World Bank Water Privatization
Policies Benefit Corporations,
Not Developing Countries
by Public Citizen.org
September 25, 2002
Privatization Should Not
Be a Condition of Loans,
Report Says :
The World Bank has engaged in a
multi-pronged effort to promote a water policy that benefits large multinational corporations at the expense of poor
people in developing
countries, according to a Public Citizen report released today.
World Bank policies impose a
"market price" for water in poor countries and contribute to increasing rates of
cholera and other
waterborne diseases, the report said. The World Bank claims that its goal
is to alleviate poverty, but its loan policies are at odds with this
objective. The report recommends that World Bank loans focus on increasing
access to water and sanitation services in low-income and underserved
areas, rather than relying on full cost recovery and water privatization.
Not only has the
World Bank required countries to privatize water services as a condition
of receiving loans, but the Bank has engineered the creation of public
utility regulatory bodies that lend credibility to the Bankís
pro-corporate water policies. Further, the Bank has launched an
orchestrated public relations effort to promote the idea that water is a
commodity, not a human right. To this end, the Bank has joined water
companies and government development agencies to create a broad array of
organizations that hold conferences, have task forces, release vision
statements and distribute glossy publications. These groups often co-opt
the social and environmental principles espoused by non-governmental
organizations about access to clean and affordable water as a basic human
companies started to view water as a lucrative natural resource, much like
oil or gold, the concept of commodifying water was born," said
Wenonah Hauter, director of Public Citizenís Critical Mass Energy and
Environment Program. "In the past decade, we have seen the provision
of water services pushed into the hands of fewer and larger multinational
corporations. At the same time, poverty and disease levels have risen in
The World Bank
policies that are most harmful promote the privatization of water
utilities, which creates lucrative new business opportunities for major
global water corporations, and "full cost recovery," which
refers to the collection of fees from consumers for the full cost of the
operation and maintenance of water utility services.
These are part of the
World Bankís standard policy that promotes privatization, deregulation,
trade liberalization and fiscal austerity. It was largely instituted in
the past 20 years when the promotion of privatization mirrored the global
trend toward more market-oriented economic policies. But critics say this
market-oriented slant benefits major corporations such as French-owned
water giants Vivendi Universal and Suez, and furthers inequality in the
developing world. Indeed, prior to the 1980s, World Bank economists and
development experts maintained that investment in public water utilities
would trigger a development "take off." However, the scale
shifted when investors began to realize the potential profit from
privatizing an increasingly scarce natural resource.
The World Bank now
claims that the private sector, rather than publicly owned water
utilities, is best able to provide the financial resources and expertise
needed to address the growing problems in water service management. Yet
private sector companies are organized to make a profit, not to fulfill
socially responsible objectives such as achieving universal access to
water and sanitation services. In many developing countries, where most
citizens earn less than $2 a day, private sector companies are unable to
meet shareholder obligations to provide a market rate of return and also
implement universal coverage with acceptable quality and at affordable
prices. Water rates soar and large sectors of the low-income population
becomes more expensive, and therefore less accessible, it creates a public
health crisis," said Sara Grusky, report author and coordinator of
the International Water Working Group. "If people cannot afford clean
water, they resort to using water from polluted streams and rivers, which
increases the risk of many waterborne diseases like cholera."
For example, in Ghana
in May 2001 after the International Monetary Fund (IMF) and World Bank
policies led to an increase in water fees, three buckets of water cost a
family almost 20 percent of the daily minimum wage.
In 2001, 50 percent
of World Bank loans required countries to privatize services and more than
80 percent of the loans contained cost recovery requirements.
To quell the growing
public concern about privatization, the World Bank often calls its
policies "public private partnerships." Water companies enter
into a lease with a country under the most profitable conditions possible,
which often donít burden the company with the responsibility of
infrastructure investment costs.
agenda between the World Bank and the global water giants is just one more
example of corporate interests overriding basic human needs and
livelihoods," said Hauter.
This article first appeared in: Public Citizen on Sept.
Public Citizen is an independent voice for
citizens in the halls of power.
Water Privatization Overview
A worldwide crisis over water is brewing. According to the United Nations, 31 countries are now facing water scarcity and 1 billion people lack access clean drinking water. Water consumption is doubling every 20 years and yet at the same time, water sources are rapidly being polluted, depleted, diverted and exploited by corporate interests ranging from industrial agriculture and manufacturing to electricity production and mining. The World Bank predicts that by 2025, two-thirds of the world's population will suffer from lack of clean and safe drinking water.
Rather than taking the dramatic action necessary to protect precious water resources, governments around the world are retreating from their responsibilities. Instead of acting decisively, they are bending to the will of giant transnational corporations that are poised to profit from the shortage of water. Fortune magazine has predicted that "water is the oil of the 21 century" and corporations are rushing to invest in the water business.
Giant water, energy, food, and shipping
companies have plans to buy water rights, privatize publicly owned water
systems, promote bottled water, and sell "bulk" water by
transporting it from water rich areas to markets desperate for more water.
At the same time, to ensure maximum profits, these companies are lobbying
to weaken water quality standards, and pushing for trade agreements that
hand over the U.S. water resources to foreign corporations.
Right here in the United States, where
some regions are already suffering from serious water shortages,
corporations from Vivendi to Nestle are poised to make a profit on water.
Some corporate interests even want to sell bulk water from the Great
Lakes, the world's largest freshwater system. The Great Lakes have
suffered from pollution, lost two-thirds of their extensive wetlands and
experienced a catastrophic loss of biological diversity. Only 3% of the
shorelines are suitable for swimming.
Water resources in Wisconsin and
Michigan have been targeted by giant bottled water companies like Perrier.
Selling bottled water is one of the most successful revenue generating
schemes for private corporations. As drinking water has been degraded, the
bottled water industry is promoting its expensive product as the solution.
Unfortunately, bottled water is not adequately regulated, and tap water is actually subject to more rigorous testing and safety standards. A 1999 study of bottled water found that bottled water is no safer than tap wader, and sometimes is less safe. Meanwhile, companies like Coca-Cola are selling purified tap water as a healthy option, and they believe that in the long run selling water will be more profitable than selling Coke.
is a national, nonprofit consumer advocacy organization founded by Ralph
Nader in 1971 to represent consumer interests in Congress, the executive
branch and the courts. They fight for openness and democratic
accountability in government, for the right of consumers to seek redress
in the courts; for clean, safe and sustainable energy sources; for social
and economic justice in trade policies; for strong health, safety and
environmental protections; and for safe, effective and affordable
prescription drugs and health care.
Reprinted by permission
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