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Transcript: #50-00 Thirst for Profits: Privatizing the World's Water
December 13, 2000

Program description, guest contact information and audio files at http://www.radioproject.org/archive/2000/0050.html

Phillip Babich: This week on Making Contact...

Peter Gleick: You cannot provide a human right to food without providing water. You cannot provide and satisfy the human right to well being and to health without providing adequate clean drinking water and sanitation services.

Margaret Catley-Carlson: Governments cannot get out of the water business. Governments have to establish good, sane water quality, and delivery understandings and norms. And then they have to monitor them and supervise them.

Phillip Babich: Over one billion people throughout the world lack the most basic water supply. At the same time, agribusiness and other industries are rapidly depleting remaining fresh water sources. On this program, we take a look at the global water supply and the push for privatization. I'm Phillip Babich, your host this week on Making Contact , an international radio program seeking to create connections between people, vital ideas and important information.

Though it's easy to forget, the supply of fresh water is finite. That resource makes up less than one-half of one percent of all the water on Earth, and is renewable only by rainfall. The rest is ocean saltwater or polar ice. Toxic pollution and industrial water diversion projects, such as dams and groundwater pumping, have disrupted natural water systems to a great degree. The results include depleted aquifers, the loss of wetlands, sinking cities, and rivers without fish. In the United States, for instance, forty percent of the rivers and streams are too toxic for fishing, swimming or drinking. Sandra Postel is the director of the Global Water Policy Project in Amherst, Massachusetts. She says that as fresh water on the earth disappears, competition over the remaining sources is rising.

Sandra Postel: We get drinking water from both lakes and rivers and also, of course, from groundwater. And it varies from place to place, what the exact mix of the sources would be. We have some very large cities in the world that depend almost entirely on ground water. The water that's drinkable and accessible to us is not always where the majority of our people are living. So there's a mismatch between the available fresh water and where we need it, for agriculture and for cities and the various things we use it for. And so what we're finding is that more and more places are becoming water-stressed, where there's just a lot of competition for the available supplies in those regions. Competition between agriculture, cities, industries and the environment.

Phillip Babich: In November 2000, the World Health Organization and the United Nations Children's Fund released the results of a study looking at basic access to the world's water supply. It found that 2.4 billion people worldwide still lack hygienic sanitation even though it could be easily provided, and that over one billion people have no access to basic water supply. Families living in Asia and Africa and so-called developing countries are the most affected. Sandra Postel says that this issue should be of top priority.

Sandra Postel: They're forced basically to go to a river or a pond or a lake and to take water that's not treated and is not necessarily safe to drink. And so they're risking disease and death every time they go for a drink of water. And that is to me a clear crisis of water today. It's not so much a problem of water scarcity per se, as a problem of poverty and lack of access.

Peter Gleick: From the point of view of meeting basic needs for water, basic human needs for water, water scarcity is not an issue.

Phillip Babich: Peter Gleick is an environmental scientist and the director of the Pacific Institute for Development, Environment and Security.

Peter Gleick: The problem is not that we don't have enough water to meet the most basic needs of everybody. That's not a lot of water. The problem is that there's not a clear agreement about meeting those basic needs, and there's growing disputes about the allocation of the water that we have. The vast majority of water goes to agriculture.

Phillip Babich: Sandra Postel agrees. She says that over 70 percent of all the water removed from rivers, lakes and aquifers goes to agriculture.

Sandra Postel: On average it takes about 1000 tons of water to grow one ton of grain. And that's not taking into account any inefficiency in irrigation; it's just the amount of water the crops need. So on top of that we also have in place a very sort of old and, in some cases, antiquated system of irrigation which does not deliver the water to crops very efficiently. So even more water than that is used.

Phillip Babich: After agriculture, the biggest water consumer is industry, especially high-tech and computer manufacturing, taking up around 20 percent of the world's water supply. The remaining 10 percent is used by people, within cities, towns and villages. According to the report released by the World Health Organization, it would take only $10 billion to provide everyone clean drinking water and sanitation, which, they point out, adds up to about half of what people living in the United States spend each year on pet food. Peter Gleick says providing people with these basic needs is not a problem of cost, but of priority.

Peter Gleick: After we've met all those needs, then, there needs to be a real discussion, a real open debate about: what's the best use of water, how efficiently are we using water, what are our real goals? And then you get to a whole other set of issues about water for food and water for industry and water for commercial uses. But I think they're secondary to the issue of meeting basic needs.

