Privatisation No Answer to Water Scarcity - UN
Thalif Deen
Inter-Press Service
March 18, 2004

UNITED NATIONS - U.N. Secretary-General Kofi Annan is sceptical that privatisation of the world's water supplies will help resolve the problems facing more than 1.2 billion people globally who have little or no access to safe drinking water.

But while Annan details some shortfalls of privatisation in a new report, an initiative by his own office is partly to blame for those problems, says one environmentalist, while another argues that the public-private debate should end so the focus can be placed on those people without water.

In the 29-page report released here, Annan points out that private investors have become more cautious and slowed investments in the water sector, having underestimated risks, overestimated profits, and encountered contractual problems.

"Problems that have arisen with private water companies include collusive bidding on water supply contracts, regulators who are too readily influenced by regulated companies, inflexible contractual guarantees of returns, monopolisation of essential infrastructure and lack of transparency," Annan says.

The study, which is due to go before the 12th session of the U.N. Commission on Sustainable Development Apr. 14-30, says that more than 80 percent of those without access to water live in rural areas.

But one observer blames the United Nations for mollycoddling a flawed private sector that now controls about 10 percent of the world's water supply systems.

"The secretary-general's statement of the problems of water privatisation is too little, too late," says Michael Dorsey, a member of the Faculty of Science in the Environmental Studies Programme at U.S.-based Dartmouth College.

Dorsey, a former U.N. representative of the Sierra Club, told IPS that environmental groups worldwide believe that part of the problem lies at Annan's own doorstep, because some of the world's private water suppliers are members of his much-touted Global Compact.

A voluntary initiative launched by Annan's office in July 2000, the Global Compact includes more than 1,000 companies worldwide that are working with the United Nations to promote corporate responsibility, including labour, environmental and human rights standards, in the workplace.

"We have repeatedly urged the secretary-general's office, U.N. agencies and member states to take critical measures to halt the privatisation of natural resources," Dorsey said. But Annan's office has rarely listened -- "indeed they have often ignored these calls."

"Now they are seeing the effects as predicted," he added, pointing out that some of the "prime culprits of the problematic privatisation the secretary-general abhors are members of his own Global Compact."

These companies, Dorsey says, include Vivendi, Veolia Environment and Suez.

"Though started with good intentions by the secretary-general, the Global Compact is counter-productive," he added.

Georg Kell, executive head of the compact, calls the comparison incorrect and unfair.

"It is like comparing apples and oranges,'' he said. ''We have never, ever taken up either the issue of privatisation or water. And there is no direct connection between the Global Compact and water privatisation," Kell told IPS.

But Dorsey said the Global Compact allows the name and reputation of the United Nations to be abused by corporations whose practices are in contradiction with the values of the world body.

"Minimally, if the secretary-general is truly concerned about the privatisation of water and other natural resources, he needs to be courageous and identify the problematic corporations in name -- and ban them from the compact," he added.

In his report, Annan says that in view of the apprehension about granting local water monopolies to private companies and, in particular, concerns over the social impact of increases in water charges, governments and consumers in many developing nations have not encouraged participation by multinationals in the provision of water services.

"The debate in different forums has contributed to a better understanding of the potential role of the private sector, although not to a consensus on all the issues," he adds.

A consortium of European non-governmental organisations (NGOs) expressed fears last week that the newly created Water Facility of the European Union could promote the expansion of private-sector water management in developing countries.

Gordon McGranahan, director of the human settlements programme at the London-based International Institute for Environment and Development (IIED), told IPS that Annan is right to be sceptical of international efforts to promote the role of the private sector in water provision.

The experience, he said, is mixed, and indicates that the role of the private sector should emerge from water sector reform, not drive the reforms.

"It is time to stop fighting over whether the role of the private sector in water provision should increase (or decrease), and to focus instead on how to get all providers, whether public, private or civil society organisations, to provide better services to the world's water-deprived," said McGranahan.

Otherwise, he added, the likelihood that global targets for providing water will be met ''are slim indeed''.

According to the Millennium Development Goals, approved by heads of state at the U.N. Millennium Summit in September 2000, an additional 1.6 billion people will seek access to safe drinking water by 2015.

If their needs are to be met, the U.N. study says, developing nations will need about 26 billion dollars to extend water supplies over the next 11 years.

But with cuts in official development assistance (ODA), resources have been in short supply worldwide.

The coordinators of the Fourth World Water Forum, scheduled to take place in Mexico on Mar. 22, say that about four billion people could face water shortages by 2025, nearly three times the current figure, even in water-abundant regions like the Americas.

"This situation illustrates that there is much more to the looming water crisis than simply water availability," says Mexican President Vincente Fox in a statement in advance of next week's forum.

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