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Financing Water for All

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If you drank water today, consider yourself privileged. You’re not one of the 1 billion people without access to this life-sustaining liquid. Financing Water for All, a report published in the 3rd World Water Forum, states that the funding for water sector needs to be doubled to halve the number of people without access to clean water and proper sanitation. The United Nations estimates that US$6.7 billion a year would do the trick. According to a new United Nations report the private financing on water sector is declining and Official Development Assistance (ODA) is being poorly directed.

Should one try to attract more private sector participation or depend solely on public sector? This is a heated topic about which people have very strong opinions, myself included. I believe that subjects such as this often have more sides to them than just plain black and white. Am I being too strict in my own opinion of thinking that water is a basic right and not a commodity like IMF seems to think? What better time to clarify my views on water than during The 4th World Water Forum, organised by the World Water Council, a home to 300 members from academic and business groups, multilateral financial institutions, development agencies, U.N. experts and local authorities. The Forum is currently meeting in Mexico to find new solutions on making clean water available for all.

Thinking of water as a regular commodity is a strong opinion-divider. United Nations and Multilateral Finance Institutions (World Bank, Regional Development Banks, IMF…) seem to have opposite views on the matter.

José Ángel Gurría head of the Task Force on Financing Water for All (previously lead by the ex Managing Director of IMF, Michel Camdessus) says that:

“We have to recognize that water is a valuable asset and that it has a cost, and not only a value. Typically, the cost of water is below its value. If we continue considering water as an almost free public good, we will accelerate its wrongful use, its wrongful disposition, and its abuse….We need people to pay for water, taking into consideration the asymmetries and the development levels of each country.”

The United Nations’s stance is somewhat different:

“In November 2002, the United Nations Committee on Economic, Social and Cultural Rights affirmed that access to adequate amounts of clean water for personal and domestic uses is a fundamental human right of all people….The Committee noted that “the human right to water is indispensable for leading a life in human dignity. It is a prerequisite for the realization of other human rights….Water should be treated as a social and cultural good, and not primarily as an economic commodity.”

These different parties have also different views on how to solve inadequate water supply. The U.N. stresses the importance of international and national level commitment that could be forced by making water a basic human right, while finance sector tries to get companies interested in water by lowering their investment risks and making official aid money available for companies. The U.N. recognises the fact that water supply costs have to be met but says that this shoud be done in a way that doesn’t alter the access to safe water by poor people.

I think both groups have valid points. First of all, adequate water should be accessible to everyone and, as nothing is free, the water supply needs to be paid for. The question is, by whom? In most cases water supply is provided by the public sector of societies; it’s paid by government subsidies, in other words with taxes. The other possibility is that water is paid by the consumers who actually use the water. One could also think of a third option as Gurría mentions, that costs are paid by donors. In my opinion, this should only be considered as a short-term solution because it is not a sustainable way to do pretty much anything.

Multilateral finance institutions’ main argument for water privatisation is that if the true market cost of water is not paid by consumers, they will waste it. It is hard to imagine that people without proper access to clean water would waste it. For instance, in Somalia the average daily use of water per person is 9 litres. Doesn’t sound like wasting, compared to European and North American daily average use per person of up to 500 litres or more. Quite improper to start asking people to save water if they don’t have it, isn’t it?

There are numerous examples of the failure of trying to privatise the water sector. Before privatisation, the water tariffs need to be raised to meet the true market costs of supplying water. In 2003, the cost of water in Ghana rose by 95% and is needed to be increased with 300% more for privatisation to happen. Rudolf Amenga-Etego of the Coalition Against Privatisation (CAP) says,

“Already 35 percent of Ghana’s population has no access to clean water. The current water tariff rates are already beyond the means of most of the population in Ghana. How will the population be able to absorb a so-called ‘market price’ in the context of privatisation?”

South-Africa’s ANC Water and Forestry Minister Ronnie Kasrils has said: “The problem is that when we try to implement cost-recovery, many of the poor cannot pay.” As a result of South-Africa’s cost-recovery policy, there was the worst outbreak of cholera in South Africa’s history in 2000 with a death toll of 260.

If water is to be saved by raising water tariffs, the right place to do this would be in the European and North American agricultural sectors which use huge amounts of water for irrigation of fields (70% of world’s total fresh water consumption is used by agriculture.)

The highly debated Financing Water for All report (.pdf) or Camdessus report published in the last World Water Forum will be extended in Mexico to cover wider sector of water supply and sanitation. The original report was strongly criticised as “a recipe for privatization of water” and “a pretext to allow transnational companies to enter the water service with favourable conditions like currency guarantees and risk-safeguards for investors”.

