THE FAILURE OF GOVERNMENTS
from the booklet
The global water crisis and the commodification
of the world's water supply
A Special Report issued by the International
Forum on Globalization (IFG)
by Maude Barlow
National Chairperson, Council of Canadians
Chair, International Forum on Globalization (IFG) Committee
on the Globalization of Water
TOO LITTLE TOO LATE
Governments all over the world have been remiss in not recognizing
the crisis surrounding the world's water resources and for not
taking steps to offset the coming emergency.
In the industrial world, there are some real success stories
in the reclamation of rivers, lakes and estuaries choked with
sewage and industrial pollution. The Hudson River in the U.S.
was once given up for dead; now it abounds with life. Citizens
and governments have worked to ban some of the most egregious
toxins entering our water, such as DDT, and in December 2000 concluded
a historic treaty banning the major persistent organic pollutants
(POPs). As well they have forced the partial clean-up of industrial
effluent such as waste from pulp and paper mills.
The partial recovery of the Great Lakes through joint action
of the bordering provinces and states, for example, is being studied
by scientists all over the world. After discovering that phosphorus
was causing much of the deterioration, the governments of Canada
and the United States signed the Great Lakes Water Quality Agreement
in 1972, which strongly curbed the dumping of phosphorus and municipal
sewage into the lakes.
As well, conservation efforts in Europe and North America
have resulted in some reduction in household and industrial water
use, helping to slow the rate of aquifer withdrawal. Water use
has actually dropped in some regions and industrial sectors in
the U.S. by 10 to 20 percent since 1980, according to the United
States Geological Survey. In the last decade, govern
In industrial countries, where the technology and resources
are available for improvements, governments have instead cut spending
on public works and eviscerated environmental laws in the name
of global competitiveness. Already crumbling inner-city systems
are deteriorating in most industrialized cities. In Britain, for
example, Worldwatch Institute estimates that one-quarter of the
water that enters the distribution network is lost because of
broken pipes and other problems. Until it started to address the
problem, Boston, Massachusetts, lost almost 40 percent of its
municipal water supplies annually from similar neglect. The average
Canadian household uses about 500,000 liters a year, but almost
half is wasted in washing cars or dripping taps. The Canadian
government estimates that it will cost $53 billion (Can $80 billion)
to upgrade deteriorating water infrastructures.
A coordinated effort by the world's governments could change
this pattern of waste within a decade. With current technologies
and methods available today, a conservative estimate suggests
that the agriculture sector could cut its water usage by close
to 50 percent, industries by 50 to 90 percent, and cities by one-third
without sacrificing economic output or quality of life. What is
missing is political will and vision.
As well, millions of people die every year from contaminated
water because many governments don't allow local communities to
manage their own resources. A March 1999 study by the World Bank
and the United Nations Development Program reports that international
aid programs channel too much money through government agencies
and utilities and don't trust local communities to manage their
own systems. The report also accuses international agencies and
governments of forcing new technologies on communities that cannot
afford to maintain them. As an example of what can work, the report
highlights a pilot project in Uttar Pradesh, India's most populous
and least developed state, in which villagers elect their own
water-management committees and oversee public budgets. The local
test projects cost two-thirds less than those delivered by the
government water board.
Governments are also culpable by their massive subsidization
of the global transportation system that underpins economic globalization.
If the full cost of transporting consumer goods across the ocean
for assembly and then back again was reflected in the final price,
the volume of world trade would diminish significantly.
Governments subsidize the water-guzzling high technology sector
in many ways. The city of Austin, Texas, not only awards tax breaks
to high-tech companies (recently $125 million to Samsung and $56
million to Sematech), but also reduced water rates. Austin's industrial
water rates are less than two-thirds of what residents pay. For
its Rio Rancho facility in New Mexico, Intel recently received
a tax subsidy of $8 billion via an industrial revenue bond and
an additional $250 million in tax credits and other subsidies.
The Southwest Network and the Campaign for Responsible Technology
reports in Sacred Waters, "The greatest form of cost externalization
related to water...comes in the form of water price subsidies,
water delivery and treatment infrastructure subsidies, and restricted
access to traditional and low-income water users caused by the
massive use by this industry."
Further, in the absence of legislation or even debate in most
countries, the privatization of water and wastewater services
is steadily advancing. Through "public-private partnerships,"
municipal governments in many countries are blurring the lines
between private companies and democratically elected governments.
Often, these "partnerships" are the first step to full
privatization. Because many of the same companies providing these
services are likely to move into the area of bulk export, dams
and water diversion, governments are granting them access to water
resources through the back door.
