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World Bank Water Privatization

Policies Benefit Corporations, 

Not Developing Countries

by Public 

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 right.

"As private 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 developing countries."

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 remain unserved.

"When water 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.

"The shared 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. 25, 2002.

Public Citizen is an independent voice for citizens in the halls of power.
They take NO government or corporate money.



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.



Public Citizen 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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