Water and the thirst for profit

January 24, 2009

Wars are fought over access to scarce resources. The 20th century was dominated by wars over colonial possessions and energy resources.

According to Maude Barlow in her book, Blue Covenant: The global water crisis and the coming battle for the right to water, in this century water is increasingly likely to be a source of conflict.

Her prediction is based on big business moves to capture control of the world's freshwater supplies and turn water into the next major commodity boom.

Since 1990, the privatisation of water has increased dramatically. Goldman Sachs has graphed how between 2000 and 2008 the water-sector index has outperformed relative to the Standard & Poors 500 index.

No wonder then that Goldman Sachs has urged investors to focus on the high technology end of the US$435 billion global water industry announcing that water is "the petroleum for the next century".

The similarity here is stark. Both oil and water are diminishing in supply and rapidly growing in demand. Yet while there are substitutes for oil, there is no substitute available for an ever scarcer supply of potable (clean) water.

What this will mean in the current situation of global economic instability and the pressures on increasing fragile ecological systems does not portend well for the growing polarisation between First and Third Worlds.

The water of life

Water is a basic necessity to sustain organic life. Humans cannot survive without it. It may take weeks to die of starvation, but adults can die in just days from thirst.

Children die of thirst much faster. Agricultural workers in the US have been known to die from heat exhaustion and dehydration as a result of working long hours in high temperatures without protection.

Yet the supply of clean, drinkable water is diminishing. While water is common on Earth, only 2.53% of it is fresh. The rest is salty.

Of freshwater, two thirds is (at present) frozen in permanent snow cover and glaciers. What remains available is in lakes, rivers, aquifers (ground water) and rainfall run-off — all of which are under threat.

Water from melting glaciers and river systems runs off into the sea where it is lost. Areas of Earth known as "hot stains" are running out of water as climate shifts and inappropriate water usage is widespread. These areas include Australia, the mid-west of the USA, sections of South America, along with large areas of Asia and Africa and Northern China.

The reasons for the crisis of clean water are many:

•Pollution due to mining, industrial and agricultural chemicals and waste running off into rivers and lakes. This is a worldwide problem as the treatment of such waste has been seen as a loss of profit and government regulation has been extremely limited.

The statistics here are frightening. For example, 40% of US rivers are toxic, as are 46% of lakes. In Russia 75% of surface water and 30% of groundwater is polluted. In China 80% of major rivers are so toxic that aquatic life is not possible. Ninety percent of groundwater systems under major Chinese cities are contaminated. Similarly high pollution levels are found across Asia, the Americas and Africa.

•The lack of effective sanitation in most of the Third World, breeding epidemics and disease through contamination of sources of drinking water.

When the First World's sanitation systems were established, mainly through public investment in the late 19th century, the impact on the reduction of disease was dramatic — far greater than the benefits of medical developments of that period.

•The depletion of ground water in aquifers through mining and agriculture. Once used this water is not replaced.

•Climate change as witnessed by droughts, desertification, salinity, freak weather patterns, sand and dust storms with the loss of top soil that feeds into a further cycle of depletion of viable land and water sources.

•Deforestation, which destroys the vegetation needed for transpiration thus depleting the moisture in the air which helps cooling. This leads to global warming and climate instability.

•Higher levels of glacial melting, which runs off into the sea and contributes to soil erosion.

•The move from farms to the city — urbanisation — now accounts for more than 50% of the population globally.

Land clearance depletes forested and woodland areas that are fundamental to the recycling of rain into the hydrologic cycle. This reduces condensation and precipitation in continental watersheds such as the Himalayas and the major river basins.

The more people are based in cities the more reliant they are on agricultural commodities for survival. This puts additional pressure on land usage.

•Loss due to "virtual" water trade — the depletion of water used to produce crops or manufactured goods for export.

The scarcer the water the more hidden the water loss due to irrigation seepage, run off and evaporation. For example, to produce a kilogram of wheat takes about 1000 litres; a kilogram of meat about five to 10 times as much; while a kilogram of cotton uses up to 30 thousand litres of water.