Phillip Babich: With the long list of overwhelming statistics about the degradation of fresh water and the disastrous consequences, alarm bells are sounding around the world. For instance, the late King Hussein of Jordan said the only reason his country would go to war with Israel would be over water. And in some places, giant balloons the size of fourteen football fields are being used to transport water to be bottled and sold. But there are disagreements about how to solve the problem of water. Industry and agriculture are the main sources of water consumption and so many scientists, environmentalists and grassroots groups working on the issue of water say that the solutions lie within fundamental changes and regulation of those sectors. But governments, corporations and some international organizations are arguing that water should become a commodity, to be managed by market forces, and are promoting the privatization of water sources. Correspondent Susan Wood has more.

Susan Wood: The race has barely begun. At stake is a water market valued at 800 billion dollars, and global corporations are rushing to cash in. Ten of the world's biggest multinationals are expanding rapidly around the globe, concentrating their operations in developing countries like China, Mexico, Brazil -- countries already facing acute water shortages. In some cases companies are signing management and lease contracts or entering into partnerships with government-owned utilities. But increasingly, they're seeking exclusive control of water infrastructure and access rights. Victor Menotti of the San Francisco-base International Forum on Globalization, an alliance of activists, scholars and writers, says all this raises serious questions.

Victor Menotti: Who's going to control this water? And who's going to own it? And who's going to be able to determine whether or not it was going to be kept in its natural place or be sold in bulk for export, much like the global commodity markets have created hunger in some parts of the globe, even in nations where they are agricultural exporters, people may be starving, because the purchasing power sends the food abroad to wherever the export market is. So we could be facing the same situation with water.

Susan Wood: Lee Travers is a principal water and sanitation economist with the World Bank in Washington, D.C. He says many developing country governments have a poor record when it comes to providing basic services.

Lee Travers: The water delivery experience in poor country after poor country -- in the cities, we're speaking of here -- the poor are rarely served. You can be awfully certain that the wealthy communities and middle-class communities in the major cities will be served with public water. The unserved groups are not the wealthy and the middle class. The unserved groups always are the poor. And so the notion that a service that's publicly provided is necessarily responsive has been proven in practice to not in fact be responsive.

Peter Gleick: Many government organizations are inefficient. They have failed to provide basic clean drinking water supply and sanitation services for billions of people.

Susan Wood: Peter Gleick is an environmental scientist and director of the Pacific Institute for Development, Environment and Security, in Oakland.

Peter Gleick: But it's also not clear to me that by throwing open those systems to the private sector and by granting private companies the right to meet those needs, that the unmet needs are going to be met. If it's possible to design market mechanisms that somehow provide water services for the poorest population, that require private companies to extend the services out to the semi-urban or the rural populations that are really suffering right now, then that would be a good thing, but the truth is I don't see that happening. I think what we're seeing is private companies coming in and skimming off the best of the most profitable systems, and leaving the unmet needs unmet.

Susan Wood: Jamie Dunn is a writer and researcher with the Council of Canadians, in Ottowa.

Jamie Dunn: What we hear over and over again is if we simply commodify -- commodifying water -- assigning it a market price, is the only way to attract investment, 'cause that's how companies can plan profits. And without that investment, there will be no development of water infrastructure to get water to the billions of people without it, because governments don't have any money.

Susan Wood: Ultimately, say the critics of privatization, it's not a question of where the money comes from. It's a question of control and accountability. Governments, they say, must answer to their people, while corporations are accountable only to their shareholders. Indeed, they say, private water companies have repeatedly shown that they place profit above all other considerations. Again, Jamie Dunn.

Jamie Dunn: What we find is that not only around the world are companies charged repeatedly with corruption and environmental damage, but also, if you look at England, for instance, the reports out of England say that what we saw between '91 and '92 is an increase in dysentery, a four-fold increase in dysentery. We have people choosing not to use water by flushing the toilet, instead to throw their waste in the back yard.

Susan Wood: French multinational Suez Lyonnaise des Eaux is one of the top ten global water companies, operating in 120 countries. According to a report issued in March by the Ottawa-based Polaris Institute, a nonprofit research and advocacy group, the company's subsidiaries in the United Kingdom and South Africa have been cited for water quality and environmental violations. In Indonesia the company has been charged with price tampering. And in France senior company executives were sentenced in connection with a bribery scandal, according to the report. Margaret Catley-Carlson is chair of the Global Water Partnership, an international network of governmental and non-governmental agencies based in Stockholm.

