25 Jul 2008

The Freshwater Cartel

By Maude Barlow
Private companies are making fundamental decisions about who has access to water and under what conditions

The world is moving toward a corporate controlled freshwater cartel. Private companies, backed by governments and global institutions, are making fundamental decisions about who has access to water and under what conditions.

Simply put, the answer to the world’s water crisis rests on the principles of conservation, water justice and democracy. No global corporation can operate on these three principles and remain competitive in the marketplace. Three major problems thus arise with the growing corporate control of water.

The first is that there is no incentive to stop pollution and hence no profit in conservation. In fact, it is to the distinct advantage of the private water industry that the world’s freshwater supplies are being polluted and destroyed.

Individual corporate leaders might not take pleasure in the global water crisis but it is exactly this crisis that is driving profits in their industry. The “dead hand” of the market will favour those companies that maximise profit. In the water business, that means taking advantage of a dwindling supply that cannot meet a growing demand.

With governments, industries and universities now investing so heavily in the burgeoning water cleanup technology industry, incentives to emphasise source protection and conservation are removed at every level. Once a massive and expensive cleanup industry is in place, economic and political pressure will come to bear on governments and global institutions to protect it. Global trade rules to promote the water technology industry are already in place. The World Trade Organization promotes and protects the trade in environmental services, encouraging cross-border trade and investment in private water cleanup companies.

As with all tradable goods and services, governments are encouraged to relinquish public control of water treatment to the private sector and have to ensure that any rules they have in place are the least trade-restrictive possible. This means that rules and regulations meant to protect the public and the environment must not hamper private business: the pressure is constantly on governments to “cut red tape” and lower their standards. As well, under the National Treatment provision of the WTO, governments cannot favour domestic water companies and will have to open up their bidding process to the increasingly powerful water technology transnationals.

The second problem with corporate control of water is that water and water infrastructure — from drinking water and sanitation utilities services to bottled water, cleanup technologies and nuclear-powered desalination plants — will flow to where the money is. No corporation is in business to deliver water to the poor.

Already, wealthy countries such as Saudi Arabia and Israel are dependent on expensive water purification technologies for their day-to-day living. On the other hand, equally water-starved countries such as Namibia and Pakistan cannot afford such technology, and so their citizens suffer from severe water shortages.

Bottled water is the exclusive prerogative of those who can pay for it, as is clean water from the tap in many parts of the world. World Water and Flow Inc, two companies on the verge of a bulk water transfer business, are looking to send their first shipments not to the parts of the world where people are dying for water but to Las Vegas and Los Angeles, in the case of World Water, and Saudi Arabia and the United Arab Emirates in the case of Flow.

The water industry is becoming more adept at lobbying and advising governments and global institutions on water policy. The big service companies have enormous clout with the World Bank and the United Nations as well as with their own governments.

Pipe Dreams, a study undertaken by the Public Services International Research Unit reports that big companies such as Suez and Veolia actually influence World Bank decisions about where funding for water services should go: “Putting private companies in the driving seat in recent years has allowed them to set the agenda in terms of prioritising the contents, regions and cities where investment in the water sector should go.”

Because of the corporate need to make a profit, donor-funded investments are not concentrated on the areas of greatest need. Rural communities have suffered from a similar lack of attention because of their inability to create a profit for the water companies. As a consequence, sub-Saharan Africa and South Asia have been the focus of only 1 per cent of total promised private sector water investment.

The third major concern around corporate control of water is that, with no regulatory oversight or government control, there will be no protections for the natural world and the need to safeguard integrated ecosystems from water plundering. As it is now, in most parts of the world governments have little knowledge of where their groundwater sources are located or how much water they contain. Consequently, they have no idea how much pumping they can maintain or if current water mining operations are sustainable.

An added strain is put on rural and wilderness water sources by the water needs of urban centres, especially the burgeoning megacities of the developing world. These needs are increasingly being met by draining rural and wilderness lakes, rivers and aquifers.

Although governments must manage competing pressures, if they maintain control of water systems, they can try to protect rural ecosystems. But if, as is increasingly the case, water transfers are in the hands of private brokers who are competing with one another for dwindling resources and the process is unregulated by governments, there will be few protections in place to stop the destruction of watersheds and ecosystems and the species and plant life they sustain.

It is unlikely that a time will come when there is no private involvement in water. Nor are most critics saying there is no place for private companies in finding solutions to the coming global water crisis. However, there is a desperate need for public oversight and control of the world’s declining water supply and for elected governments — not corporations — to make the decisions about this shared heritage before it is too late.

