The new men of Empire are the ones who believe in fresh starts, new chapters, new pages; I struggle on with the old story, hoping that before it is finished it will reveal to me why it was that I thought it worth the trouble. (J.M. Coetzee in Negri & Hardt, 2000)

Increasingly, large international gatherings have become platforms to call for fresh starts, to forge consensus on old but still outstanding issues. Providing access to fresh water is one of the most critical challenges facing governments and the international community at large. Today, 1.3 billion people do not have regular access to safe drinking water. By 2035, this figure could rise to 3 billion people. With growing populations, the demand rises. At the same time, industrial activities are threatening supplies. Most of those without access to water live in Sub-Saharan Africa, South Asia and East Asia, typically in rural areas.

WWF3 Background

At the Earth Summit in 1992, it was proposed to create an international policy think tank to address what had come to be regarded as a pending "world water crisis". In 1996, the Asian Development Bank and a group of big water multinationals such as Vivendi and Suez Lyonnaise picked up on the proposal, and established the World Water Council. The Council, in turn, initiated the World Water Forum, a conference held once every three years to help meet the Council's principle objective-that is: "To provide the platform to arrive at a common strategic vision on integrated water resources management on a sustainable basis, and to promote the implementation of effective policies and strategies worldwide".

The 1st and 2nd World Water Forum

The first World Water Forum took place in Marrakech in 1997. There, the Council received the mandate to develop the "World Water Vision for Life and Environment for the 21st Century". Three years later, at the Second World Water Forum in the Hague, this Vision was presented. Essentially, the document set forth privatization and market-driven delivery of water, on the basis of principles such as pricing water at full cost and "transparent, service-oriented management", as the solution to the world's water crisis. As the joint statement issued by the World Water Forum CEO Panel on Business and Industry stressed, "Water is an economic good and its economic value should be recognized in the allocation of scarce water resources to competing uses."

As for the 140 governments officials who attended the Ministerial Conference on Water Security attached to the Forum, they saluted the industry's offer to create "public-private partnerships" in a joint effort to deliver water more efficiently, and help keep access to water affordable to all. After all, access to fresh water was to be considered a "basic human right" as a draft declaration of the Conference affirmed. But then, in the final declaration "basic human need" was substituted, thereby effectively alleviating governments of their responsibility to ensure that all citizens have access to water, and paving the way for further commercial exploitation of water resources.

The Third World Water Forum

Even though the World Water Council is not a UN agency and is, therefore, considered by some to lack an official mandate, by default, the Forum has become the place where agenda-setting and decision-making on freshwater resources is done. As far the organisers are concerned, the upcoming Forum will focus less on visions and more on implementation issues. Hence, the subtitle "World Water Actions". Where past Forums have been rather dominated by the private sector and donor institutions, the WWF3 now purports to be more inclusive of communities and NGOs. The guiding principles outlined by the Secretariat are that the Forum be open to all, and will work to translate visions into concrete actions and commitments.

NGOs at WWF3

NGOs, for their part, have consolidated their work on water, and civil society activism on the issue has grown apace. With regards to civil society input at WWF3, two co-ordinated efforts may be distinguished. One is led by the Fresh Action Network (FAN), an alliance of over 200 NGOs co-ordinated by WaterAid, a British charity, with financial support from the Dutch government. Another initiative is the People's Forum on Water, founded in March 2002 by a group of a Japanese NGOs when they first convened to plan their WWF3 activities. This planning further evolved at a 'strategy meeting' held in Ottawa in October, 2002 hosted by Maude Barlow, a well-known activist and author of the internationally acclaimed book "Blue Gold". According to Barlow, the participants in the meeting agreed that the People's Forum would try "to split the World Water Council 'consensus' on a corporate model of water governance and to promote a new democracy model of water governance".

Whereas individual FAN members would not necessarily be less concerned about the thrust of the private sector in financing water delivery, the FAN seems more inclined than the People's Forum to uphold a dialogue on privatisation and promote cross-sector partnerships, rather than to see the WWF3 as a stage for raising criticism and the presentation of alternative models. FAN has called for a joint-NGO statement to be presented to the Ministerial Conference on the 23-24 of March. However, it is very well possible that more than one NGO statements will be drafted and presented to the Conference.

The Political Economy of Privatisation

As said, the World Water Council proposed in the Hague that sustainable water management is best achieved by paving the way for private companies to have a more prominent role in owning, managing and delivering water resources. However, the Council is definitely not alone in its pursuit of a market-based approach to water access and delivery. Consider, for instance, the World Bank's World Development Report (WDR). In a draft of the WDR due this year , the proposed section on water postulates that "the role of PSP [private sector participation] in raising accountability for the public sector has not been tapped sufficiently," (page 49). The Bank goes on to note that "increasing responsiveness and accountability to clients and in particular to poor people will require greater separation of roles between policymakers and service providers," (page 51). Overall, the draft suggests that private provision of services would be the most efficient means to improve the water supply.

