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!