This is an edited extract from Blue Covenant — The Global Water Crisis and the Coming Battle for the Right to Water (Black Inc).

Maude Barlow will be touring Australia in late August/early September, beginning as a guest of the Melbourne Writers' Festival.

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Posted Tuesday, July 29, 2008 - 11:16

Spot on, Maude. It's vital that water stay in the public domain, and that its treatment and distribution be controlled by governments, and never by private corporations. Of course, water should still be priced, in fact at higher levels than at present, and in much more equitable ways, no discounts for cotton and rice producers, for example.

Yep, water will certainly be the political problem of the twenty-first century, and the cause of many wars.


Posted Tuesday, July 29, 2008 - 14:36

Explain why manufactured fresh water (I don't care to define whether it is reprocessed, or desalinated, or whatever) should not be performed by private rather than public companies? You can make an argument for natural resources being public, but when our demand exceeds natural supply, who's going to step in and make it?

I've always thought it slightly absurd that we even grow rice in Australia.

Posted Tuesday, July 29, 2008 - 15:29

Hi Meski,

If you thought rice was absurd, think cotton.

Down here in Adelaide, perhaps some of us are panicking, but the threat of no water at all seems very real, so if a private monopoly got hold of the rights to produce it (and hang the consequences), then we would be paying through the nose for it. Perhaps if there were three or four companies producing or treating water, then maybe a monopoly situation could be avoided (like with the petrol companies, yeah right).

Governments certainly can be inefficient as producers, I'd agree, but at least they are held accountable at the next election. Down here, ours has just bingled our water bills, but most people would probably still prefer that to private control, i.e. something which can be bought out by foreign companies.

As for how water can be made, I would expect that some of those funds would come out of Penny Wong's carbon reduction bucket.


Posted Tuesday, July 29, 2008 - 15:45

Ok, cotton too.

Manufacturing potable water is going to be expensive, however you do it. Governments should hang onto, and improve the infrastructure, one improvement would be having separate reticulation of potable and non-drinkable water.

Posted Tuesday, July 29, 2008 - 17:44

Hi Menski,

Yes, that too. New houses in Adelaide have t obe fitted wit ha doble reticulation system, and in other places too. Why should any waste water ever get to the sea ?


Posted Sunday, August 31, 2008 - 16:56

Nice piece Maude,

You are on the money and I think the first thing to remember is that no government should interfere with the supply of water to people who are sustaining themselves or their communities and moves toward water privatisation and monopoly should be rejected as folly by any self thinking person living on this continent.

My favourite CSIRO report, Future Dilemmas (Barney Foran) covers the water swindle so well in scientific and economic terms..ie not only is the mis-use of water in Australia to the detriment of ordinary citizens its plain simple dumb economics and our esteemed friend John Maynard Keynes, pointed this out in no uncertain terms in his latter years after the global illuminati grabbed hold of his other theories on managing money and budgets.

We have a water minister that cant get it right and we have a government that is pursing the same dogma as past liberal/national governments...we dont really have an issue with water in this country we have more of an issue with governments controlled by lobbies who represent corporations that thrive on the waste of water because our governments say they can.

Look forward to catching up in Melbourne at the Festival.

Posted Sunday, August 31, 2008 - 19:01

Surely whether or not to build desalination plants, OR waste water treatment plants, OR to buy back water licences, OR whatever should depend on the marginal cost of the production of water, i.e. what is the cost of that one extra megalitre, if the price of water is set at various levels, 1 cent per kilolitre, 10 cents per killitre, $ 1 per kilolitre, etc. If the cost per kl of purchasing licences is lower than the cost per kl of building and running a desalination plant over, say, ten years, then buy licences. If the cost of effectively treating waste water is lower than the cost of buying back licences, then build more treatment plants, etc.

But surely there has to be a price put on water use, perhaps even a flat primary produce rate, and a flat urban consumption rate, so that, at the other end of the economic equation, higher costs make it more economical to build treatment plants, etc., and more prohibitive to flood-irrigate for cotton or rice.

A standard economic principle, in Economics I, is that you make the least use of your scarcest resource, and the most use of your most plentiful resource: capital, labour and land (resources). What is Australia's scarcest resource, apart from common sense ? Water. So why the hell was it ever contemplated for irrigating cotton or rice, which are amongst the highest consumers of water, apart from fish and Olympic swimmers ?