Margaret Catley-Carlson: Governments cannot get out of the water business. Governments have to establish good, sane environmental laws. They have to establish good, sane water quality and delivery understandings and norms. And then they have to monitor them and supervise them. Companies have to respect these. If either side does not live up to that bargain, nobody can be in favor of that kind of arrangement.

Susan Wood: Catley-Carlson is also chair of Suez's Water Resource Management Advisory Committee. She says the allegations against the company are probably mistaken. She describes government regulation and community management as key to environmentally sound and equitable water delivery in developing countries. But the Council of Canadians' Dunn says multinationals prefer to operate with as little regulation as possible.

Jamie Dunn: The reports that I get out of England are now that the Blair government has put in strict environmental regulations around water systems, that the private water companies are starting to look into selling them back to the communities. When you start recognizing the environmental impact of water, when you start looking at the public health impact of water and making the water delivery systems accountable, suddenly there isn't so much profit. And that's why it makes more sense to deliver publicly, where it's about accountability on health and human rights, and conservation.

Susan Wood: The notion of water as a human right is beginning to receive greater attention in international forums. It's not explicitly mentioned in the United Nations treaties that form the core of international human rights law, with the exception of the Convention on the Rights of the Child. Nor is it referred to in the Universal Declaration of Human Rights. But according to the Pacific Institute's Gleick, who has written on the subject, that's because the framers of those instruments saw water as so essential to human life that, like air, it did not need to be mentioned.

Peter Gleick: It's also clear that a number of the human rights that are explicitly guaranteed cannot be provided without water. You cannot provide a human right to food without providing water. You cannot provide and satisfy the human right to well-being and to health without providing clean -- adequate clean -- drinking water and sanitation services. And so those are even stronger arguments that, in fact, water must be explicitly included in the human rights debate.

Susan Wood: Of course, says Gleick, declaring water a human right will not in itself eliminate scarcity, just as declaring food a human right has not eliminated hunger. But, he says, it will place an enormous responsibility on governments, one he says many are unwilling to assume. The exception, he says, is the government of South Africa.

Peter Gleick: Under apartheid there were 13 or 14 or 15 million black South Africans, primarily, without access to basic clean drinking water and sanitation services: a microcosm of this much larger global problem. And when the apartheid government fell and the new government, democratic government, came in, they adopted the issue of access to clean drinking water and sanitation services as one of the most important efforts that they had to make. They threw out all the old water laws, the apartheid-era water laws. They threw out the water rights that had been granted to the mining industry and the farming industry in South Africa, and they rewrote the Constitution, and the Constitution now guarantees access to basic water as a human right.

Susan Wood: The environmental scientist says this shows even water-stressed countries can have enough water to meet the basic daily living needs of their people. What's needed, he says, is the political will to make it happen. For Making Contact, this is Susan Wood in New York.

Phillip Babich: You're listening to Making Contact, a production of the National Radio Project. If you want more information about the subject of this week's program, we'll be giving out our toll-free number at the end of this broadcast.

In January 2000, the city of Cochabamba in Bolivia came to a stand-still when a group of labor, community and human rights leaders shut down the city in order to protest the privatization of their water system. After intense pressure from the World Bank, which called for no public subsidies to hold down water price hikes, the Bolivian government sold off the water system in 1999 to Aguas Del Tunari, a subsidiary of the Bechtel Corporation. Oscar Olivera, who became a protest leader in the fight, believes that the city had had a recurring water problem before the privatization. Of the 600,000 people living in Cochabamba, only half were connected to the water system. Others relied on local corporations or trucks that delivered over-priced water to their areas.

Oscar Olivera (by translator): To solve this problem, the government had to make two decisions. First of all, they wrote a new law on potable water, and sewage, which granted a monopoly concession -- an absolute monopoly concession -- for the provision and distribution of water -- water services. This law also allowed for the confiscation of those water systems that people had built with their own efforts. This law also eliminated the traditional forms of managing water resources amongst the rural populations, the indigenous communities. This law not only allowed for the privatization of the water companies, but also privatized the sources of water itself. It also dollarized, or allowed the price of water to be pegged to the dollar. And it also made it impossible for the population in general to participate in the concession process, or in the setting of water rates.

Phillip Babich: Oscar Olivera says that the new contract between Aguas Del Tunari and the Bolivian government was ambiguous, and no solution to Cochabamba's water problem.

