic fabric of a community. While climate change has taken hold of the media as the greatest threat facing humanity, many environment ministers would disagree. To them, unsafe drinking water is clearly the single greatest threat facing their citizens, particularly children.

Yet the trend is worsening. From 1950 to 1985, the percentage of the world’s urban population doubled. The United Nations estimates that more than half of all people on earth now live in urban, rather than rural, settings. As a result of growing urbanization, the number of clean communal water sources is decreasing as water and sanitation provisions come under increasing pressure. Indeed, social scientists have introduced the term “water deprivation”—“the inability reliably to obtain water of adequate quantity and quality to sustain health and livelihood”—as a basic index of poverty.

The journalist Charles Fishman describes the consequences well: “Water poverty doesn’t just mean your hands are dirty, or you can’t wash your clothes, or you are often thirsty. Water poverty may mean you never learn how to read, it means you get sick more often than you should, it means you and your children are hungry. Water poverty traps you in a primitive day-to-day struggle. Water poverty is, quite literally, de-civilizing.”

It is not hard to imagine just how different the lives of Aylito and her children would be if they had ready access to clean water. No time lost gathering water. No time lost due to sickness from drinking dirty water. No need to drop out of school. Newfound opportunities to pursue jobs, take care of their families, and build their communities.

In recognition of these pressing issues, the governments of the world committed one of the eight Millennium Development Goals to drinking water. By 2015, the UN has pledged to “reduce by half the proportion of people without sustainable access to safe drinking water.” Given the poor state of water provision in much of the
world and the limits on debt-burdened governments to fund significant infrastructure, this remains a challenging goal.

The problems from water deprivation are clear and have been for years. Everyone can agree that increased access to safe water and improved sanitation are both desperately needed in developing countries and absolutely necessary to improving quality of life. There is little agreement, however, over how actually to achieve this.

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OCHABAMBA SERVED AS THE FLASHPOINT OVER SEVERAL CRITICAL
areas of disagreement. What is the proper role of the market in water allocation? Should access to drinking water be regarded as a basic human right? Regardless of how one answers these questions, practical question remains. What are the appropriate roles of companies and government in providing water whether by right or by price?

The water sector is often described as a natural monopoly. The high costs of infrastructure create significant barriers to entry, thereby making competition difficult because it is hard for new businesses to enter the market. This has often justified state intervention and public provision of drinking water. Almost 95 percent of water systems in the United States are under public control. But that is not inevitable. Nor is it necessarily desirable.

Public water utilities, particularly in developing countries, face a number of potential challenges. Funds to pay for laying new pipes, upgrading old ones, or building new treatment plants can be hard to come by, not to mention the basic costs of maintaining the current aging system. Civil service protections may make the employees insensitive to concerns over customer service. If politicians control jobs, there may be abuses of patronage or corruption, undermining morale. This is not to say, of course, that all water utilities suffer from these shortcomings or even that most do. The basic problem is that current water provision in many developing countries is woefully inadequate, and this has occurred under a tradition of public service provision.

In light of these concerns, many have argued that the answer to safe drinking water in the developing world lies in privatization. Growing demand and shrinking supply make the perfect ingredients for a market solution. The arguments for contracting the operation of water utilities to corporations are similar to those for privatizing other traditionally public services, whether prisons, registries of motor vehicles, or trash collection. Only the private sector, they contend, can mobilize the necessary capital for investments to improve service and ensure efficient management.

At the heart of all these arguments lies the assumption of state failure. It is indeed ironic that international financial institutions funded by governments often made privatization a core condition for lending funds to nations such as Argentina and Bolivia.

Spurred by the consensus of the Dublin Statement, there has been an unprecedented expansion of private sector participation in water supply over the past two decades. The global water service market has been estimated at over $250 billion and growing at an annual 6 percent rate. Water supply services have been privatized across the globe, from the United Kingdom, Poland, and Morocco to Argentina, Indonesia, and the Philippines. “Privatization,” of course, can mean many things. Such arrangements have ranged from outright privatization of water supply infrastructure to /files/01/94/65/f019465/public/private partnerships, management contracts, leases, etc.

In theory, private provision should provide benefits over public provision, particularly in developing countries. The first advantage is access to private capital. A common and understandable excuse offered by many local and regional governments in developing countries for poor water service is the simple fact that building and maintaining water treatment plants and water mains is enormously expensive. Cities across the United States are barely doing enough to maintain their own infrastructure. How realistic is it to expect Cochabamba to do the same? Companies have access to private investment capital and can bring much greater funds to bear toward water supply infrastructure and delivery in a shorter amount of time than can local governments. Moreover, the profit motive ensures that companies will focus on efficiency. A public utility, shielded
from competition and guaranteed a fixed rate of return, has no similar incentive.

Private provision of services should also be less vulnerable to patronage and corruption than local governments where politicians influence hiring decisions. The problem, of course, is that deals can be cut when the initial terms are negotiated. Bechtel had no interest in building the hydroelectric dam above Cochabamba, for example, but local politicians demanded that as a concession for the contract. In a telling statistic, fully 70 percent of the water concession contracts in Latin America have been renegotiated, at least opening the possibility for additional side payments and concessions to the authorities rewarding contracts.