Likewise, the World Commission for Water, a think tank co-sponsored by the World Bank along with the FAO, the UNDP and the UNEP, recommends "a greatly increased role for the private sector in providing water services for people, irrigation and electric power," seeing it as a key mechanism for bringing about reform in the sector. In a report presented to the World Water Forum in the Hague, the Commission called for full-cost pricing of water use and services in order to encourage private sector participation, limiting subsidies only to the poorest of the poor.

Both reports raise concerns about the public delivery of water in many developing countries, where the management of municipal or state companies is in such a dismal state that privatisation of the water supply may seem a panacea. In fact, many poor people have yet to see public water delivery materialise in their neighbourhoods, depending, instead, on private vendors who are often charging exorbitantly high (black-market) prices. One of the most extreme examples of this is Luanda where recipients of piped water pay less than 1 cent per cubic metre, whilst those without connected water supply may pay as much as US$16 per cubic metre for untreated water delivered by truck (Cain et al., 2002).

Can private companies deliver?

The question, then, remains as to whether the privatisation of the entire supply chain, doing away both with all too heavily subsidised but far from efficient public delivery, as well as with entrepreneurs exploiting the situation, can and will deliver-and not just to those who are in a position to pay for it.

If we are to believe the private sector, they can--and they are quite eager to do so. Currently, the water industry is dominated by a small group of multinationals, the biggest being the French Vivendi and Suez-Lyonnaise des Eaux. Already, such companies--often themselves privatised state companies--have benefited substantially from the opening up of water markets. Thames Water, for instance, the private offspring of the Thames Water Authority has recently merged with the German RWE to become the world's third largest water and waste services company with over 21,000 employees worldwide, 70 million customers in 46 countries, and 2.7 billion worldwide sale.

As water resources become more precious and markets open up, the water business is booming. Worldwide, annual industry revenues are estimated at $300 billion. Two of the fastest growing market areas are in water rights and municipal water supply systems (Laundry & Anderson). Operating results for RWE's Water Division over the first three quarters of 2002 were up by 6.7 percent with sales rising between 11 percent (in Europe) and 61 percent (Asia Pacific).The company expects these figures to rise further as the trend toward privatisation and outsourcing continue (RWE, 2002). Similarly, Vivendi reported a 4.1 percent rise in results over 2002 with revenue growth particularly high in Eastern Europe (up 70%) and Asia (26%) (Vivendi, 2003).

It are large multinational utility companies such as these that compete for a share in the world market for fresh water treatment, delivery, and related services. At the same time, they share a common interest in the expansion of this market into areas that are for the most part still serviced by public authorities. Hence, their collaborative support of the World Water Council, which may be seen as a means for them to forge a consensus on the sensibility of privatisation.

Forging a consensus: the tripartite model of water management

Now, as the water industry has come to recognise in recent years, reaching out to national governments does not suffice as the move towards the decentralisation of public services has put ever more responsibilities-and ever dwindling financial resources--in the hands of local authorities. In this context, donor organisations and the World Bank are promoting so-called "tripartite" models of water management: public-private partnerships in which citizens are directly represented rather than by proxy--that is, through their government.

Hence, since the World Water Forum in The Hague, water companies such as Vivendi and Thames Water have joined forces with some NGOs and aid agencies to develop and promote workable tri-partite models. One of such initiatives is Building Partnerships for Development in Water and Sanitation (BPDWS), an offspring of the Business Partners for Development (BPD)*, set up to demonstrate that partnerships involving business, civil society and government "can provide win-win benefits to all three parties; can be much more widely used throughout the world; and can be scaled up to national and regional levels" (BPD Website). Again it is WaterAid, the London-based charity which, as we have seen, also hosts the FAN secretariat, that co-ordinates the BPD's effort to promote the tripartite model, with financial support of the World Bank, the water industry, and the British government**.

WaterAid may thus be seen to play a pivotal role both in the co-ordination of civil society input at the World Water Forum as well as a joint-effort on the part of the water industry along with some NGOs to forge a consensus on that private sector participation can work to the benefit of all if companies, governments, and citizens co-operate***.

However, given that the water market is dominated by a few large multinationals, there is a legitimate concern that, instead of improving access to potable water to the deprived millions, private companies could take advantage of their monopoly power and either price water tariffs beyond the reach of poor people or 'cherry pick' their customers according to cost effectiveness criteria including their ability to pay. There is evidence that this is already occurring. In the Czech Republic, for instance, water rates increased by more than 100 per cent in the first three years of a concession to a subsidiary of UK-based Anglian Water (Ruzicka, 1999).

Meanwhile, the World Bank and IMF are already for years actively promoting water sector reform in developing countries, something that is not reflected in the current WDR draft. In a survey of IMF Letters of Intent conducted in 2001, it was discovered that IMF loan agreements with twelve borrowing countries (including Benin, Guinea-Bissau, Honduras and Tanzania) stipulated conditions imposing water privatisation or cost recovery requirements (Grusky 2001). The World Bank, for its part, has outstanding commitments of about $20 billion in water projects (UNEP 2000).

