Is the Tide Turning Against Water Privatization?

Jayakrishnan Subramanian/Flickr)” width=”640″ height=”427″ />Water for sale in Lagos, Nigeria. (Photo: Jayakrishnan Subramanian/Flickr)

The rusty pipes running through the rough neighborhoods of Lagos reveal how Nigeria’s flood of petrol dollars trickles down: as much as 80 percent of the water is estimated to be “stolen” in a system plagued by mismanagement and failed privatization schemes. But now help is coming accidentally from the World Bank—the financial institution better known for financing mass displacement of slum residents. Its investment arm is inadvertently bringing a small spark of hope to Lagos—not because of what it’s funding, but what it isn’t. Apparently, it’s finally starting to back off the agenda of corporatizing the city’s water.

While the World Bank confronts criticism for projects that have fueled rights violations across the Global South, Corporate Accountability International (CAI) has observed that the bank’s International Finance Corporation (IFC) recently recoiled from one keystone neoliberal development program: A nascent proposal for a water-privatization scheme for Lagos has foundered, apparently dismissed as unworkable and unprofitable.

Part of the city’s massive inequality boils down to the chronic development failures of the water system. The Lagos Water Corporation (LWC) has historically provided a fraction of local water, but has struggled to create a broad citywide system through a “public private partnership” (PPP)—provoking opposition from labor and community groups. The World Bank’s move, reported in The Guardian, actually marks the second failed attempt to broker a PPP; the LWC rejected an earlier proposal in 1999 for being unviable and costly. Since then, the LWC has tried unsuccessfully to launch PPPs with other companies.

Following April’s elections, local civil society groups have pressured the new governor of Lagos, Akinwunmi Ambode, to halt “privatisation under the failed Public Private Partnership model.”

In cities like Nagpur, India, and Manila, in the Philippines, according to CAI’s research, the IFC has helped finance pro-privatization plans, underwriting projects to facilitate investment in commercially managed water systems—supposedly to broaden access for underserved populations. But promised improvements have not materialized. Instead, advocates say, parched communities have suffered through years of infrastructure failures and scandalous rate hikes as local neighborhoods—which often never had decent services from public or private sources—were stuck paying for contaminated, diseased, or simply nonexistent waterworks.

“Private industry brings nothing usually to the table, as far as infrastructure investment,” says CAI campaigner Jesse Bragg. From a business standpoint, he notes, rather than sinking funds into long-term renovations for damaged, eroding water systems, companies like Veolia “see profit in the rate setting, collections, metering of the water, not the investment.”

As CAI explains in a report on World Bank privatization programs, “Historical experience and technological conditions demonstrate that water is a natural monopoly; planning, not competition, will engender efficient infrastructure systems.” Activists say the market-focused corporate model tends to exacerbate global inequalities. Infrastructure issues like basic maintenance or expanding pipelines to less profitable impoverished or isolated areas are not prioritized. Moreover, “delinquent” ratepayers are often penalized and suffer shutoffs when they can’t afford their bills. And as a part of the local economy, private water corporations don’t have the same commitment to maintaining strong civil service workforces as public-sector utilities—which are often a community’s main source of solid union jobs.

In addition to deepening deprivation of marginalized communities, advocates warn that women are also disproportionately impacted, because they are often responsible for household stewardship of water supplies. When multinational corporations swoop in to manage water, the outside control of a public resource “further removes its governance from community, and particularly women’s access.”

These programs are fueled by a neoliberal development model based on the notion that private markets are the most rational way to distribute resources. But, while privatization is certainly an efficient way for rich companies to extract wealth from the poor, many experts say that, in fact, public, municipally managed water systems tend to work more effectively and distribute water services more equitably among those who most need them.

The collapse of the World Bank’s Lagos PPP talks may point toward a global trend toward remunicipalization of water services in recent years, as many localities that have experimented with privatization have found that public services are actually more cost-efficient in the long run.

With the relentless drive to marketize a critical natural resource, water privatization has alienated both labor and consumers in rich and poor countries alike. And this is precisely why the remuncipalization trend has been led by richer cities. For example, as Veolia’s contracts have collapsed across the United States, where rate hikes and sewage spills have tainted municipal relationships, the chief brand in corporate water has seen its profits dwindle in recent years.

There are ways to do water infrastructure investment right. By engaging local communities and providing democratic control over water resources, both distribution and consumption can be managed equitably. More than 30 countries, mostly in Africa and Latin America, have passed “right to water” legislation to establish a human rights framework for water management. Meanwhile, local leaders and civil society groups have committed to long-term infrastructure investments channeled toward sustainability and socially-focused development, rather than corporate revenue streams. To foster this process, CAI calls on the global financial system to comprehensively divest from privatization schemes and “revitalize World Bank funding for public water agencies to expand infrastructure and access.”

The great water paradox is that the richer you are, the cheaper it is: Compare poor countries’ water systems to the public services enjoyed across the United States—where municipal water remains relatively low-cost and pristine. Bragg says international development should promote infrastructure projects “Where the water system is accountable to the people, and that the end goal of water delivery is access, not profit. And this is more important in the Global South than it is here… It’s an issue of survival, and we shouldn’t be looking to extract profits from some of the poorest communities in the world.”

When you give poor people the right to water, it’s not a boom market, but it offers a guaranteed better return on investment—saved lives, healthier environments and communities. The Global South’s faith in markets is evaporating as people learn the hard way that you can’t squeeze clean water out of dirty business.