Direct consequences

Modern society began to flourish only when we worked out how to deliver reliable water supplies and services to larger concentrations of people and how to remove the accumulated urban waste that causes disease. The failure to provide this globally has direct, tangible and unacceptable consequences.

Across the world, 1.1 billion people lack clean water and 2.6 billion go without sanitation. Either of these factors, or both in combination, lead to massive outbreaks of waterborne diseases.

The World Health Organisation reports that contaminated water is implicated in 80& of all sickness and disease worldwide. In Africa alone, water-related diseases kill around 27,000 people every day.

These diseases take a variety of forms but three types stand out – waterborne, water-based and water-washed.

Waterborne diseases include those transmitted by drinking contaminated water, particularly when contaminated by human excreta. These include most of the intestinal and diarrhoeal diseases caused by bacteria, parasites and viruses such as typhoid, dysentery and gastroenteritis.

In the last decade, the number of children killed worldwide by diarrhoea was more than those killed in all armed conflicts since World War II combined.

Water-based diseases come from hosts that live in water or require water as part of their life cycle. The most widespread types are parasites such as guinea worm disease in which a worm, up to a metre long, eventually and painfully emerges from the victim's skin.

Another disease, which currently effects 200 million people in 70 countries, is a blood infection from a parasitic flatworm that causes chronic debilitation as well as liver and intestinal damage.

Water-washed diseases come from having insufficient water for washing and personal hygiene or when people wash in contaminated water. These include eye-damaging trachoma and diarrhoea passed from person to person.

All these are easily preventable with government political will and competence. Clean, safe water and sanitation have successfully eliminated most of these diseases in the First World. They remain a major problem in the Third World.

The disparity between water usage patterns illustrates part of the problem – access to water.

The average human needs a minimum of 50 litres of water per day for drinking, cooking and sanitation. An average usage in North America is almost 600 litres a day per person while the average African uses six litres per day.

The lack of access has major consequences for the life chances of women and girls who, in increasing areas of shrinking local water supply in Africa and Asia, walk an average distance of six kilometres to collect and carry water.

This means that girls starting as young as four years old spend their lives carrying water. Water is heavy — a kilogram per litre. The search to supply enough water dominates their lives, to the exclusion of access to education and general community facilities.

And of course water means food and lack of water means lack of food. Poor countries don't have sufficient infrastructure to buffer the impacts of climate change — the increasing droughts, storms and floods. Starvation, weakening immune systems and competition for scarce resources generate even greater devastation.

In 2000, the UN agreed on a plan to halve the proportion of people without clean water and sanitation by 2015.

In November 2006, the UN declared water a "global crisis" after 55 member nations failed to meet their targets.

The US Congress passed the Water for the Poor Act in 2005, which required the government to implement a strategy to help developing countries provide clean water. Yet by June 2007, no money had been appropriated for this purpose, although water-related aid has been spent, often directed toward the US's broader strategic interests, such as the wars in Afghanistan and Iraq.

The UN now estimates that by 2025, 3 billion people will lack access to clean water.

The thirst for profit

With any diminishing, scarce resource, the market drive for private control and profitability grows. The rapid growth of private water corporations since the 1990s demonstrates this.

In 1990, only about 50 million people bought water from a private provider. Today the big water companies provide water to about 600 million people, just under 10% of the world population.

Barlow's book documents this growth clearly. Until recently, two transnational companies, Suez and Veolia Environment controlled, two-thirds of global private water. Their profits have increased dramatically.

For example, Veolia went from a revenue base of US$5 billion in 1996 to $34 billion in 2006.

Water related investment is a huge growth area — generating new companies, new technologies and processes.

Siemens, the German industrial giant, has moved into the water waste and treatment business, estimating that water recycling technology (worth $40 billion in 2006) would double in the next eight to 10 years. The investment opportunities include:

•Water and wastewater treatment.

•Desalination — there are now 87 desalination corporations globally. This is a growth area for both conventional power-driven technology using coal, as in Australiam, and nuclear-driven power generation in countries like Japan, Kazakstan and India.

•Nanotechnology to provide nanomembranes for water purification.

