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Water Privitization : Causes and Consequences

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Water Privitization : Causes and Consequences Golden Research Thoughts Volume 2, Issue. 3, Sept 2012 Available online at www.aygrt.net ISSN:-2231-5063 ORIGINAL ARTICLE GRT Water Privitization : Causes And Consequences K. Naresh Kumar ·Research Scholar in Dept of Social Work from Osmania University. Ex Academic Consultant, Department of Social Work, Telangana University, Nizamabad. Email: [email protected] ABSTRACT: Since water has been emerging central point in all spheres of development and social sector, similar response has also emerged from academic as well as developmental politics. Further, scarcity of fresh and clean water leads to emergence of new water business which targeted to reach nearly 2 billion consumers who are estimated as short of fresh water consumption. International markets were already proposed and pushed by world body like WTO to privatize water. Water privatization is a short hand for private sector participation in the provision of water services and sanitation, although more rarely it refers to privatization of water resources themselves. This paper examines causes, problems and role of civil society, especially, social workers and NGOs dealing with providing safe drinking water to common people in India. WATER PRIVATIZATION: Water privatization involves transferring of water control and/or water management services to private companies. The water management service may include collection, purification, distribution of water, and waste water treatment in a community. Traditionally this service has been provided by the local governmental infrastructure such as the municipality or local city council. The pro privatization lobby including water corporations, World Bank and IMF has aggressively campaigned for water privatization on the grounds that, while water subsidies promote wasteful practices, commoditization of water should allow market forces (supply and demand) to set the water tariff, which in turn will reduce water consumption and promote water conservation. Furthermore, it is argued that opening this sector to private providers will bring in badly needed capital for upgrading and development of infrastructure. There are several models of water privatization that are currently in trend in different parts of the world. Depending on the degree of privatization, these models can be broadly categorized into: ·Service Contracts – In this model, public authority retains overall responsibility for the operation and maintenance of the system, and contracts out specific components. Service contracts last 1-3 years and include services such as meter reading, billing and maintenance. While public ownership is maintained and community accountability structures remain in place, the transparency of operation can be limited. Please cite this Article as :K. Naresh Kumar ,Water Privitization: Causes And Consequences : Golden Research Thoughts (Sept ; 2012) Water Privitization: Causes And Consequences 2 Contracts are often not openly negotiated and regulation and oversight is usually lacking. (Design), Build, Operate, Own and Transfer or (D)BOOT – This model of privatization is usually used for system infrastructure development e.g. water treatment plants that require significant finance. The private operator is required to finance, construct, operate and maintain the facility for a specific period of time (usually more than 20 years). At the end of the term, the infrastructure may be turned over to the municipality or the contract is renewed. This model is more prevalent in developing countries. Examples of (D)BOOT include Tiruppur Project in TN India and Cochabamba experience in Bolivia. ·Divestiture – In this model, the government or public authority awards full ownership and responsibility of the water system including the water source to a private operator under a regulatory regime. This is also done in the form of 10-20 year renewable contracts on the entire system. The government moves operation to private hands thus improving efficiency. Competition is limited through the process of bids on the divestiture. The private sectors firms are then expected to takes the risks and recoup investment/profits. This model cedes tremendous power over an essential resource to corporations. Examples of divestiture include the Rasmada scheme, under which a 22-year lease over a stretch of the Shivnath River in Chattisgarh was accorded to Radius Water, Inc. Water privatization has been recommended by the Indian government's national water policy10 to address the issue of water scarcity. In its article 13 titled, “Private sector participation” the policy says that “private sector participation should be encouraged in planning, development and management of water resources projects for diverse uses, wherever feasible”. This has placed water privatization at the forefront of developmental policies implemented by several state governments. While the policy is silent on the kinds of privatization models that will be adopted, as can be seen from the case studies below, most of the privatization that has been done in India follows the (D) BOOT model. The national water policy also encourages interlinking of rivers to improve water availability in water scarce areas. The proposed river linking scheme has at its heart of funding, water privatization, which will further isolate the water source and responsible water management from local communities. Many state governments, neighboring nations sharing river waters with India and experts have questioned the merits of such a scheme on numerous grounds including lack of feasibility and impact studies on this project, ecological disasters from river diversion schemes around the world, as well as adverse environmental impact due to submergence, soil salinity and water logging. CAUSES OF WATER PRIVATIZATION: The water has now become an economic resource managed by the market forces. The governments of such countries, who cannot afford to start and maintain the projects to overcome the difficulty of water scarcity, give the control of this resource to private interests, which in turn are capitalizing on the growing scarcity of water. According to the reports of World Bank's Private Participation in Infrastructure (PPI), there were only 8 projects of water and sewerage in developing countries during 1984 to 1990, which increased up to 97 between the years 1990 to 1997. There are actually five financial concerns, which are associated with the privatization of water. These concerns are: 1. Water is a resource necessary for life; hence there is much at stake rather than only financial benefits while making decisions about water allocation. The corporste privatization of water to some organization gives them control over the lives of millions of people, and they would exercise their monopoly to maximize their profits. 2. The history of water industry has shown the allegations of bribery, misappropriation of funds, high consumer prices etc. 3. It is also to be noted that the privatization of an important resource like water means that the management of water is based on the scarcity and profit maximization rather than a long-term sustainability. It is possible that the organization puts their profit before the sustainable water management 4. The trend of privatization gradually reduces the democratic involvement of governments and the citizens in water industry's water management decisions. Hence the government and the public of a country become unable to ensure that the resource of their country managed in an efficient manner. There is also a possibility Golden Research Thoughts • Volume 2 Issue 3 • Sept 2012 Water Privitization: Causes And Consequences 3 that if monopoly of a private organization is established it is almost impossible for the government to reverse it. 5. According to the records, it can easily be said that the countries that have the worst water crisis have the lowest GDP and are the home of the poorest people of the world. If private organizations establish their monopoly over the resource of water there, it results the access of water only to those who can afford it. Consequences of Water privatization: The case studies discussed above highlight many of the reasons to oppose water privatization, which are summarized here. These issues are largely generic but here they are presented as specific to India. For a more global picture, the reader is referred to the Public Citizen website and its list of top ten reasons to oppose water privatization,34 from which this document has drawn liberally. PRICE HIKES ARE UNAFFORDABLE FOR THE POOR: Water privatization has invariably led to price hikes in almost all the regions in the world where water has been privatized. This is because the there are considerable costs involved in upgrading the water harnessing, purification and distribution systems. For such expensive projects, the water corporations borrow private money, which is subject to high interest rates from the financiers and state taxation. The corporations recover their costs and expenses by charging the consumer. Not only is the capital cost divided over all the consumers but also the interest, taxes and overheads on the capital. Thus, the consumer is forced to bear the burden of higher payments on company loans. In contrast, tax-free public financing results in low costs for such projects in community owned or state controlled water systems. It has been argued that privatization will lead to reduced water consumption and promote conservation. However, while market forces will determine the water tariff and make
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