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The Water Privatization Debate: a Critique of and Alternative to the International Financial Institutions' Promotion of the Pr

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The Water Privatization Debate: a Critique of and Alternative to the International Financial Institutions' Promotion of the Pr THE WATER PRIVATIZATION DEBATE: A CRITIQUE OF AND ALTERNATIVE TO THE INTERNATIONAL FINANCIAL INSTITUTIONS’ PROMOTION OF THE PRIVATE PROVISION OF WATER SERVICES By Rachelle Curran A Thesis Presented to The Faculty of Humboldt State University In Partial Fulfillment Of the Requirements for the Degree Masters of Social Science Environment and Community May 2006 ABSTRACT THE WATER PRIVATIZATION DEBATE: A CRITIQUE OF AND ALTERNATIVE TO THE INTERNATIONAL FINANCIAL INSTITUTIONS’ PROMOTION OF THE PRIVATE PROVISION OF WATER SERVICES By Rachelle Curran This thesis focuses on the debate over the private provision of water services. One billion people worldwide lack access to clean water, which results in millions of illnesses and deaths every year. The international financial institutions have blamed lack of access to clean water on government corruption and deficient funding. Their solution has been promoting the private provision of water services to increase access to clean water. Growing international social movements have been disputing the value of the private provision of water services. This thesis adds to the debates by arguing that the private provision of water services is a political choice, not an economic inevitability and that the private provision of water services does not promote the mission of the international financial institutions to decrease poverty by increasing access to clean water. The private provision of water services is not efficient because it is a natural monopoly and it tends to: increase water costs and service disconnections, not account for the costs from water-borne illness, concentrate investment in wealthy areas, and perpetuate corruption. The alternative solution promoted in this thesis is strong democracy based on the right to water. iii ACKNOWLEDGEMENTS I have many people to thank in helping me through the challenging process of creating this thesis. My wonderful sisters, Sally and Nilaya, both gave me endless emotional and editorial support. My dearest friends Tim and Jamie committed tireless hours of feedback that only the closest of friends would volunteer. And many of the students in my cohort were always there to share, especially Becky and Amy for all their positive words and helpful feedback. And of course my parents were forever there to listen and be caring. And finally, without them none of this would have happened, my thesis committee, Noah, John and Sam, for being flexible and working with me to the end. Thank you all, I am in great debt to all of you, for the kindness you have extended. iv TABLE OF CONTENTS Page ABSTRACT ...................................................................................................................... iii ACKNOWLEDGEMENTS............................................................................................... iv TABLE OF CONTENTS ....................................................................................................v CHAPTER ONE: INTRODUCTION..................................................................................1 Definitions............................................................................................................... 1 The Problem of Lack of Access to Clean Water..................................................... 3 The Problems of Water Scarcity............................................................................. 5 International Financial Institutions’ Influence on Water Development ................. 7 International Financial Institutions’ Strategy: The Private Provision of Water Services................................................................................................................... 8 Debates Over the Private Provision of Water Services ........................................ 11 Private Provision of Water Services as a Political Choice, not an Economic Inevitability........................................................................................................... 13 A Critique of the Private Provision of Water Services......................................... 14 Increasing Access to Clean Water Through Government Accountability............ 15 Overview of the Thesis ......................................................................................... 16 CHAPTER TWO THE ROLE OF INTERNATIONAL FINANCIAL INSTITUTIONS IN THE PRIVATE PROVISION OF WATER SERVICES................ 17 Introduction........................................................................................................... 17 History of the International Financial Institutions’ Involvement in Water........... 17 The Role of the International Financial Institutions in Water Development........ 20 v The International Financial Institutions’ Current ................................................. 22 Political Platform for Water.................................................................................. 22 The private provision of water services.................................................... 24 Charging directly for water services: cost recovery ................................. 27 Government decentralization.................................................................... 29 World Bank Self-Assessment ............................................................................... 31 CHAPTER THREE: THE PRIVATE PROVISION OF WATER SERVICES AS A POLITICAL CHOICE, NOT AN ECONOMIC INEVITABILITY ................................ 34 Introduction........................................................................................................... 34 The Liberal Political Theory Underlying.............................................................. 37 International Financial Institutions’ Decision-Making......................................... 37 Variations in liberalism based on negative versus positive freedoms ...... 38 Varieties of liberalism in the twentieth century........................................ 39 Keynesianism................................................................................ 39 Neoliberalism................................................................................ 40 Summary............................................................................................................... 44 CHAPTER FOUR: ............................................................................................................46 CRITICAL ANALYSIS OF THE PRIVATE PROVISION OF WATER SERVICES AS A SOLUTION TO LACK OF ACCESS TO CLEAN WATER ................................ 46 Introduction........................................................................................................... 46 Water is Essential for Life and Has No Substitute ............................................... 48 Water Service is a Natural Monopoly................................................................... 49 Increased Water Costs and Water Disconnection................................................. 52 The increasing gap in wealth distribution................................................. 54 vi The Private Sector Does Not Have to Account for the Costs of Public Health Problems.................................................................................................... 56 Private Investment is Not Expanding Access to Clean Water.............................. 57 Private provision Does Not Decrease Corruption................................................. 61 Summary............................................................................................................... 64 CHAPTER FIVE: INCREASING ACCESS TO CLEAN WATER THROUGH GOVERNMENT ACCOUNTABILITY .......................................................................... 65 Introduction........................................................................................................... 65 Democracy ............................................................................................................ 65 Thin democracy ........................................................................................ 68 Strong democracy ..................................................................................... 70 Strong democracy in Porto Alegre, Brazil.................................... 72 Examples of strong democracy and water access for all citizens. 73 The Human Right to Water................................................................................... 74 The Millennium Development Goals: Prioritizing Poverty Reduction ................ 77 Conclusion ............................................................................................................ 79 WORKS CITED ................................................................................................................83 vii CHAPTER ONE: INTRODUCTION The strategies used to increase access to freshwater are increasingly controversial around the world. This thesis focuses on one of the most debated subjects within discussions of freshwater: international financial institutions’ promotion of the private provision of water services as the solution to the lack of access to clean water worldwide. While this topic is frequently addressed from the engineering, economic and ecological angles, this thesis analyzes the private provision of water services from a political perspective. In this thesis, the underlying political decision-making that has enabled and promoted the private provision of water services as the current strategy towards ending the lack of access to clean water will be explained and critically analyzed. Definitions
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