The Perils of Privatization: The Conflict between Multinational Corporations' Quest for Profits and the Simple Human Right to Clean, Safe Water

By Hauter, Wenonah | The American Prospect, June 2008 | Go to article overview

The Perils of Privatization: The Conflict between Multinational Corporations' Quest for Profits and the Simple Human Right to Clean, Safe Water


Hauter, Wenonah, The American Prospect


IF ADEQUATE WATER FOR DRINKING and sanitation is essential for life, shouldn't we consider water a human right? Not everyone thinks so. In February, the United Nations Human Rights Council missed a critical opportunity to recognize a human right to water. As a result of lobbying by the United States and Canada, the council derailed a European-backed declaration, accepting instead a weaker resolution that actually protects a corporation's right to sell water.

As illustrated by the February United Nations vote, our government and its corporate allies believe that water is a new profit center. They are promoting markets and privatization as the solution to providing water to the world's poor--l.4 billion people without access to drinking water and 2.5 billion without sanitation services. International finance institutions, funded by the United States and other developed nations, provide loans to developing nations on the condition that they privatize services and charge steep user fees. Indeed, the very institutions that are charged with alleviating poverty, like the World Bank, are implementing policies that force people who make $1 or $2 a day to choose among food, housing, or water.

Contrast this with the United States where, at the turn of the 20th century, reformers concerned about the high levels of water-borne disease successfully campaigned for public funding of municipal water and sewage systems. Today, public utilities provide 86 percent of household drinking water and 98 percent of sewer services. But the same economic interests promoting privatization in the developing world are clamoring for it in the United States.

Over the past 15 years, private water corporations, mostly European, have begun targeting American cities for privatization. Equity research firms predict that privatization of water services and private investment in pipes and infrastructure could provide large and stable profits. Proponents of privatization cite economic efficiency as one of its biggest selling points. But studies by independent researchers and even dissenting voices within the World Bank refute this claim.

A RECORD OF EMPTY PROMISES

Communities all over the world have suffered from the empty promises of water-privatization profiteers. Whether in Dares Salaam, Tanzania, or Guayaquil, Ecuador, or Atlanta, the results have been devastating. They include cost-cutting measures that jeopardize public safety, job cuts to essential staff, maintenance and water quality problems, lack of infrastructure investment, sewage spills, corruption, environmental degradation, outrageous rate hikes, and political meddling.

Almost across the board, private corporations deliver poorer service at a higher cost than do most public utilities. Surveys of U.S. utilities show that privately owned water utilities charge customers significantly higher water rates than their publicly owned counterparts charge--anywhere from 13 percent to almost 50 percent more, according to an analysis by Food & Water Watch, the advocacy group I direct. The reality is that any "efficiency" is realized by firing staff--often up to half of existing staff--undermining the ability of the utility to maintain pipes and other infrastructure.

Case studies from recent practices around the globe tell the story. In 2005, the government of Tanzania canceled its 10-year contract with the British-based firm Biwater after two years of poor management and unmet obligations left people without water and the government short about $3.25 million. The East African country enjoyed some measure of justice in early 2008 when an international tribunal ruled that Biwater must pay almost $8 million in damages and fees to the state water utility in Dares Salaam. Not coincidentally, the company had taken control of the city's water supply in a controversial, noncompetitive privatization process favored by the British government and the World Bank. …

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