PARIS In a world fast running short
of fresh water, a new debate rages: Private companies
are free to exploit oil, "black gold," but what about
the infinitely more valuable resource of "blue gold"?
Two French companies alone Suez and Vivendi
Environnement supply water to 230 million people
around the globe, from U.S. cities like Atlanta to urban
centers across the Third World.
Hardly noticed a few years ago, the issue of water
privatization is likely to be a big topic at the United
Nations' World Summit on Sustainable Development that
begins Monday in Johannesburg, South Africa.
It raises a deceptively simple question: Is water
a human right or a commodity? "The problem is that it's
both," said Peter Gleick of the Pacific Institute in
Berkeley, Calif. Everyone has a right to safe, clean
water, he said, but because of government failures,
1.1 billion people lack access to it.
A new trend is clear. Both Suez and Vivendi expect
double-digit annual growth in their water business,
and each already has contracts that add up to more than
$10 billion a year. Puerto Rico just hired Suez to distribute
RWE, a German energy conglomerate, is buying small
water companies to challenge the French companies. Hundreds
of other private operators hold concessions to pump,
treat, and distribute water.
Although companies are granted rights to market water
not ownership of the water itself Gleick
and others worry that an inevitable expansion of the
private sector might escape essential public control.
"Privatization has the potential to grow enormously
because of the desperate need for water in the developing
world, but water is too important to be left in purely
private hands," Gleick said.
The World Bank, U.N. agencies, and a number of governments
support a concept they call PPP, short for public-private
partnerships. They encourage companies to invest heavily
in the pumps, mains, and other infrastructure for delivering
water in exchange for profit. In many big cities, up
to half the water is lost to leaks and broken mains.
Billing is often chaotic. Public water utilities, usually
short of cash and expertise, struggle to meet fast-growing
Suez and Vivendi each point to cases around the world
where they have expanded service, sometimes with lower
rates. Both insist that they sell service, not water,
and stress that they operate on concessions that must
be renewed. They say better systems mean that many poor
people now have access to reliable water for much less
than they paid itinerant vendors.
"We have the money and the expertise, and we believe
we can manage water better than states can," said Jacques
Petry, head of Ondeo, Suez's water division. "We don't
own these resources. We manage them and protect them."
But Ondeo's American subsidiary faced a storm of protest
after it took over Atlanta's water supply in 1999. Consumers
reported mysterious cuts, confused billing, and long
delays for service.
Managing water is a business fraught with economic
and cultural complexities. A 2000 uprising in Cochabamba,
Bolivia, underlines the dangers. Consumers revolted
when Bechtel doubled water rates. Seven people died
in violence, and the U.S. company lost its concession.
Canadian activist Maude Barlow, author of the book
Blue Gold, makes her position clear in its subtitle:
The Fight to Stop the Corporate Theft of the World's
Water. While agreeing the private sector has some
role to play, she says water must remain firmly in public
hands with no confusion between human right and commercial
asset. "You can't have both as equal in law," she said.
In 2000, Barlow praised the Cochabamba uprising in
glowing terms. Today, she acknowledges, the current
cooperative-run water system is in shambles, with neither
capital nor experience. "Why can you find money for
a private company and not a public company?" she asked,
arguing that international agencies should help local
authorities run their water utilities.
Other activists worry there is a flaw in the logic
of privatization: If companies make money by delivering
water, won't their incentive be to sell as much as they
can rather than to conserve a scarce resource?
But William Cosgrove, a Canadian consultant who helped
draft the World Water Vision paper for an environment
summit last year in the Hague, Netherlands, insists
that most people, company executives included, believe
water is a basic right. "This is controversial simply
because it's not understood," he said. "As long as it
is accepted that governments set up regulatory frameworks
and define objectives, they can make the best use of
water they have."
Executives at Suez and Vivendi agree. Jean-Luc Trancart,
a Suez spokesman with long experience in French water
management, argues that private companies fill a vital
need. "I always tell activists if they really want to
hurt us, they should make the public sector work better,"
Pierre Victoria, community relations director at Vivendi,
says government must take a regulatory role and argues
that private management is bound to fail if people do
not see better service at fair rates.
In the long term, said Gleick at the Pacific Institute,
private companies are not likely to be the prime movers.
Already, he said, large American cities with good municipal
systems are thinking twice about privatization. "If
the big-profile examples like Atlanta get ugly, that
will slow things down fast," he said.
And business opportunities are limited in countries
without strong civil societies. "They'll pick the low-hanging
fruit: the municipal systems already in operation but
in need of expertise or cash, serving middle and upper
class segments of society," Gleick said. "The poor will
continue to be left out."