TCS Daily

Water Wars

By Roger Bate - August 29, 2002 12:00 AM

JOHANNESBURG - The campaign against water privatisation, already substantial, reached its height yesterday at the World Summit for Sustainable Development (WSSD).

'I like privatisation of water if it's the kind of privatisation where the private sector consult with the public to improve efficiency' of water delivery, claimed South African water minister Ronnie Kasrils. But Kasrils is more distrustful when 'water resources are owned by private shareholders'. In other words, he's distrustful of real privatisation.

Of course, Kasrils has come a long way from his former days as a communist member of the military wing of the African National Congress. And he is by no means alone in arguing that consultation is what is needed and not private ownership. Nearly all the activists and delegates at the WSSD think likewise.

Earlier this week, Minister Kasrils launched the Water for African Cities project. This initiative, which is run by the UN Habitat agency in concert with the UN Foundation (a private entity distributing the billion dollar donation of media mogul Ted Turner), wants to increase poor people's access to clean water in urban centres.
It's a classic private-public initiative, which targets 8 African cities, including Johannesburg. According to its Director, US Senator Tim Wirth, it will have a very positive effect in improving access for the poor in those locations.

Initiatives like this seem necessary with perhaps two billion people lacking access to good quality water and over three million dying every year from water-borne diseases. It's ironic that because of the vagaries of supply, 'the poor pay much of their income on water, sometimes 20 times as much as the rich' says Ms Anna Tibaijuka the Director for UN Habitat.

The fact that the poor often pay so much for water seems to add weight to complaints by groups like Oxfam and Friends of the Earth that water is being made a commodity for sale, when it should be 'a global human right'. These groups, under the banner Eco-Equity, demand that privatisation should be reversed and that aid should be increased to prevent so many deaths from water related diseases.

However, Richard Tren a writer on water and a consultant to the South African Government's Water Research Commission criticised the approach of the UN Foundation and the major groups saying it was very Northern focussed. It was true that water access was a problem in urban areas but that the main reason for this was because so much water was wasted in agriculture.

'If 20% of the water wasted in agriculture was used for domestic use (both urban and rural) then the poor would have ample supplies' he explained. 'Minister Kasrils seems intent on blaming the lack of international aid for the poor state of water access in his our country, yet he will not countenance considerable private investment in water projects, or allow water trading, for fear that he will lose control of domestic water issues'.

The World Bank seems to be weighing in more on Tren's side than the Ministers. It has called for greater private involvement in water supply and sanitation provision. Although sensitive to the political nature of water privatisation, it remains firmly committed that privatisation - combined with market mechanisms - is the main way to improve access of the poor to water. It cites evidence from around the globe including Chile where water access for the poor has increased faster than in any other developing country, and nearly all because of trading of water rights.

Water rights trading is one of the thorniest of political issues in water management. Like other environmental trading - for example the successful trading in reducing sulfur dioxide emissions in America - the idea that market mechanisms in water can more efficiently allocate water than old fashioned command and control is widely accepted by economists but adamantly opposed by green NGOs. Yet all NGOs call for improved efficiency in supply. They think this can be achieved by large increases in price for rich domestic customers, but they ignore that water trading can be (and often is) between the poor and impoverished, not just rich businessmen and rich white farmers. In India the value of illegal trades is estimated by the World Bank at being worth over $1 billion.

Indeed, there seems to be widespread confusion that a market mechanism (such as water rights trading among farmers and other rights holders) is the same thing as private company water provision. Tren believes that 'the Eco-Equity alliance intentionally conflates the two issues since privatisation has such a bad name amongst the chattering classes at these types of summits, and they don't like market solutions to anything, even when they can help the poor'.

This confusion is set to continue and will maintain the focus on the demand for aid. Minister Kasrils even called it 'scandalous' that rich countries had reneged on the development aid targets agreed at the first Earth Summit in Rio ten years ago. Then aid was about 0.35% of GDP (the target set was 0.7% GDP), it has now fallen to 0.2% of GDP - but it's still a far higher absolute amount of aid because of great economic development. However, according to George Ayittey of the Free Africa Foundation in Washington DC, 'aid corrupts governments in Africa and other parts of the developing world - private property and the rule of law lead to development, not aid'.

It's time the market was allowed to work in allocating water because governments are failing so abysmally. Since the summit began on Monday over 30,000 children will have died from water borne diseases around the world.

Roger Bate is a Director of International Policy Network in Washington DC

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