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Great Lakes Article:

Water Privatization: In this thirsty world, who owns the water?


By Mort Rosenblum
Associated Press
Posted 09/10/2002

   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 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 its water.
   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 demand.
   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.
   Conflicts like a 2000 uprising in Cochabamba, Bolivia, emphasize the danger. Consumers revolted after a consortium led by Bechtel took over water distribution. Some rates doubled, although the U.S. company says increases averaged 35 percent. Soldiers quelled the unrest, but the consumers prevailed. Cochabamba's water distribution was put in the hands of a local committee.
   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,'' he said.
   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, Gleick at the Pacific Institute thinks, 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.''
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