The privatization arguments go beyond private management, however, to the nature of drinking water itself. The failure to treat water as a scarce commodity, advocates argue, only ensures its inefficient distribution and use. A basic axiom of resource economics is that we overconsume goods that are underpriced. Since the market is more efficient than governments at allocating scarce goods, it follows, market prices should be charged for water. This would promote conservation and more efficient use of scarce water resources by making waste expensive.

Perhaps surprisingly, the plight of the poor actually reinforces this argument. The fact that the very poor do pay for water, and pay quite a bit in relative terms, suggests both that they could and would pay for piped water. Thus the principle of “full cost recovery” —charging a price to cover all the costs of investment as well as profit—has seemed both possible and desirable, but also risky.

Private operation of a water system may provide the capital necessary for maintenance and upgrades, yet it requires amortization periods that can run several decades for the investments to pay back. A long-term return on investment also requires general economic, political, and social stability over that period. In many develop ing countries this is far from a given. Hence the difficult challenge: privatization may hold the greatest social potential in developing countries because it can inject needed capital, yet it is in precisely such settings where investment environments are least certain.

The immediate concern that can arise with full cost recovery is one of inequity. If water access is based on ability to pay rather than willingness to pay, then what are the implications for poor and marginalized communities if water prices rise? Does changing the management regime effectively deny them access to adequate clean drinking water? More fundamentally, will private water providers only choose to service wealthier areas and not bother to invest in poorer areas, making privatization a losing proposition for the poor? These are primary concerns of opponents to privatization.

The answer is not as obvious as may first appear. Consider, for example, the privatization of water services in Argentina. Much like Bolivia, spurred by the International Monetary Fund and World Bank in the 1990s, Argentina engaged in a large-scale privatization campaign. Over a decade, roughly one-third of Argentina’s municipalities privatized their water systems. Case studies carried out by researchers from the University of California, Berkeley, and the Universidad de San Andrés in Buenos Aires, Argentina, found that privatization resulted in measurable benefits. Service quality improved (in the form of cleaner water, faster repairs, improved water pressure, fewer stoppages), and the network of both water provision and sewer lines expanded into poorer areas not previously connected at all. The authors surmised that networks expanded into poorer areas because the wealthy parts of the city were already connected.

Using statistical analysis, they also found that privatization of the water system reduced child mortality by 5 to 10 percent. This impact was greatest in poor municipalities, where the marginal improvement in water supply and cleanliness was much greater. As one of the authors concluded:

In spite of the concerns about inducing negative health effects or worsening health inequality, our evidence suggests that the deterioration of water systems in Argentina under public management was so large that it allowed for a privatization that generated profits, expanded service, and reduced child mortality. While the regulated private sector might have been providing sub-optimal services, it seems it was doing a better job than the public sector.

As with the question of whether drinking water is safe, the key question in assessing the public versus private debate is “Compared to what?” Privatization of water systems surely poses its own set of concerns, but these may still be preferable compared to the miserable state of public provision. It’s not as if Cochabamba had a great situation before Aguas del Tunari came in. Robert Glennon recounts an illuminating exchange in this regard between “an Argentinean opponent of privatization, who argued that water ‘is a gift from God,’ and the president of Veolia Environnement (which supplies water to 100 million people throughout Europe, Asia, Africa and the Americas), who responded, ‘Yes … but he forgot to lay the pipes.’”

Interestingly, despite the benefits researchers attributed to privatization in Argentina, they found that public disapproval increased from 49 percent in 1998 to 85 percent in 2002. It’s important to keep in mind the broader context, since many services beyond water and sanitation were privatized, and low-income households were more supportive of privatization than others polled. There is no doubt, though, that antiprivatization positions were politically popular.

The Argentine research is described in detail because, in such a highly charged area, facts are hard to come by. The terrain of the water privatization debate features a contested landscape, dominated by mammoth multinational corporations and savvy nongovernmental organizations (NGOs). With polarized advocates on both sides, it can be difficult to know where the truth lies.

The academic researchers painted a generally positive view of Argentine water privatization. Contrast that, however, with the description by the advocacy group Food & Water Watch of the privatization of the water utility in Buenos Aires: “Before privatization, nonpayment of tariffs had been somewhat of a problem. Aguas Argentinas [the private provider] effectively dealt with this problem by cutting off poor Argentines after three unpaid bills. Consequently, the company ‘persuaded’ 90 percent of its customers to pay.” As two prominent figures opposed to water privatization put it, “The major water privateers are facing mounting and fierce public
opposition to their operations in many parts of Latin America. As in the rest of the world, the damaging effects of water privatization are well-documented: rate hikes, cut-offs to customers who can’t pay, reduced water quality, huge profits for corporate investors, secret contracts, bribery and corruption.” It’s hard to imagine two more contrasting assessments of the same situation.

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S PART OF THE LARGER ANTIGLOBALIZATION WAVE, A VOCAL RIGHTS
-based movement has arisen to challenge the growing pressure for water privatization. For this group, the status quo is equally unacceptable. Rather than reliance on the market, though, their strategy calls for a bold change in how we conceive of the broader issue, arguing for the recognition of a human right to water. We saw such a demand expressed in the grassroots Cochabamba Declaration and its statement that “water is a fundamental human right and a public trust.” Similar calls for a human right to water may be found in more than a dozen international documents. What, though, does this mean in practice?