Padma PeguSince water cannot be created but only managed, should we place our greater faith in public service bodies or private corporations? Should water service be privatized, after all?
Or, is there a choice here? Perhaps not. Already, drinking water is a full-fledged commodity packaged in bottles and sold as a branded consumer good. So, how long before transnational water, food, and energy corporations
acquire control of water through development of new technologies such as water desalination and purification; control over the bottled water industry and water distribution; privatization of municipal water services, including sewage treatment and water delivery; and construction of water infrastructure? In May 2000, Fortune magazine stated that in a world fleeing the vagaries of technology stocks, water is the best investment sector for the century. In the same year, at a World Water Forum in the Hague, a triumvirate of multinational water companies backed by the World Trade Organization (WTO) persuaded the UN into defining water as a human need (which can be best served by private companies) instead of a human right (which means people are ensured equal access on a non-profit basis).
The World Bank places the value of the current water market at close to $1 trillion. With only five per cent of the world’s population currently getting its water from corporations, the profit potential defies imagination. This is how it works: private companies approach cities and states and offer to lease, buy, or enter into a consortium agreement for the existing municipal water systems. After privatization is complete, the companies make a profit by charging residents every time they turn on a tap or flush a toilet. Some also offer wastewater services, such as sewage disposal, and run water treatment plants. Many of these companies get profit guarantees written into their contracts. For example, if residents use less water than predicted, companies can raise rates so profits do not fall below a certain number. The effort to attain ‘full cost recovery’ is a prerequisite to privatization. In some parts of the world, reports the trade journal Global Water Intelligence, water commands the same price as oil. Fortune declared the water market as ‘a place that promises steady consistent returns well into the next century.’
Two factors have contributed to the process of privatization: (i) the growing acceptance of privatization of public services as an effort to increase their delivery and quality; and (ii) the institutional backing of the World Bank and the IMF for privatizing water services. ‘Effective water resource management requires that water be treated as an economic good,’ the World Bank asserts on its website, explaining that ‘private participation in water and
wastewater utilities has generally resulted in sharp efficiency gains, improved service, and faster investment in expanding service.’
The inefficient water distribution systems and water management capabilities of countries have certainly contributed to the scarcity as well as the sub-standard quality of water in many countries, resulting in an increase in diseases emanating from the lack of access to clean water. In reaction, many governments are resorting to privatization of their water distribution and water management infrastructures.
A number of large pipeline, energy, and electricity companies have entered the water field, in the expectation of great profits from what can be termed as ‘convergence’ – whereby a single company delivers natural gas, water,
and electricity to millions of customers on a for-profit basis. Water companies say that privatization and conservation are not mutually exclusive. They say it can actually improve water service, because for-profit companies can invest in new technology and infrastructure improvements. Yet, the other truth is: the
more water sold, the better the bottom line. So, will they still try to halt the world’s parching?
Privatization means that the management of water resources is based on the assumptions of scarcity and profit maximization rather than long-term sustainability. Corporations are interested in increased consumption to
generate profits and are, hence, much more likely to invest in diversion or export of water than in conservation.
Water template
Is there a better way to manage the world’s freshwater supply and to apply integrated approaches to the development, management, and use of water resources? Can scientists, policymakers, economists, and other stakeholders work on news tools, ideas, and best practices for optimizing water management? The US-led study ‘Charting Our Water Future’, by consultants McKinsey and Company, tells us that by 2030 global water demand will be 40 per cent greater than today’s ‘accessible, reliable, environmentally sustainable supply’, which constitutes a fraction of the absolute raw freshwater available in nature.
A three-day UN-Water conference in Zaragoza, Spain, in October 2011 suggested that successful water projects can serve as templates around the world and help to stimulate the adoption of green economies. The event placed a special focus in showcasing already successful projects of how water can be a major contributor to developing a green economy. They included: the four major rivers project in the Republic of Korea; the
reform of the urban water supply and sanitation sector in Yemen; water planning in Laos; and the improvement of the water supply in Burkina Faso.
Water is closely linked to the green economy because it is interwoven with sustainable development issues such as health, food security, energy and poverty. Governments see their role as primarily delivering water. This has to change in a fundamental way to incorporate the practice of sustainably managing water resources for society and the natural environment.
India’s challenge
In the case of India, a great deal more of water infrastructure is required to be set up. Compared to other semi-arid countries, India can store relatively small quantities of the rainfall it receives. Whereas India’s dams can store only 200 cu.m.of water per person, other middle-income countries like China, South Africa and Mexico can store about 1000 cu.m. per capita. Moreover, India can store only about 30 days of rainfall, compared to 900 days in major river basins in arid areas of developed countries. The highly seasonal pattern of rainfall – 50 per cent of precipitation falls in just 15 days and 90 per cent of river flows occur in just four months – perhaps poses an added challenge.