Oscar Olivera (by translator): This process, the contract process, was done behind people's backs, and a very obscure process that violated the established procedures for such concessions and the direct negotiation process. In the contract that was signed, there was an article that stated that the terms of the contract were outside of the jurisdiction of any Bolivian laws. The contract also established clauses of confidentiality, which made it virtually impossible for anyone who wasn't party to the contract to learn about what was in the contract: that means the population couldn't know what had been signed. The contract also guaranteed a 16% rate of return for the consortium on its investment.

Phillip Babich: In January 2000, the residents of Cochabamba were handed their monthly bills from their new water company. For some families the water rates were more than double. Those earning as little as $100 a month were facing bills of $20 and higher for their water. Oscar Olivera says it was time to act.

Oscar Olivera (by translator): Because of this, everyone in Cochabamba came together -- the peasants, the workers, the drivers, the students -- everyone was united. Because with the other privatizations there are some thing you can forego, perhaps not traveling in a train or an airplane, or using less electricity. But nobody can live without water. So the people said, "No" to the contract with Aguas del Tunari, which is the name of the consortium, and also, "No" to this new potable water law. We were saying "No" on the one hand, but behind that we also had proposals for how we wanted the new water law to be.

One of the key principals of our legislation is that water continued to be a common good and not be reduced to a simple business or commodity. That the traditional ancestral forms of water resource management in the countryside be respected, and that the efforts, the collective efforts of the poor neighborhoods to build and consolidate their own water system be respected. And this alternative proposal for water legislation was elaborated: was written by the population, by these organizations. And after eight days of the city being completely shut down, a popular uprising in Cochabamba, between the fourth and twelfth of April of this year, finally we were able to kick out the transnational consortium, and we were also able to force changes in the water law in the Congress of my country.

Phillip Babich: Bolivians aren't the only ones angry about Bechtel's role in their communities' water systems. People living in San Francisco, home to Bechtel's world headquarters, are concerned about that company's recent involvement in the massive San Francisco water system that delivers mountain spring water a distance of 175 miles to San Francisco and nearby areas. The city's Board of Supervisors approved a contract with the San Francisco Water Alliance, an engineering venture company led by Bechtel, to manage a massive retrofitting of the city's deteriorating water infrastructure. Many residents feared it was the first blow in a slow killing of San Francisco's public water system. Correspondent Krissy Clark has more.

Krissy Clark: Community groups across San Francisco are sounding alarms that privatization of the water in their city is not far down the road. They're upset that the Public Utilities Commission, known as the PUC, has made ties with the largest privately held company in the world, which is a leader in the budding water privatization industry. San Francisco mayor Willie Brown's latest estimate on the cost of the revamp project is $8 billion. Officials and citizens are all asking themselves, "Where's the money?" Voter approved bonds are one possibility, but might be tough to come by, while the mayor has discussed bottling and selling city water as a funding source. During its contract bid last spring, Bechtel mentioned the possibility of privately financing the project. That's something Chris Daly sees as a step towards privatization of the entire water system. He's a founder of Mission Agenda, a tenants' rights group.

Chris Daly: These folks know, even folks that own their own homes, if they've got a mortgage, the bank really owns that house. And as soon as they don't make a payment on that mortgage, or a couple of payments on that mortgage, the bank will come and foreclose and take that house. Could that happen with our water? It's possible.

Krissy Clark: Another possibility that worries Daly is that the city will grow dependent upon Bechtel to manage its water system. As the contract stands for the next four years, Bechtel will act as a management consultant. Over that period, the company is supposed to transfer skills and knowledge to the PUC. But Daly says there is nothing explicit that describes what kinds of checks and balances would ensure that transfer.

Chris Daly: As soon as you bring someone like Bechtel in, and, you know, they've done a certain number of years of work, they have the expertise and they have ownership over the project, it becomes...it makes less sense to remove them from the project. The city gets dependent on them. It's not in Bechtel's interest, in their financial interest, to empower the city, so that they lose their job. It's in their interest every step of the way to disempower the city. and to get more and more control over the project and over the resource.

Leamon Abrams: When you think about the engineering challenges, I mean, a company like Bechtel is anxious to get its hands and arms around programs that sort of challenge and stretch its technical skills and its ability to deliver innovation.

