March 22nd is World Water Day. The dire situation that a large
chunk of the world’s population is in when it comes to water
provision will be put on display. With good reason. More than a
billion people lack access to clean and safe water, and over two
billion are without adequate sanitation facilities. Twelve million
people die annually of terrible water-borne diseases. The
inadequate water supply helps to keep millions of people in
poverty. They either have to wait in line, or carry heavy vessels
of water, or they are too ill to work or study.
Water distribution and sanitation have traditionally been a
public responsibility. Currently, 97 percent of water distribution
in developing countries is in the hands of governments. So the
responsibility for above-described failures and fatalities lies
with incompetent and negligent governments.
And yet, in the few cases where the private sector has been
given a role in water distribution, there have been large and
sometimes violent outcries against privatization. Local politicians
have used foreign companies in general, and international utilities
in particular, as scapegoats.
The debate on the role of the private sector has also been
present in the West. Opponents to private sector participation
claim that reforms have failed. NGOs such as the London-based World
Development Movement and the American consumer advocate group
Public Citizen argue that privatization has been a huge failure,
that the poor have been ignored, and that most contracts have been
cancelled. Some have even asserted that Western multinational water
companies involved in the business have realized that there is no
money to be made on poor people’s need for water, and that they
therefore are pulling back from developing countries.
The facts and figures tell a different story. In most cases
highlighted by the opponents, be it Buenos Aires, Argentina;
Manila, Philippines; or El Alto, Bolivia, more people have been
given access to clean and safe water following privatization. The
poor have gained disproportionately in all these cases, since they
are more likely than the better-off not to have been served by the
operator under the public regime. And once they’re hooked up to
water sources, they pay dramatically cheaper prices for water than
was the case when they were forced to pay for black market
water.
There are also cases that privatization opponents fail to
mention, such as Chile, Cambodia, and Gabon, where success has been
striking. Global data from the World Development Indicator database
show that more people have access to an improved water source than
in countries without such investment.
Also, new research from the World Bank rebuts most of the
protesters’ claims. A mere 7 percent of all developing country
water projects with private sector participation have been canceled
or distressed between 1990 and 2004. That means that the claim of
anti-privatization activists that failure has been rampant just is
not true. Ninety-three percent of water expansion projects have
been successful.
Furthermore, while it is true that private sector investment in
water distribution in poor countries dipped between 2000 and 2003,
in 2004 it increased by 34 percent. That is, investment is flowing
back into developing countries, meaning that more people are likely
to be connected to a water main and to be liberated from all the
difficulties associated with water poverty. The superior skills of
private firms compared to poor-country governments have enhanced
performance, and will continue to do so.
In fact recent press reports indicate that, in the two major
canceled privatizations, Buenos Aires and Manila, the operations
are likely to be taken over by new private investors, not by the
government. Local authorities have come to realize that the
advantages of giving the private sector a role in water
distribution hugely outweigh the risks.
Many ideologically motivated NGOs have gathered for the
mid-March World Water Forum in Mexico. But few there are likely to
present these facts, or even take them into consideration. Instead,
they will continue to spout rhetoric. Too bad for the poor, because
they don’t drink catchphrases.