New infrastructure needs to be built especially in underserved areas such as the water-rich northeast of the country. It may also be noted that a country that is perennially short of power in peak periods has utilized only
about 20 per cent of its economically viable hydropower potential, as compared to 80 per cent in developed countries. The country needs to invest in water infrastructure at all levels – from large multipurpose water projects to small community watershed management and rainwater harvesting projects.
Importantly, a secure water future will remain a pipe dream unless there are drastic changes in the way the state functions. The state needs to divest itself of those tasks that it does not need to perform. By bringing in cooperatives and the private sector in the provision of basic public water services, the state can focus on financing public goods such as flood control and sewage treatment and fulfil the role of regulator to balance the interests of users.
Today, India has capacity to store about 200 billion cubic meters of water, a gross irrigated area of about 90 million hectares, and an installed hydropower capacity of about 30,000 megawatts. Assured supplies of water have meant that crop yields on irrigated land are consistently much higher than yields from rainfed agriculture, allowing India to achieve national food security. Hydropower from many of the large dams has given considerable boost to industrial growth and groundwater irrigation. The direct benefits realized in terms of irrigation and hydropower, in turn, have impacts on other industries – through backward linkages with input industries like fertilizer and tractors and through forward linkages with the food processing industry. Further, in
many parts of the country, there are also substantial returns from investments in smaller-scale, community-level water storage infrastructure such as tanks, check dams, and local water recharge systems.
Nevertheless, there are massive needs for investment in water supply systems for growing cities and for underserved rural populations. India’s cities and industries also need to use water more effectively, and there will have to be great investments in sewers and wastewater treatment plants.
That said, the water sector is facing a major financing gap. The annual requirements for rehabilitating existing infrastructure alone are estimated to be around Rs 200 billion, while the India Water Vision (2025) expects new
investments – with conservative allowances for sewage treatment – to cost about Rs 180 billion a year. Annual allocations in the recent past have varied between Rs 90 billion and Rs 170 billion a year. A total water demand of 1,027 billion cubic meters and an investment of Rs 5,000 billion have been estimated to meet the water demand in 2025.
Investments on such a scale in new projects should be within the framework of integrated scheme for river basin development plan. Further, development of water resource projects must be preceded by unambiguous assessment of environment and social impacts.
Currently, large proportions of recurrent budgets are spent on personnel, not on real maintenance, and on electricity, irrigation and water supply subsidies. Any financial gap can only be met by a combination of methods
which include greater allocations of budgetary resources, more efficient use of those resources, and greater contributions from water users.
It is instructive to note that Pakistan’s Punjab has a well-defined water entitlements system that has been in place since 1991 at both the provincial and canal command level. China is also putting in place a system of
water entitlements. India, too, has successful cases of clear entitlements at the international level (the Indus and Ganga Treaties). However, it still has to evolve a formal system of water rights. The first step towards this would be clarifying that water is publicly owned and that a water entitlement is usufructuary – it is a right to use, not a right to own water. In India, as in all cases, the ownership of water resides, and must continue to reside, with the state.
Once established, a formal system of entitlements can bring about a series of fundamental and positive changes. Those requiring additional water (such as high-value agriculture and people living in emerging cities) will be able to meet their needs by acquiring the entitlements of those who are using water for low-value purposes. To cite an example, in the pioneering watershed management project in Sukhomajri in Haryana, water entitlements were distributed in the village, giving people a valued new asset. Many of the poor, with less or no land, chose to cash in their entitlements by selling them to landowners who could put the water to a variety of uses.
The state of Maharashtra passed the Maharashtra Water Resources Regulatory Authority Act of 2005, the heart of which is the creation and management of a water entitlement system. While establishment of individual and
transferable water entitlements is the long-term strategy, the Bill adopts an intermediate strategy of establishing bulk water entitlements for entities such as water user organizations, urban and rural water supply agencies, and
industries.
As described in the World Bank report ‘India’s Water Economy: Facing a Turbulent Future’, there is no issue more important in reducing what the Finance Minister has described as the “growing number of little civil wars†over water. And if we are really worried, we should be asking enough questions.
For instance, who owns water? Should water be privatized? Should it be traded as a commodity in the open market? What laws do we need to protect water? What is the role of government? How can water-rich countries share their precious resource with water-poor countries? How do ordinary citizens become involved in this process?
Instead of allowing this vital life resource to become a commodity sold to the highest bidder, each of us needs to believe that access to clean water for basic needs is a fundamental human right. Each generation must ensure that the abundance and quality of water is not diminished. Above all, we need to make radical adjustments in our societies, lifestyles, and outlook in order to reverse the drying of the earth’s surface and learn to live within the watershed ecosystems that were created to sustain life. And we must dismiss any notion that we can be careless about the world’s precious water sources because technology will someday come to the rescue. There is no technological way out for a planet depleted of water.
Finally, the whole truth is that we can live without oil. But water?