Thirst for Profit: Corporate Control
of Water in Latin America
by: Lisa Boscov-Ellen, The Council
on Hemispheric Affairs
www.truthout.org/, June 19, 2009
The Corporate Crusade to Commodify
Water
Water has been characterized as the oil
of the 21st century. Blue gold. It is essential to life, and yet
humanity faces a growing water crisis as a result of severe mismanagement
in water and sanitation, which will be exponentially exacerbated
in the coming decades by population growth combined with declining
resources. Latin America has the greatest income disparity in
the world and the population's access to water reflects this inequality.
Over 130 million people living in the region do not have access
to potable water in their homes, and sanitation is in even poorer
condition, as it is estimated that only one in six persons has
adequate sanitation services. According to the 2007 Annual Report
from the nonprofit organization Water For People, "Every
day, nearly 6,000 people who share our world die from water-related
illnesses - more than 2 million each year - and the vast majority
of these are childrenThere are more lives lost each year to water-related
illnesses than to natural disasters and wars combined." It
is clear that lack of access to clean water is a serious issue,
one that has only started to gain international attention from
a variety of organizations in recent years.
The Fifth World Water Forum took place
in Istanbul, Turkey, from March 16-22, 2009, with over 25,000
people attending, representing 182 countries. The World Water
Forum, the largest water policy event in the world, is held every
three years. It is organized by the World Water Council, a private
think-tank based in Marseille, France. The People's Water Forum,
a global water justice movement which has referred to the World
Water Forum as "false" and "corporate driven,"
also gathered in Istanbul to protest the Fifth World Water Forum.
In the People's Water Forum Declaration, they sharply criticize
the World Water Forum, stating that it is motivated by private
interests and attempts to create the misleading illusion of an
utterly false global consensus on water management. The Declaration
also asks that the next water forum be organized by the UN General
Assembly, calls for water to be defined as a human right, and
denounces all forms of privatization and commercialization of
water and sanitation services. Joining the discussion, the International
Water Forum, a by-invitation-only Forum sponsored by the United
Nations Institute for Training and Research (UNITAR), the City
of Atlanta Department of Watershed Management, and CIFAL Atlanta
will be held on July 9-10 of this year to discuss global water
scarcity as well as methods for establishing a sustainable water
supply.
The struggle over water is certainly not
a new phenomenon. Wide-scale water privatization began in the
1990s and was often stipulated as a condition for assistance from
international financial aid institutions, primarily the World
Bank and the Inter-American Development Bank. Since then, there
has been ongoing conflict over water management, with Latin America
at the center of many of the models for resistance and restructuring.
These water-related conflicts, popularly referred to as "water
wars," gained international attention a decade ago. The expulsion
of water giant Bechtel by the citizens of the Bolivian city Cochabamba
marked the beginning of a greater resistance to water privatization
and commercialization in Latin America. Given the failures of
privatization and neoliberal policies in Latin America, it should
not come as a surprise that the people are objecting to the commodification
of this basic human need.
Privatization and Commercialization
It is worth noting that privatization
and commercialization are distinct processes when discussing their
implementation in Latin America. Privatization connotes reorganization
and management from a source other than the public sector, and
can involve a spectrum of private occupation. Commercialization
entails the introduction of management institutions, such as free
market competition (albeit simulated, in this case) into the process.
However, privatization and commercialization are frequently concurrent
processes, as was the case in Cochabamba.
There are only a few arguments commonly
employed to defend water privatization in Latin America. The primary
justification is that the governments of one of these countries
have previously failed to adequately provide water, either because
of incompetence or corruption. Organizations like the World Bank,
which frequently finance privatization projects, dogmatically
believe that the open market is more efficient at resource management
than the state because the government is "overextended."
Furthermore, they think that the competition in private sector
development will lead to higher quality and lower cost services.
Another common rationale is that making water into a commercial
good - thus assigning monetary value to water - makes consumers
less likely to waste it. According to this argument, the commercialization
of water would prevent its overuse.
These assumptions, however, are problematic.
The postulation that competition is an inherent element of privatization
is misguided. In fact, the corporate monopoly on water in Latin
America is part of the reason that prices have been high and quality
has been low. It could be wiser to address the concern about wasting
water through an expansive educational program that encompasses
both fundamental health issues regarding drinking water and sanitation,
and information about the importance as well as preferred methods
of water conservation. Another possible solution is through government
regulation, which could be more effective if it were done transparently
and involved community participation. The state could potentially
utilize subsidies, a water tax or a credit to promote the sustainable
use of water. The greatest problem with the mindset behind privatization
is that while it considers water a human need, it is not deemed
a human right, which essentially denies the universal right to
life. Regardless, the fact is that Latin American countries that
have experienced privatization of their water supply have seen
little improvement, and in most cases water supply and quality
have declined.
