Freshwater scarcity and the theory of social adaptive capacity: privatization and the role of the multilateral development banks and corporations in Malaysia.

Author:Alatas, Sharifah Munirah


This paper is a discussion of the presence of TNCs, and development banks and corporations in managing and distributing scarce freshwater resources in Malaysia. The discussion centers around how these entities might have or have not been able to alleviate the problem of water scarcity. The discourse in this work focuses on freshwater scarcity and the theory of social adaptive capacity in Malaysia, amidst the privatization process which is manifested by the presence of transnational water corporations and multinational development banks. How successful are they in enabling society to adapt to growing water scarcity? (1) Through what means are the TNCs and banks managing the high demand for freshwater in Malaysia? What aspects of the water industry are the TNCs and banks focusing on? Are the TNCs and banks facilitating adequate water availability in both urban and rural areas? By asking these questions, we attempt to review the concept of social adaptive capacity of Malaysian society in the context of freshwater scarcity and in the presence of the privatization process of the water industry.

The discussion in this paper is situated within the framework of the social adaptive capacity theory. This means that a majority of states do not go to war over scarce water resources but instead cooperate and seek settlements to reflect their long term interests. Broadly defined, adaptation refers to the genetic or behavioral characteristics which enable organisms or systems to cope with environmental changes, such as drought and water scarcity. (2) Even though TNCs, banks and trade regimes are getting more involved in the water issues, it has not come to the point of conflict in Malaysia. The social adaptation capacity posits that its essence is self-restraint, moderation, comrpomise and peace. The theory accepts the inevitability of the trade in water resources, and many developing and poorer countries see that the central concern is the liberty of the individual; people see the state as a necessary part of preserving liberty and that the state must always be the 'servant' of the collective will. The social adaptation capacity theory is a framework under which society reconciles order (security) with justice (equality). Thus, water TNCs and corporations have an important task at hand, i.e. to perform their duties within the framework of social adaptation capacity. By discussing the role of TNCs and corporations in the business of water, this theory should guide stakeholders to consider affordable operation costs (extraction of water), efficient delivery to households and businesses and equal distribution of clean water to consumers.

Adaptations are considered responses to risks associated with the interaction of environmental hazards such as water scarcity, and human vulnerability or social adaptive capacity. This article hypothesizes that the social adaptive capacity theory will ease water stress despite there being a combination of reduced government control, the growing involvement of TNCs and development banks and privatization, whose aims are to primarily maximize profits ad secondarily to alleviate water stress. The concept of the social adaptive capacity theory can be summarized with the following quote: "For human societies, adaptive capacity can be defined as the ability to plan, facilitate, and implement measures to adapt to climate change. Factors that determine adaptive capacity may include level of economic wealth and well-being, availability of appropriate technology, extent of information and skills, provision of sufficient infrastructure, effectiveness of institutions, political stability, cultural cohesiveness and social equity." (3)

However, capacity for what? The most accurate approach is the scientific capacity for understanding earth sciences, and social and management sciences, and management capacity through adaptation measures and adaptation policy. Generic social adaptive capacity includes the following traits: wealth, population health, education skills, access to technology, governance, stability, effectiveness, equity and social cohesion. Specific social adaptive capacity involves budget allocation for climate adaptation (because climate fluctuations have an impact on rainfall), meteorologists, water scientists, resource, environmental, and climate economists and policy analysts, adaptation technology, health advice, climate education and awareness. All these should play an active role in addressing water scarcity and how to adapt to it. The social adaptive capacity theory is best suited in the analysis of freshwater scarcity and the privatization of water resources because of the critical level of global freshwater availability. Currently, as of 2012, salt water levels are at 97.5% while freshwater levels are at 2.5%. Freshwater resources are in the form of glaciers and permanent snow cover (69.9%), lakes and river storage (0.3%) and groundwater, including soil moisture, swamp water and permafrost (30.8%). (4)

The global water situation has trickled down to countries like Malaysia where there is a growing freshwater crisis. This crisis has been slowly securitized because water scarcity is seen as the ultimate limit to development, prosperity, health and national security. (5) Securitizing water resources brings an entirely new level of discourse and policy initiatives because it switches debates and the attention of policy makers, academics, NGOs and other community groups, to the human dimension in water scarcity and to the sovereignty of states who share water resources at their borders. By securitizing the water crisis all stakeholders would be forced to prevent a breakdown in the social, economic and political fiber of a state because of the high stakes-revenue obtained by privatization projects. Securitizing is thus one example of the social adaptive capacity of humans. While in some parts of the globe, states sharing a common body of water may resort to conflict to secure their precious resource, states in other regions may resort to conflict resolution through regime development (such as SAARC, ASEAN, ASEAN + 3 and ASEAN Economic Community, 2015) which is social adaptive capacity at work. While this may seem like a step in the right direction, the trend towards a global governance of water resources is just another name to privatize water extracting, purification, packaging and delivery. This begs the question: how does the theory of social adaptive capacity promote easy access to water in a water-scarce country? How do the water TNCs, development banks and corporations organize their activities in Malaysia keeping in mind the ultimate goal of social adaptive capacity?

The Intergovernmental Council of the International Hydrological Program [HIP] (UNESCO) is devoted to researching and finding natural water resources and managing those resources. The UN is well into their plans to develop global governance over all sources of fresh water. (6) The form that this global governance takes place is through the formation of the Intergovernmental Panel on Climate Change(IPCC) document HS 15332,"Climate Change Impacts: Securitization of Water, Food, Soil, Health, Energy and Migration". (7) It explains how the UN plans to secure resources. Through the International Monetary Fund (IMF) least developed countries are encouraged to sell their resources on a global platform as "full cost recovery" to the global central bankers. Once those resources are under the complete control of banks like the IMF they become assets to be reallocated (read 'sold') back to the people for a price. All these activities are embodied in the concept of privatization but it undermines the more fundamental and effective theory of social adaptive capacity. In the context of human dimensions of freshwater scarcity, social adaptive capacity refers to a process, action or outcome in a system (household, community, group, sector, country and region). The privatization of water resources focuses on some aspects of society, but it does not take a holistic approach as the theory of social adaptive capacity does. This is because privatization activities in the water industry are profit-driven. In an industry that has a high demand for dwindling resources, large amounts of revenue can be generated. As a result, consumers end up paying more. However, the application of the social adaptive capacity theory could help reduce the tensions felt by consumers who are forced to grapple with high water costs. In a nutshell, privatization involves the following:

  1. "Outsourcing" which means both private contracting for water utility plant operation and maintenance (O&M) and private provision of various services and supplies, such as laboratory work, meter reading, and supplying chemicals.

  2. "Design, build, and operate (DBO)" which means negotiating a contract with a private firm for coupling design and construction services with comprehensive operating agreements for new, expanded, or upgraded facilities.

  3. "Asset sale" which means the sale of government-owned water/wastewater assets to private water companies.

    Social adaptive capacity can be used as a guiding set of rules to enable the private sector to efficiently and affordably process the water sector in Malaysia. In his review Thomas Homer-Dixon (8) (1995) says that the concepts of social adaptive capacity (Ohlsson, 1999) and social...

To continue reading