TRADING AND BUYING WATER RIGHTS
Commercial water trading is growing in many parts of the world,
usually with governments' blessing In Chile, where privatization
is a government goal, water companies are buying water rights
from farmers and selling them to cities. Informal, small-scale
water trading among farmers is common throughout the non-industrial
world. As long as these arrangements are made between local farmers
and local communities, the system can work equitably; but if the
practice is unregulated, it is often used to drive up the price
of water for the poor. When large corporations enter the game,
they typically buy up block water rights, deplete water resources
in an area, and move on.
A similar practice is already common in the fishing industry.
Large corporations are buying up government-granted fishing licenses
called Individual Transferable Quotas (ITQs)-an entitlement that
can be leased or sold, permitting the holder to catch a specified
quantity of fish. Originally designed by governments to control
overfishing, ITQs are now concentrating the fishery industry in
the hands of a small number of giant fishing corporations who
encourage destructive fishing practices and strangle local communities.
As one out-of-work Newfoundland fisher said, "For the first
time in history, the fish are owned before they are caught."
In California, water rights trading is becoming a very big
business. In 1992, the U.S. Congress passed a bill allowing farmers,
for the first time in U.S. history, to sell their water rights
to cities. In 1997, (then) Interior Secretary Bruce Babbitt announced
plans to open a major water market among the users of the Colorado
River. The new system would allow interstate sales of Colorado
River water among its southern users- Arizona, Nevada and California.
Wade Graham (Harper's Magazine) calls this development "the
largest deregulation of a national resource since the Homestead
Act of 1862" and adds that the only thing that could have
topped it would have been the privatization of all U.S. federal
lands. Government leaders are counting on the free market to do
what politicians and the courts have not been able to do- referee
between the many claims to the Colorado's water.
The deals are expected to be small at first (Nevada has already
arranged to pay Arizona to store water for future use), but in
the long run, the fast-growing areas where high-tech industry
is concentrated will be able to obtain vast quantities of reasonably
priced water from a virtually limitless source. As a warning,
Graham points to a failed experiment in water privatization in
the Sacramento Valley in the early 1990s.
For the first time, Southern California cities and farmers
were no longer prevented from buying water directly from Northern
California farmers, hoarding it and selling it on the open market.
Large-scale operators helped themselves to huge amounts of water
and stored it with the Drought Water Bank until the price was
right to sell. A small handful of sellers walked away with huge
profits, while other farmers found their wells run dry for the
first time in their lives. The results were disastrous; the water
table dropped and the land sank in some places.
Graham compares this incident with the Owens Valley tragedy
at the turn of the last century. The once lush, water-rich Owens
Valley was bled dry when water officials from Los Angeles devised
a scheme to divert Owens Valley water to southern California.
The Owens Valley scam demonstrated that although only a few individuals
or corporate entities hold registered water rights, the entire
community depends upon those rights... Water in California is
prosperity, and if the legal right to use it can be privatized
and transferred away, then the prosperity of the community may
go with it.
Water rights trading, however, is growing in California despite
the storm warnings. In 1993, the billionaire Bass brothers of
Texas quietly bought up 40,000 acres of Imperial Valley farmland
in order to sell water to the city of San Diego, California. The
project fell through when it was discovered that the district,
not private farmers, owned the property. In January 1999, U.S.
Filter Corp. bought a ranch and 14,000 acre-feet of water north
of Reno, Nevada, which it intends to divert by pipeline to Reno
for commercial sale. The local community of Lassen County says
it will be left without its lifeblood. Santa Monica-based Samda
plans to pump well water from its 2,000-acre ranch in Fremont
Valley north of Mojave and deliver it by pipeline to Los Angeles.
The Stockman Water Co. has received an endorsement from the city
of Parker, California, to pump water out of the San Luis Valley
to Denver, Colorado.
In early 2001, the Metropolitan Water District of Los Angeles
contracted to buy as much as 47 trillion gallons of water from
the state's largest farming company, Cadiz Inc. In a move of great
concern to environmentalists and farmers, who fear a repeat of
Owens Valley, the water will be pumped from an aquifer deep under
the Mojave Desert. Tony Coelho, formerly a powerful Democratic
congressman and a chairman of Al Gore's presidential campaign,
says that this water source is so valuable, no dollar figure can
be put on it. "Careers are made and lost in water politics,
and that will be true here." Adds Keith Brackpool, the British
entrepreneur who runs Cadiz, "If you do the math, the price
of our water just soars."
Little wonder California's Governor Gray Davis says, 'Water
is more precious than gold." In a private market, the superior
purchasing power of large cities such as Los Angeles and of corporations
such as Intel could force the cost of water up far enough to price
farmers, small towns and indigenous peoples out of the market.