Bolivia's Water War
Bolivia is the classic example of a situation
in which the water privatization and commercialization process
was disastrous. Two concessions to private, corporate control
in Bolivia - part of a condition of a World Bank loan of US$20
million to the Bolivian government in 1997 - have now been rejected
through popular uprisings. The first was in Cochabamba in 2000
against Aguas de Tunari, a subsidiary of the enormous U.S.-based
Bechtel Corporation (which was the only bidder). The second uprising
occurred in La Paz/El Alto, where a subsidiary of the French company
Suez, called Aguas de Illimani S.A. (AISA), was thrown out in
2005. In Cochabamba, after Bechtel was installed, it quickly raised
rates by an average of 35% (and in some cases as much as 200%),
which was far outside the budget of the city's poor and would
have left many without access to water. Licenses were even required
for individuals to collect rainwater from their roofs, and people
were charged for water taken from their own wells. Protests escalated
to the point that the Bolivian government declared a state of
martial law, and eventually the company was forced to abandon
their operations in the country. Supporters of privatization in
Bolivia argue that these tariff increases were necessary to improve
the existing infrastructure and expand the service area. Furthermore,
some have suggested that antecedent economic and social factors,
such as political corruption and pre-existing anti-privatization
public sentiment, contributed to the tinderbox complexity of the
situation in Cochabamba and were responsible for the failure of
water privatization.
After Bechtel was driven out by public
outrage, the international attention given to Cochabamba's "Water
War" faded, although problems still remained. Marcela Olivera,
the Latin American Coordinator of Food and Water Watch's Water
for All Campaign, writes that,
"the other battle that's still going
on, that we're fighting now in the form of the struggle over water
rights, has to do with our not being able to put together an effective,
participatory popular alternative with social controls to serve
as a counter to privatization, to private control of resources.
This is a battle that's still being waged in Cochabamba, but it's
less romantic and not so easy to talk about, because there are
a lot of problems with the water company. Things have not been
resolved now that the company has been reclaimed. I think this
is where the true work lies - -work that is harder, unrecognized,
and still involves an entrenched battle."
The withdrawal of Bechtel left SEMAPA,
Bolivia's municipal water service, in charge of distribution.
This service was also inadequate and left the poorer southern
districts without water. After Evo Morales was elected in 2005,
in part due to the social protest ignited by the Cochabamba incident,
he created a Ministry of Water in Bolivia with the goal of achieving
equal and universal access to water. While Bolivia has approved
a new constitution that considers water a fundamental right and
bans private appropriation, little progress has been made towards
the country's goal, as only US$800,000 was appropriated for the
water budget in 2008.
Models for Change: Bolivia, Venezuela,
and Peru
The town of Sebastian Pagador, in southern
Bolivia, has become an example of community-based innovation.
In 1990, they formed a collective called APAAS (Association of
Production and Administration of Water and Sanitation), in which
the 390 families in the area formed a committee, and every member
family had the monthly responsibility of digging six meters and
paying one boliviano for supplies. By 1993 they had built an entire
distribution system. It was a long and rigorous process, but today,
around 600 houses in the area have access to potable water seventeen
hours a day, and each household only has to pay US$3 a month.
The members of the water collective are proud of their ability
to provide service from a system they built by hand, but also
of their management style that gives control to the people rather
than to administrators. There are, however, still issues with
this system. Financial restrictions make it impossible for them
to expand to meet increased demand, they have not been able to
construct a water treatment system, and the wells that they currently
use are expected to dry up in approximately a decade.
Venezuela provides another case study
of effective restructuring of water management. Mariela Cruz Salazar
of the Technical Water Committee in Camancitos, Venezuela discusses
Venezuela's alternative for community management. The Venezuelan
government created "technical water committees" and
"community water councils" where all of the technical
water committees can meet to discuss their problems and ideas.
The government helps to finance these projects, and has educated
people in environmental issues and in the conservation and administration
of water. If an issue concerning water arises in the community,
a citizen's assembly convenes to discuss the problem and then
communicates with the State Institute for Water Resources. Together,
Water Resources and the community plan and prepare future projects.
Salazar writes that, "We're managing the water as an organized
community, not just by receiving the water, but by training the
community in how to use it rationally and conserve it for the
future." Although the figures are debatable (the WHO/UNICEF
Joint Monitoring Program and the Andean Development Corporation
[CAF] project lower estimates), the Ministry of Environment says
that in 2008, 93 percent of the population had access to water
supply and sanitation. This would mean that Venezuela is one of
the few places to achieve the UN Millennium Development Goals
for water and sanitation.
