Global Policy Forum

By Tony Clarke and Maude Barlow

We are taught in school that the Earth has a closed hydrologic system; water is continually being recycled through rain and evaporation and none of it leaves the planet's atmosphere. Not only is there the same amount of water on the Earth today as there was at the creation of the planet, it's the same water. The next time you're walking in the rain, stop and think that some of the water falling on you ran through the blood of dinosaurs or swelled the tears of children who lived thousands of years ago.

While there will always be the same amount of water, we can render water unusable for ourselves and for the planet. The growing scarcity of potable water stems from a variety of causes. Per capita water consumption is doubling every 20 years, more than twice the rate of human population growth, which itself is exploding. Technology and sanitation systems, particularly those in the wealthy industrialized nations, have encouraged people to use far more water than they need. Yet even with this increase in personal water use, households and municipalities account for only 10 percent of water use.

Industry claims 20 to 25 percent of the world's fresh water supplies, and its demands are dramatically increasing. Many of the world's fastest growing industries are water intensive. For example, in the U.S. alone, the computer industry will soon use over 396 billion gallons of water each year.

Nonetheless, it is irrigation that is the real water hog, claiming 65 to 70 percent of all water used by humans. Increasing amounts of irrigation water are used for industrial farming. These water-intensive corporate farming practices are subsidized by governments and their taxpayers, and this creates a strong disincentive for farm operations to move to conservation practices such as drip irrigation.

Along with population growth and increasing per capita water consumption, massive pollution of the world's surface water systems has placed a great strain on remaining supplies of clean fresh water. Global deforestation, destruction of wetlands, dumping of pesticides and fertilizer into waterways, and global warming are all taking a terrible toll on the Earth's fragile water systems.

The world is running out of fresh water. By the year 2025, there will be 2.6 billion more people on Earth than there are today. As many as two-thirds of those people will be living in conditions of serious water shortage, and one-third will be living with absolute water scarcity. Demand for water will exceed availability by 56 percent.

Water as a commodity

The combination of increasing demand and shrinking supply has attracted the interest of global corporations who want to sell water for a profit. The water industry is touted by the World Bank as a potential trillion-dollar industry. Water has become the "blue gold" of the 21st century.

The move to privatize water coincides with the rise of the Washington Consensus as the dominant world economic philosophy. This philosophy calls for trade and investment liberalization, and turning responsibility for social programs and resource management over to the private sector. In this case, it is an assault on the ancient commons of water.

Global trade agreements have become perhaps the most important tool for corporations trading in water and their allies. All of the multinational governing bodies, the North American Free Trade Agreement (NAFTA), the General Agreement on Trade and Tariffs (GATT), and the World Trade Organization (WTO), define water as a commodity. As a result, water is now subject to the same rules and regulations governing other commodities like oil and natural gas. Under these combined international rules, a country cannot prohibit or limit the export of water without risking censure by the WTO. Nations are also restricted from denying the import of water from any country. NAFTA's "proportionality clause" means that if a country turns on the tap to export its natural resources, it cannot turn off the tap until it runs out of that resource.

In addition, the push to privatize water services will be greatly enhanced by new rules governing cross-border trade in services at the WTO, known as the GATS (General Agreement on Trade in Services). Under the proposed GATS rules, not only will governments face added pressures to deregulate and privatize their water systems, but once a city's water services have been taken over by a foreign-based corporation, efforts to take these services back into public hands will invite severe economic penalties under the WTO.

Leading the charge for privatization are three big transnational corporations based in Europe: Vivendi, Suez, and RWE. All three have systematically bought out smaller rivals to become the dominate powers in the business of water all over the globe. The long-range strategy of these companies began with their efforts to take over the public water systems in Third World countries where they hoped to position themselves as the saviors of the water crisis. Instead, a series of private-sector fiascoes in the Third World derailed their plans.

The case of Buenos Aires is especially instructive. Buenos Aires was to be the flagship operation of Third-World water privatization. Suez, through its subsidiary Aguas Argentinas, took over the Buenos Aires water and sewage system in 1992. A common argument for privatizing water systems is that, unlike the cash-strapped public sector, the private sector has the capital necessary to update or refurbish aging water systems. But public sources like the World Bank, International Monetary Fund, and other smaller banks supplied 97 percent of the $1 billion necessary for the Suez privatization experiment. Suez did expand water and sewage service by a small increment, but failed to meet its projected targets in both areas. Nonetheless, the company managed to reap annual profits of around 25 percent in the mid-1990s. Recently, Suez announced that it plans to pull out of Argentina because the country's currency crisis has cut into its profits. There have been other private-sector fiascoes in places like Johannesburg, New Delhi, Manila, and most famously in Cochabamba, Bolivia.

The effort to privatize Third World water systems has become a target of civil society protests. Representatives of an international civil society network appeared at a meeting of chief executive officers at the World Water Forum in Kyoto, Japan, in March. The group took over the microphones and offered a series of testimonials about the impact of water privatization around the world. Toward the end of the event, a water activist from Cancun, Mexico, stepped to the microphone and held up a glass of pitch-black, putrid-smelling water. He explained that he had taken the water from his home tap in Cancun, where Suez runs the municipal water system. He then requested that the moderator pass the glass of black, smelly water up on stage to the CEO of Suez, inviting him to drink it.

Targeting First World water

The big water companies are now changing their strategy and concentrating their operations and their investment on more secure markets in North America and Europe. Eighty-five percent of all water services in the U.S. are still in public hands. That's a tempting target for conglomerates like Suez, Vivendi, and RWE. Within the next 10 years, they aim to control 70 percent of water services across the United States.

They have positioned themselves to move aggressively. Vivendi, Suez, and RWE have bought up the leading U.S. water companies, U.S. Filter, United Water, and American Water Works, respectively. These water companies had largely serviced small towns and communities, but under the tutelage of the global giants they have become the engines for privatization in the United States.

When transnational water conglomerates take over a municipal water system, it feels like a local problem, but because the same corporate players are targeting communities all over the world, we must build alliances and connections, learn from one another, and start to build a frontal attack. At the Polaris Institute, we propose a three-pronged strategy. First, develop a water-alert network so we can know where companies are operating and where they are going next. How are they going to move? And how can we get ahead of them?

Second, we need water-action teams that bring citizens together to build local water-watch coalitions and develop campaigns to protect their water supplies and services from conglomerates. Then we should link those local campaigns with the national campaigns of groups like Public Citizen or the Council of Canadians.

Third, we need to offer alternatives. It is not enough to say we want to defend our public water systems against private takeovers. There are problems with public water systems, and we must find new ways of revitalizing them in our own communities through citizen participation. Engaged citizens can act as watchdogs for their local water systems.

Our local actions should be informed by three global principles. One is water conservation. We cannot kid ourselves about water scarcity. Water may be abundant in one place, but it's scarce in others. Water conservation must be a top priority.

The second principle is that water is a fundamental human right. People need water to live. Water must be provided equitably to all people and not on the basis of the ability to pay.

The third principle is water democracy. We cannot leave the management of our most precious resource in the hands of bureaucrats in government or the private corporations, whether or not they are well intentioned. We, the people, must preserve this special trust, we must fight for it, and we must take our proper role and demand water democracy.

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