CLOSED DOOR DEALS
Companies with water interests stand to reap huge windfalls
as governments around the world, having allowed municipal infrastructures
to crumble, now hand the water market over to the private sector.
And they are doing it with the full participation and approval
of international government agencies such as the United Nations
and the World Water Council.
In July 2000, the United Nations announced a "Global
Compact" with a number of major transnational corporations,
including Nike, Shell Oil and Suez Lyonnaise des Eaux. Many NGOs
were surprised and deeply concerned about the UN giving its blessing
to corporations noted for their bad environmental and labor practices
in return for their agreement to a handful of purely voluntary
guidelines. But this development is very much in keeping with
the pro-privatization position the UN has been following for some
At a March 1998 conference in Paris, the UN Economic and Social
Council Commission on Sustainable Development proposed that governments
turn to "large multinational companies" for capital
and expertise and called for an "open market" in water
rights and an enlarged role for the private sector. The UN promised
to mobilize private funds for the vast investments needed for
networks and treatment plants and for the technology needed to
ensure future water supplies.
The UN, with the World Bank and the International Water Resources
Association, is also a founding member of the World Water Council,
"the world's water-policy think tank" as the Council
describes itself. The World Water Council's 175 member groups
include leading professional associations, global water corporations,
government water ministries, and international financial institutions.
One of its two vice presidents is Rene Coulomb of Suez Lyonnaise
The Council held the first World Water Forum in Marrakesh,
Morocco, in 1997, and the second in The Hague in March 2000, attended
by 5,700 participants from all over the world and chaired by then
World Bank Vice-President Ismail Serageldin. While ostensibly
called to bring together "stakeholders" in the water
issue from around the world to address the global water crisis,
the Forum was instead used as a showcase for the transnational
water and energy companies and even big food corporations such
as Nestle and Unilever in order to promote privatization and full
cost recovery as the only solution to the world's water shortages.
Most panels and workshops were chaired by World Bank and corporate
executives who also made up the lion's share of panelists; only
one public sector union representative was invited to speak during
the entire five-day conference.
NGOs were allowed to attend, but the prohibitive cost of the
conference fee and accommodation ensured that only a small number
were present. Government officials from more than 160 countries
attended, but were relegated to observer status and approving
the final report of the Forum, which refused to name water as
a human right, calling it instead a "human need." This
is not semantic; if water is a human need it can be serviced by
the private sector. A human right cannot be sold. Throughout this
process, corporations emerged as the dominant players on the world
A second new international water agency was also created in
1996, composed of many of the same players. The Global Water Partnership
(GWP) describes itself as an "action-oriented network"
of organizations interested in water issues with a mission to
find "practical tools" for solving water problems, particularly
in developing countries. Its membership includes a number of NGOs,
government agencies (such as Canada's Canadian International Development
Agency, whose former head, Margaret Catley-Carlson, is GWP's new
chair), multilateral banks and the private sector. Suez Lyonnaise
des Eaux executive, Rene Coulomb, sits on the steering committee,
as does a representative of the Switzerland-based World Business
Council for Sustainable Development and the World Bank. Another
representative of Suez Lyonnaise des Eaux, Ivan Cheret, sits on
the GWP's Technical Advisory Committee.
Its operating principle that water is an "economic good"
and has an "economic value in all its competing uses,"
is the basis for GWP's priority on the privatization of water
services. For instance, in November 1997, this advisory group
held a meeting in Vitoria, Brazil, in partnership with the Brazilian
Association of Water Resources and the Inter-American Development
Bank. Among the issues considered were "public-private partnerships
for water management." Suez Lyonnaise des Eaux, through its
membership on this committee, is in a privileged position to bid
for these "partnership" contracts with the "good
housekeeping seal of approval" of the world's governments
and the United Nations.
It is clear that transnational water corporations are waging
an offensive on many fronts to take over the agenda of international
sustainable development programs for their own profit and that
political leaders, the World Bank and the United Nations are openly
colluding. Their way is paved by the utter failure of governments
everywhere to protect their water heritage. The private sector
argues that it is time to give the private sector the chance to
manage this precious resource and even some environmentalists,
having given up on governments altogether, agree.
In fact, governments are losing their right to protect their
water heritage by default. Most governments have very few laws
or regulations regarding their water systems. Most haven't even
begun to address the issues of privatization, commercialization
and trade in water. Yet, while they leave their water resources
unprotected by legislation, they are actively negotiating and
signing international trade and investment agreements that supersede
national law. These treaties include trade in water, and some
explicitly grant water rights to the private sector. The most
immediate example is NAFTA signed by Canada, the United States
and Mexico in 1993.