The Water Lords: Who Owns Your Water?

One of the most important trends (and least understood) in the water industry in the last two decades has been the (selling out) contracting of private companies to operate existing facilities or build and operate new facilities. I don’t have to remind you that the fate of the world rests principally on mitigating climate change and on its water policies as Daniel Zimmer (executive director of the World Water Council) explains:

Water is a political issue, but politicians need to understand why they should care more about water.

Yes, one would think so but unfortunately the commoditization of water is rife, aided and abated by the IMF and the World Bank, never mind that it is unethical and environmentally unsound. Like a case of déjà vu, we are rapidly losing control of our most vital resource to a handful of monopolistic corporations. Corporations don’t care about the environment, and they certainly don’t care about human rights. They only care about profit.

 

Meet the new overlords: here are some of the largest private water corporations: Suez Environnement (this link will take you directly into their press releases touting their latest acquisitions, it will take your breath away), Veolia Water (a spin-off of Vivendi), currently number two though they like to think on their website that they really are number one, RWE is thought to be number three, with more than 640 subsidiaries worldwide and (conservative) annual revenues of more than $50 billion, Bechtel, (the very same company who was awarded gazillions to rebuild and restore potable water systems in Iraq) which, if you remember Bolivia’s famed “water war” of 2001, it was a direct result of a World Bank initiative involving a Bechtel subsidiary: when the price of water tripled after privatization was introduced, thousands took to the streets until the government backed down and told the company to leave. Of course Bechtel, ever the class act, sued the government.

Other major water corporations include Biwater plc, Bouygues/Saur, U.S. Water, Severn Trent, Anglian Water, and a host of others, lesser companies but too numerous to mention.

Some of the worst offenders (the actual list is too great to fit in this measly diary) : not only RWE owns and operates Thames in the UK (btw, it has the worst polluting record), it has in turn acquired American Water Works through Thames Water (the largest publicly held U.S. based water utility with 16 million customers in 29 states and three Canadian provinces, and growing). Thames/RWE is gaining yet more control of U.S. water and wastewater services via an agreement with Operations Management International (OMI), a Denver-based firm. There are more “deals” on the horizon, just read their blurb on their “environment friendly” website.

In 1996, Bouygues/Saur was awarded the contract with a $96 million loan from our “friends” the World Bank. The deal explicitly stated that its aim was “cost recovery” (meaning profit for investors) and stipulated the need to charge for the cost of water, even to poor households. As a result, as in many other countries in Africa, many Senegalese citizens are forced to turn to untreated water systems for their water needs despite a constitutional guarantee of access to water for all.

All of the above companies are aided by the World Bank and the IMF, which are increasingly -forcing- asking Third World countries to abandon their public water delivery systems and contract with the water giants in order to be eligible for debt relief. What a racket! It seems that the World Bank only serves the interests of water companies both through its regular loan programs to governments (which often come with conditions that explicitly require the privatization of water provision) and through its private sector arm, the International Finance Corporation, which invests in privatization projects and makes loans to companies carrying them out. Sounds familiar?

In their dealings with sovereign countries the World Bank and the IMF, more often than not, impose increased cost recovery conditions in order to improve the economic viability of water utilities so that they will be more lucrative for private sector investors. If you go to their website you will read the following:

“Effective water resource management requires that water be treated as an economic good, private participation in water and wastewater utilities has generally resulted in sharp efficiency gains, improved service, and faster investment in expanding service.”

In the “I laugh at you dept”, both the IMF and the World Bank take the view that because of imperfections in water markets (I kid you not), they should be eschewed in favor of comprehensively administered solutions, their solutions:

“At the heart of the approach is the development of a comprehensive analytical framework for water resources management. Water resources should be managed in the context of a national water strategy that reflects the nation’s social, economic, and environmental objectives and is based on an assessment of the country’s water resources. The assessment would include a realistic forecast of the demand for water, based on the projected population growth and economic development and a consideration of the options for managing demand and supply, taking into account existing investments and those likely to occur in the private sector”

Shorter version: huge profits for the private sector (read multinationals), higher prices for water, cutoffs to customers who cannot pay, little or no transparency in their dealings, reduced water quality, bribery, corruption and so on. Did I forget something?

Another water for profit scam is the bottled water industry: it is one of the fastest-growing and least regulated industries in the world, expanding at an annual rate of 20 percent, and that’s another diary.

You may say, “we have made giant strides in desalination technologies and reverse osmosis processes…” so why do we need those water lords? Well, relying on desalination technology is like willing to sacrifice a sheep for a lamb: it is not only really expensive, it uses the very fossil fuels that are contributing to climate change and if you read carefully how an average plant works, it produces massive amounts of saline brine that do, eventually, get dumped into our oceans and help kill off marine life and fragile ecosystems. However, here are some good news on the reverse osmosis front.

And finally, according to the World Water Council, estimates are that the U.S. will have to invest upwards $23 billion annually for the next 20 years to maintain water infrastructure at its current level. Conversely, to expand water services developing countries will need to double their own spending to achieve a reasonable potability (water which is not safe to drink can carry diseases and heavy metals). Good luck with that. It’s the IMF or no way, it seems.

“The human right to water entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses. An adequate amount of safe water is necessary to prevent death from dehydration, reduce the risk of water-related disease and provide for consumption, cooking, personal and domestic hygienic requirements”.

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