Despite the critics, something needs to be done in order to attract more finance into the water sector. The United Nations’ publication Supplying Water – For a Price suggests that people should view this problem not as private versus public but rather try to find ways on how governments could work as facilitators and regulators of companies managing the water supply. This could be reached through a dialogue among all stakeholders; governments, the private sector and all users of water.

This dialogue is intended to continue in Mexico, in the 4th World Water Forum. The Forum seeks to enable multi-stakeholder participation and dialogue with a slogan: Local action for a global challenge.

The Forum has a registration fee of $600. These big boys sure know how to support multi-stakeholder participation. Come one, come all!

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About Sampsa

  • http://elvirablack.blogspot.com Elvira Black

    Sampsa, very interesting and informative piece. Being an “ugly American” (lol) I of course know next to nothing about the details involved in the widespread water shortage in other parts of the world, or the strategies involved to remedy such inequities. To me, having water seems as much of a birthright as having air to breathe, so it seems tragic that this should not be the case for all.

    Being an apartment/coop apartment dweller, I’ve never had to pay for water, but as far as I know homeowners (of houses versus coop apartments) do. However, I do think that Americans in general tend to take natural resources for granted, so again, it’s good to get an international perspective on these issues.

  • http://ruvysroost.blogspot.com Ruvy in Jerusalem

    I’d like to toss in my kudos to your piece along with my ten agorot. IMHO, the main problem with water is what it is used for. There is nothing wrong with watering a lawn – but the methods used should be designed to save water as much as possible. Using a drip method to water a lawn for example, would allow the watering to go on even when there is a draught. Thus soil would not be lost to wind and erosion.

    Is it absolutely necessary to build huge cities in the desert like Los Vegas wasting water on such things as fountains? Is it necessary to concentrate people in places like Los Angeles in the tens of millions, where water must be imported?

    Is it necessary for Americans and Europeans to use 500 liters per person?

    The shortage of water is directly traceable to the uneqal distribution of it and its unequal use on the planet. At some point this inequity will have to be addressed. If done so peacefully, many lives will be saved. If not…

  • RedTard

    I don’t think any of the water being sprayed on my yard was imported from Ghana. That being the case it isn’t my problem. Of course, the do-gooders will eventually make it mine by forcing me to pay extra to subsidize those who cannot seem to figure out the concept of plumbing.

  • http://ruvysroost.blogspot.com Ruvy in Jerusalem

    RedTard,

    You wrote,

    “Of course, the do-gooders will eventually make it mine by forcing me to pay extra to subsidize those who cannot seem to figure out the concept of plumbing.”

    I don’t think the water you use came from Ghana. But in Ghana, the issue is not figuring out plumbing, but paying for the plumber – while also paying exhorbitant baksheesh to the thieves running the place.

  • RedTard

    True, it’s a sad state of affairs. Africa’s population is on pace to triple before it begins to slow down like the western nations. They have been having droughts and famines for longer than I can remember.

    As the poster pointed out the world cannot handle infinite population growth. The more water and food aid we send to those portions of Asian and Africa the more hungry children they will produce whose faces we’ll see on the telly and be asked to send more aid. What is the answer to the problem? Do we stop sending aid and let nature determine sustainable population levels? Do we continue to subsidize population growth and compound the problem? Do we do the evil nazi forced sterilization thing?

  • http://sampsak.blogspot.com/ sampsa

    Thanks for your comments guys.

    Ruvy had some good points about the absurdity of building cities to places without any resources to live with. He also questioned if it’s necessary for westerners to use so much water. Most of this water use is actually indirect. Agriculture uses the biggest share of fresh water on irrigation. When one buys these artificially irrigated crops or meat produced by irrigated animal feed your daily water use is that much higher.

    We have the cleanest water in the world in Finland and take it easily for granted, like Elvira noted. For example everytime I flush a toilet 8 litres of clean water is wasted. In Germany they have two waterpipe systems; one for clean water used in cooking etc. and one for showering, flushing toilet… I hope this system would become more widely used.

    RedTard,

    The problem isn’t population growth, but rather unequally shared resources. Until development countries especially those in Africa are not allowed to develop their own economy, aid and development co-operation have their use. The idea in development work is actually quite wierd; to make yourself unnecessary by empowering people of the South to help themselves.

    Development countries should be allowed to protect their domestic markets until local entrepeneuers can face the international competition. One way to promote development is by doing fair bussiness with people, lowering the custom tariffs of refined goods of the south would be a good way to start. What do you think?