•Atmospheric water generation by sucking moisture from the air to sell to drier climates.

•Cloud seeding with silver iodide and dry ice to increase the probability of rain.

•A huge growth in bottled water by Pepsi, Coca Cola and Nestle, in particular.

The stampede to privatise water resources and water technology has been given a helping hand by World Bank, World Trade Organisation and International Monetary Fund policies.

Since the 1970s, loans granted to the Third World were made available only if they agreed to structural adjustment plans that "liberalised" their economies by privatising their water, mining and manufacturing utilities, reduced government support for agriculture, reduced their trade barriers and devalued their currencies. This diminished foreign aid programs for agriculture and opened the way for massive growth of agribusiness.

In the 1990s, a similar policy opened the way for water privatisation.

In response to a growing recognition of the water crisis, the UN declared the 1980s as the International Drinking Water Supply and Sanitation Decade.

This was subverted under the neoliberal market dominant policies implemented by Thatcher in Britain and Reagan in the US.

Water privatisation took place in 1989 in Britain, soon followed in Australia by the Victorian Liberal state government of Jeff Kennett.

The same policy logic dominated the international lending agencies. Instead of direct aid spending, governments of poor countries were encouraged to let the First World water transnationals run their water systems for profit.

At the same time, under the General Agreement on Tariffs and Trade, water was reclassified as a "good" — a commodity — and became subject to the rule that prohibits the use of export controls and eliminates restrictions on imports.

This means that once a country has exported water commercially, it cannot revert back to public control of its internal water supply due to environmental concerns, for example.

A similar restrictive policy has been imposed on water services. Governments cannot maintain these under public sector control, nor even favour non-profit delivery of services. Under the policy of "free trade", control over essential human needs and rights are denied and restricted.

However, providing such privatised services to the Third World has rarely gone smoothly.

If only the rich can afford to pay, the profit margin shrinks. Furthermore, in countries such as Bolivia and India popular movements have waged successful campaigns against privatisation that have led to the withdrawal of transnational water companies.

The impact of competitive tendering has opened up privatisation of essential water services either by direct takeover or by the explosive growth of public-private partnerships, which in many areas include water recycling.

It may not be called privatisation, but in reality it has the same impact as privatisation. The World Bank operates a shell and pea game of labelling only the complete sale of public assets as "privatisation", while promoting three basic types of privatisation:

•Concession contracts that give a company the license to run the water system for profit — including all investment and innovation decisions.

•Leases that are contracts where companies are responsible for maintaining the distribution system and existing assets but where government is responsible for new investment.

•Management contracts where the private company is solely responsible for managing the water service.

The advent of privatised water services can distort government decisions regarding water saving practices.

For example, in Victoria, where drought has led to severe water restrictions, private for-profit service companies have complained to government about their decreasing profit levels and have projected future budgets based on the easing of water restrictions despite the reduced rainfall and low dam storage levels.

Given the record of the current Victorian Labor government's water policy — which focuses on environmentally damaging options such as a coal-generated desalinisation plant and piping scarce rural water to Melbourne — there seems to be a built-in corporate distortion of policy.

Alarmingly, the system of privatised water also generates conflict over access and control of water resources between and within countries. The classic example is Israel's control over water access in the Palestinian Occupied Territories.

The growth of popular struggles against water privatisation is generating an international water justice movement in the First World, and in the Global South, against ownership of water. These movements demand that access to clean water be seen as a human right.

But the dynamic of growth of transnational water corporations and the establishment of private water cartels is opening up the potential for international conflict concerning water access.

For example, the US has issues with Canada concerning access to the Great Lakes, which are now patrolled by armed US coast guards. At the same time US interests are challenging Mexican farmers' traditional practice of diverting water from the Rio Grande.

Barlow argues that there is a need for an international covenant or UN treaty to guarantee constitutional recognition of the right to water. Such a covenant would recognise water as a basic human right internationally.

While this call builds awareness for water access, such a covenant, if achieved, would not be easily implemented within a market dominated system. The current collapse of the capitalist economic system, at the expense of the needs of the working population. reinforces the fact that the market is not compatible with global water security.

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