Conclusion

Neither of the reports mentioned above examine in any detail the potentially negative impacts of private provision of water supplies, or ways to overcome them. Nor do they demonstrate the opposite for that matter. Indeed, it has yet to be demonstrated that private companies can deliver more efficiently without compromising on maintenance and access for the poor. In both regards, the final version of the World Development Report due this year (WDR 2004) would be severely lacking if it does not tackle both sides of the argument on private sector provision of potable water.

As for the public sector reform promoted by the IMF and the World Bank in developing countries, the least they could do is to abstain from meddling with the right of governments to provide basic services themselves, particularly to the poor. The same applies to the WTO: water is not a commodity to which the same conditions obtain as for cars or chocolate bars. We think, for one thing, that both the WDR 2004 as well as the Conference of Ministers at the WWF3 should reflect this opinion and state clearly that multilateral loan and trade agreements may not impinge on the right of developing countries to choose as to how they provide basis services to their populations.

Instead, the Ministerial Conference this year ought to consider adopting the recent recommendation of the UN Committee on Economic, Social and Cultural Rights, which states that access to safe water is to be considered a human right. As the Committee observed, water is a limited natural resource and a social good fundamental to life and health and that, therefore, it should be treated as such and not merely as a commodity. This point bears underscoring as it strikes at the heart of the controversy over the commercial exploitation of public goods-however efficient this may seem from an operational point of view. For, in the end, the primary objective of commercial exploitation is to maximise profits. Therefore, a private providers' strategies and operations (if it is to be profitable one) are designed to meet this end rather than to guarantee sustainable, equitable access. It should, therefore, not bear any surprise when multinational water companies that put a bid on public facilities up for sale, often state a preference for supplying urban areas where populations can afford higher rates, and where all the pipes are already in place.

Now, it is fair to say that in some circumstances, privatisation may very well help to enhance operational efficiency in the provision of basic services. However, the provision of basic needs may be seen to entail more than just the criterion of cost-effective management. Safety, reliability, sustainability and equitable access are some of such criteria. For one thing, water providers just cannot afford to cease delivery when a "profit warning" cause their stock to crash. Or refuse to repair the sewage because a bill has not been paid. At the very least, private provision requires a strong regulatory framework that provides for independent monitoring, genuine public participation, and imposition of penalties for non-compliance. Such a regulatory framework has yet to be established internationally.

Meanwhile, in most countries, weak regulations are facing up to a monopolistic world market. This is the worst possible condition for the prospects of a sustainable and equitable provision of basic services. Already, the poor in general, and women and children, in particular, bear the greatest burden, there where decades of "structural adjustment" and "public sector reform" have as of yet failed to bring affordable food, healthcare, and education to their communities. In the case of potable water, then, one the most basic human needs, treating it like any other commodity is bound to push its price even further beyond their means, causing them, instead, to collect water from untreated sources. This is where the current discourse on a global water crisis has severe if not deadly consequences. Hence, the need for civil society to remain committed to water as a basic human right and to call for a strong regulatory framework supported by governments and international organisations. This, indeed, would be a fresh start to an old story.

Notes

*More precisely, Building Partnerships for Development in Water and Sanitation (BPD-WS) is the new name for the BPD's Water and Sanitation Cluster. The name change reflects the cluster's effort "to engage civil society more systematically in issues around water and sanitation services for the poor" (See BPD-WS FAQ).

**Convened by WaterAid and Générale des Eaux (Vivendi), other partners in BPD-WS include Aguas de Barcelona, Anglian Water, CARE International, Durban Metro Water Services, Hydro-Conseil, the International Secretariat for Water, International Water Ltd., The Mvula Trust, Northumbrian Water, Programme Solidarité Eau, Ondeo, Thames Water, UK Department for International Development (DFID), Unicef, and the World Bank Group (BPD Partners).

***On March 19, the BPD plans to co-host a small workshop with the Freshwater Action Network on issues around partnership engagement (see BPD at WWF3).

References

Ruzicka, P. (1999) Water Supply and Sewerage Systems Internal Report, Wood, Forestry and Water Industry Workers Trade Union, Czech Republic in Public Services International (PSI) Briefing, World Water Forum, 17-22 March 2000, the Hague, the Netherlands. (downloaded on 7 March 2003)

RWE (2002) Report on the first three quarters of 2002, Water Division (downloaded on 7 March 2003)

Vivendi (2003) Annual Results Slides Presentation  (downloaded on 7 March 2003)

Landry, Clay J. and Terry L. Anderson (1990) The Rising Tide of Water Markets in ITT Industries Guidebook to Global Water Issues. London: Financial Times (downloaded on 7 March 2003)

Negri, Antonio and Michael Hardt (2000) Empire, London: Harvard University Press

Cain, Allan, Mary Daly and Paul Robson (2002), Basic Service Provision for the Urban Poor; The Experience of Development Workshop in Angola, IIED Working Paper 8 on Poverty Reduction in Urban Areas (downloaded on 7 March 2003)

Grusky, Sara (2001) IMF Forces Water Privatization on Poor Countries Globalization Challenge Initiative (downloaded on 7 March 2003)

UNEP (2000) United Nations System-Wide Earth, 2nd Report on International Scientific Advisory Processes on the Environment and Sustainable Development.