  • RedTard

    I see lots of circular logic. People say they have these poverty, food, and water problems because the north (or west) has been meddling in their affairs. In order to solve that it is said that the west needs to provide more assistance which only gets us more involved leading to more accusations.

    I believe cutting off aid, while painful in the short term, will force those needy countries to develop sustainable models. Let them solve their own water problems and they will be better off for it. Send in some western engineers and capital to solve the problem and we’ll only get blamed for ‘meddling’ and for the lack of local expertise.

    Economic and social progress could certainly alleviate many of these issues, the problem is that you can’t give a society progress it must be earned.

  • http://sampsak.blogspot.com/ sampsa

    As you seem to think that people should get income only if it’s through hard work and struggle. What do you think about getting rid off subsidies for western agriculture. Without government subsidies many western agricultural products would be too expensive for prize-wise consumers. Development countries would benefit for sure from their hard work. Poor countries could diversify their economies and make water sector development also possible.

  • RedTard

    Sounds like the basis for a workable idea.

  • Turbo_Glide

    Hmm, do I give the 10 fish that I caught to poor person OR do I teach ‘em how to fish and don’t need to give him but a starting fish?
    Translation: If I keep giving water to another country I waste my own. If I teach that country to find, get that water and use water properly they will survive for many years.
    The problem is that no one should have the right to control water that is for public use, no person or company should have control over water, no person or company should pollute water. Yet many, especially businesses, pollute on continuous basis. Many countries use water as population control. That is the real problem!
    Just seen it on news: 35.9 billion in unpaid fines for polluting in the USA alone.
    I rest my case.
    coder / fishnet / PhD, MD, QC
    Proud to be Canadian

  • Petteri

    Oil gets the headlines now but (near)future wars are going to be fought over water. This is why, I appreciate that Sampsa took time to write this informative piece.

    I couldn’t help but notice that there is a false assumption in the USA that you don’t have anything to worry about as far as your fresh water resources are concerned. Huge areas are, and not only in the Sun Belt, depleting them faster than they can recover. There is already cricis with the ground water levels which can be up to 100ft lower than just a decade or two ago. Why it seems to escape the attention of so many US citizen is total mystery to me. The Canadians, to the North, are already worried sick that the US will start soon full scale water diversion under the free market agreement. I am sure that there has been some rumblings in the US about the farm subsidies but the biggest bill, caused by insane and free for the farmers watering policies, is still in the mail. In the mean time we should, where ever we live, try to minimize the size of our environmental foot print as much as possible. Hey, we are in this all together.

  • http://sampsak.blogspot.com/ sampsa

    Wow, Petteri seems to know this stuff. Very nice, thanks for your contribution.

  • RedTard

    Anybody that bashes the US as the cause of all world problem does seem to be quite popular right now. It a way to avoid looking at your own problems if you just blame them on an outside enemy.

    That being said, water rights are becoming a valuable commodity. As far as I’m aware the US doesn’t import anything other than some bottled water. Again, without bringing up useless side issues you have with the US, what does our national water consumption have to do with Ghana?

  • http://ruvysroost.blogspot.com Ruvy in Jerusalem

    Red Tard,

    Put your glasses on and read, please. Nota bene: “We have the cleanest water in the world in Finland and take it easily for granted, like Elvira noted. For example everytime I flush a toilet 8 litres of clean water is wasted.”

    Those are the words of the author criticizing water waste in FINLAND.

    I’m from a part of the world where wars over water are par for the course. A big part of the dispute over Judaea and Samaria is based on the aquifer underneath it. The peace treaty between Israel and Jordan specified that Jordan gets so many millions of cubic feet of water from the Kineret (Sea of Galilee) each year.

    Here you do not spray a car with water to wash it. You take a bucket of water. The car gets just as clean. We have gardens watered all over the city. But they all use drip irrigation to squeeze every drop of value out of the water used. For the past five years wew have gotten above average rainfall here – five years in a row. But nobody is grateful, and nobody thinks to conserve water more. And pollution is a huge problem here. I’m not ripping the US here, Red Tard, am I.

    But the fact still stands that Americans waste immense amounts of water, and Canadians probably waste more. And the fact still stands that improving water quality in Ghana is an issue of paying the plumber, and keeping the baksheesh collecting gov’t our of your pocket.

  • Petteri

    Ruvy,

    I think your country, Israel, is just about the only one, right now, that gets high marks of her efforts to bring water consumption to sane levels. Would be interesting to hear from you about the latest news of your desalinition projects.

  • http://en.wikipedia.org/wiki/Irrigation tudor

    Have you ever tried to create a reverse flow of water from the ocean the land by means of the mentioned site?