The circumstances in Peru are very similar
to those in many other Latin American countries. In 1992, their
constitution was modified so that the country's resources and
production were open to multinational corporations and a neoliberal
economic agenda. Although they managed to stop water privatization
in 2006, Peru continues to struggle with creating an alternative
proposal and implementing a system that guarantees more permanent
rights to water. Although coverage of the recent protests that
began in early April and the violent conflict that occurred on
June 5th has focused on the issues of new laws, free trade, and
the extraction of oil and natural gas, water is also an important
part of this conflict. The series of laws approved by President
Alan Garcia would remove indigenous control of land and natural
resources. It would also likely lead to substantial amounts of
development in the rainforest. According to Reuters reporter Dana
Ford, "Law 29833 creates new public agencies to oversee water
management and distribution. Small farmers fear the changes will
drive up costs, reduce their access to water while giving more
of it to corporate growers, and eventually lead to the privatization
of the water agencies." Additionally, deforestation that
would be part of development in the rainforest contributes to
flooding, droughts and the melting of glaciers as a result of
global warming. This environmental perspective that is brought
to the water issue is distinctive. Nelly Avendaño of the
Front for the Defense of Water, in Peru's Junín region,
expresses a remarkably comprehensive understanding of the necessary
action which must be taken:
"it's a question of maintaining,
conserving and protecting our water sources, of providing drinking
water that is safe for human consumption, of modernizing agricultural
irrigation methods. Ultimately, all this needs to be followed
by the construction of water treatment plants for sewage and wastewater,
so that this develops its own cycle and is converted into clean
water for agricultural or industrial use. If our policies don't
integrate the issues of water resources, sanitation, and the environment
into one, then the system will undoubtedly continue to fail us."
The Front for the Defense of Water recognizes
that the privatization of water is a complex issue, which concerns
both environmental sustainability and the natural rights of humankind.
Turning the Tide
Civil society has made strides against
the runaway process of privatization and commercialization of
water, but there is a formidable challenge ahead. While transnational
companies have experienced setbacks in their attempts to privatize
water in Latin America, they have had to change their strategy,
but privatization still persists in the region. Since privatization
has become such an anathema, corporations use different terms
to describe their ventures. The appropriation of a territory or
bioregion, as is the case in Peru, allows for control over the
resources in that area. Large companies, with total engineering
capacities at hand, can divert whole rivers as part of their production
projects, or end up making water unusable for local inhabitants,
which essentially is privatization, but through contamination.
Bottling water and monopolizing technology for extraction and
purification are other forms of privatizing water and vending
it to the highest bidder.
In addition to using these methods to
gain control of water, corporations normally see to it that they
benefit from the wording and intent of free trade agreements.
NAFTA considers water to be an "investment," the WTO
General Agreement on Trade in Services and the proposed FTAA call
it a "service," and in both NAFTA and the WTO it is
regarded as a "good."
Privatizing and commercializing water
guarantees that the focus on its management and distribution will
be profit, not what is best for people or, for that matter, the
planet. Profits from the bottled water industry are so high that
the infrastructure necessary to provide the world's population
with potable water could be created by applying the profits accumulated
over just one year. The US$100 billion that people spent on bottled
water in 2005 is three times what would be needed to achieve the
UN goal of making water available to everyone by 2015. The terrible
situation that the lack of a proper water supply and sanitation
creates for so many is avoidable and, as of now, is largely a
product of poor resource management. A NACLA report by Maude Barlow
and Tony Clark states that, "While the region's available
resources could provide each person with close to 110, 500 cubic
feet of water every year, the average resident has access to only
1,010 cubic feet per year. This compares to North America's annual
average of 4,160 cubic feet and Europe's 2,255.6."
To ensure equality, water must be considered
a human right and not just a need, privilege or commodity. However,
the issue requires a broader vision that goes beyond simply an
evaluation of the failures of privatization and includes a consideration
of alternatives. The community-based programs that have included
village-based education have been very successful in making water
available to the communities they serve. While this is a valuable
model, it has limitations when applied in bigger cities. Even
though there have been problems with government management in
the past, advocates of public access insist that privatization
is not the answer. A water management system that includes public
and community cooperation has great potential when combined with
a more comprehensive educational program and increased transparency.
However, the focus must shift to include not only alternative
models, but also preventative planning. As the world population
increases and water sources grow more scarce, the World Bank expects
that by 2025, more than two-thirds of humanity will not have a
reliable source of potable water, and adequate sanitation will
probably become even less common. The Intergovernmental Panel
on Climate Change predicts that the figure of those without water
in Latin America would include somewhere between 7 million and
77 million people. The growing movement surrounding water rights
must tackle these predictions by addressing the less immediate,
yet equally important concerns of restructuring agriculture and
irrigation, minimizing pollution, and working to protect the environment
before providing this vital resource becomes an issue of true
scarcity rather than mismanagement, as now is the case.
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