Water wars: is water a human right or a commodity?

• Author: Gies, Erica
• Position: WAVE POWER

It is a marker of developed countries that nearly everyone has access to clean water. But roughly 1.1 billion people around the world have no such reliable access, according to the United Nations. The result is both grim and predictable: the lack of clean water leads directly to a higher incidence of preventable waterborne diseases such as cholera and dysentery, which kill 2.2 million a year.

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Because water is so critical, cultures worldwide share a belief that it belongs to everyone and that access is a basic human right. This idea has been enshrined legally at least as far back as an ancient Roman precedent called the public trust doctrine. But in recent years, following a worldwide trend toward privatization across sectors, private companies (often European multinationals) have started assuming management of municipal water systems in countries around the world. Western models of capitalism argue that private firms are more efficient and effective than government-run entities, and this rationale can be compelling to local governments in developed countries. However, in developing countries it is often less a matter of choice; rather, pressure to privatize comes from conditions put on loans by the Western-run World Bank, International Monetary Fund, and Inter-American Development Bank. This broad trend toward privatization has begun to raise concerns in many quarters, although so far only 14 percent of water works in the United States have been privatized, and 10 percent worldwide. Some people resist on principle, believing that water should be in the public domain. Others turn against privatization when prices rise or water quality decreases.

"The privatization of public wealth is one of the great issues in our time," says U.S. Representative Dennis Kucinich of Ohio, a Democrat who chairs House subcommittee hearings on water. "There's a systematic attempt to dismantle everything owned by the public," he says, mentioning health care, education, the post office, roads, and social security. "What you have is a move from a democracy toward a plutocracy. This is not just an academic philosophical exercise. This has real economic consequences."

RISING RATES

For many people, water privatization exploded into public view for the first time in 2000, when residents of Cochabamba, Bolivia, revolted against soaring water rates. The previous year, Bolivia's government, pushed by the World Bank, had granted a 40-year water privatization contract to a consortium jointly owned by U.S. engineering giant Bechtel Corporation and the Italian energy company Edison. Rates increased immediately by as much as 200 percent, and many families were paying one-fifth their income for water. The rioting led to government instability and the revocation of the water contract.

Other early adopters of privatization have also experienced rate increases, along with poor maintenance and repair and a lack of water accessibility. The disenchanted circle the globe, from U.S. cities such as Atlanta, New Orleans, Buffalo, and Stockton (California), to Dar es Salaam, Tanzania; Guayaquil, Ecuador; Buenos Aires, Argentina; Manila, the Philippines; Jakarta, Indonesia; and cities in South Africa and Namibia, just to name a few.

Food & Water Watch (FWW), a U.S.- and Germany-based consumer advocacy organization, has tracked rate increases after privatization. It compared rates charged by publicly and privately owned utilities in California, Illinois, Wisconsin, and New York, and found that privately owned water utilities charge customers up to 50 percent more than those that are publicly owned. A 2008 FWW report, Costly Returns, explains why this is the case: "Regulators typically set prices so that a water company recovers all its expenses and a certain percentage of profit [in the United States, usually about 10 percent]. Because its profits are a percentage of expenditure, a company increases them by spending more money on the system. Private companies have a financial incentive to unnecessarily inflate the costs of water and wastewater systems."

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Water companies such as American Water and Veolia Water, a French multinational, say that local public utility commissions have the ultimate say over infrastructure improvements and therefore industry profits. "Every project is reviewed by regulators and other rate case interveners to ensure that the project's scope, delivery, and cost are appropriate," says Maureen Duffy, director of external communications for American Water. "Costs deemed excessive are not allowed to earn a rate of return." Lou Ann Baker, vice president of communications and community affairs for the central region of Veolia Water North America, said her company operates the same way: "In Indianapolis we have a service advisory board that also has to take a look at a capital plan and make the determination [about whether a project goes forward]." However, the FWW report argues that public utility commissions are often too susceptible to industry pressure.

Companies also say water is more expensive today because...