Krissy Clark: Leamon Abrams is a public relations manager for Bechtel, though right now his desk is in a PUC office. The idea of Bechtel getting its "hands and arms" around San Francisco's water system is just what worries many community groups. But Abrams says Bechtel has no intention of privatizing San Francisco's water. While Bechtel provides water and wastewater services to millions of customers worldwide, Abrams says the San Francisco project interests his company as an exciting engineering project, not as a new acquisition. Calling water a "precious commodity", he says Bechtel learned from its experience in Bolivia that privatization only works when the consumers are willing.

Leamon Abrams: I think in certain instances, if you have, you know, a willing owner and customer, if you have a finite financing need, and you have an ability to collateralize the asset, that is, tolls or some other mechanism, which can be used to pay down the construction cost for the program, that privatization may make sense. Again, it's a local call for the most part, and it depends on having that test met, as well as the will of the jurisdiction of the owners in that particular locality.

Krissy Clark: Beverly Hennessey is a public relations officer for the San Francisco PUC. Although during the contracts bidding contest, Bechtel came in second in the city's own rating system, Henessey insists that the commission chose Bechtel because they had the right experience for the job, not because the PUC has plans for privatization. But some citizen groups, point out the fact that Mayor Brown has been an advocate of privatization for other city services, such as transportation, and that he's filled the city's water system task force with a number of privatization advocates. Still, Hennessey says, she's sure water will remain under public control in San Francisco.

Beverly Hennessey: We see a little bit of a trend, at least in California, for privatization of water systems. But the San Francisco PUC has done a remarkable job of delivering safe, potable water to 2.4 million people for the last 80 years or so, or longer. And I think these other situations where privatization has moved in, has been a situation where the city or that particular county was in dire straits, either financially or just needed help and support in running their system. And that's not the case here with the San Francisco PUC. We do a really excellent job of delivering water. I think the San Francisco voters are far too smart to turn over their water system, that's something that's such a precious resource like this, to a private company.

Krissy Clark: But many community groups in San Francisco fear it won't be up to the voters to decide. Some say privatization has already begun. David Novogrodsky, executive director of Professional and Technical Engineers, Local 21, says Bechtel has a virtual control of PUC management, which for the last year has had no general manager and little management infrastructure. The result, he says, is a stituation where private contractors lack thorough public over-sight, leaving people who are not responsible to the city system in charge of it. Leamon Abrams, the public relations officer at Bechtel, says internal checks and balances and an independent peer review board, should ensure that Bechtel is accountable to the public, even as it fully integrates itself into the PUC for the next few years. But Novogrodsky isn't satisfied.

David Novogrodsky: What people have a right to expect with their water supply and their power supply and their wastewater treatment and other kinds of things like that--and there are many things like that--is a certain kind of transparency. Be able to see what's going on, be able to know how their money is working, how the resources are being used. These are public resources. They are their resources. They're the owners, and they're also the recipients of the service, of the products. And they have a right to control it.

Krissy Clark: The coalition that has been organizing against the Bechtel contract, says they will continue their fight. Local 21 filed a lawsuit against the city over the contract. The suit failed in Superior Court but is currently under appeal. The union will also bring up the issues during their contract negotiations with the city in 2001. In addition there are plans to urge the city government to cancel the project when it comes up for its yearly review. Chris Daly, of Mission Agenda, says it's important to consider that once a private corporation gains access to the city's water system, it may not act with the common good in mind.

Chris Daly: Water is a basic human right. And when you give control of that resource from the people or from our government, to a private corporation who is charged, deemed with only maximizing their profits, does that mean some people go without water?

Krissy Clark: For Making Contact, I'm Krissy Clark. Phillip Babich: And that's it for this edition of Making Contact: a look at the global water supply. Thanks for listening. And special thanks this week to Esty Dinur for recorded portions, and to Orla Rapple for production assistance.

Laura Livoti is our managing director. Peggy Law, executive director. Associate producers, Stephanie Welch and Shereen Meraji. Senior advisor, Norman Solomon. National producer, David Barsamian. Women's desk coordinator, Lisa Rudman. Prison desk coordinator, Eli Rosenblatt. And, I'm your host and associate producer, Phillip Babich.

If you want more information about the subject of this week's program, call the National Radio Project at 800-529-5736. Call that same phone number for tapes and transcripts. That's 800-529-5736. You can also go to our website at radioproject.org.

Making Contact is an independent production. We're committed to providing a forum for voices and opinions not often heard in the mass media. If you have suggestions for future programs, we'd like to hear from you. Our theme music is by the Charlie Hunter trio. Bye for now.