Water for people.pdf - WHO Thailand Digital Repository

R E C O G N I Z I N G A N D V A L U I N G T H E M A N Y F A C E S O F W A T E R / 3 3 5Ministerial Conference on Water recently announced that Africarequires US$10 billion a year to meet urgent water needs and anoverall investment of US$20 billion a year for the development ofwater infrastructure in order to meet the Millennium DevelopmentGoals by 2015 (The Abuja Ministerial Declaration on Water, 2002).Global figures and ranges are only indicative of the magnitude of thechallenge, although there is no consensus on exact requirements. Inthis regard, the most important step at this point would be to developsuch estimates at the country level using a standard methodology withunderlying assumptions adjusted to local conditions. Such an exerciseis part of a sector investment plan and will help countries draw upstrategies for resource mobilization and investment coordination.It is quite clear that there is a massive investment gap and thatthe sources of financing are inadequate. The commitment bydeveloped countries to provide 0.7 percent of Gross NationalProduct (GNP) for official development assistance to developingcountries is far from being met and this has caused a significantinvestment gap in development financing, including in the watersector. On this financing gap, the Ministerial Declaration (2001)reminded the developed countries to respect their commitments of0.7 percent of GNP. The polluter pays and the user pays principlesare difficult to apply because of poorly monitored legal or illegalwater pollution and water abstractions.Role in public-private partnershipsOne of the options for financing urban water supply and sanitationinfrastructure is to develop partnerships with the private sector. Theconcept of privatization (particularly when it involves divestiture ofassets) is, however, controversial. It is argued that privatization candistort the notion of ‘value’ by replacing it with one of ‘price’ (GWP,2000), and, in so doing, it can sideline all social objectives relatedto water. Maude Barlow, author of the book Blue Gold: The GlobalWater Crisis and the Commodification of the World’s Water Supply,emphasized thatthe privatization of municipal water services has aterrible record that is well documented. Customer ratesare doubled or tripled; corporate profits rise as much as700 percent; corruption and bribery are rampant; waterquality standards drop, sometimes dramatically; overuseis promoted to make money; and customers who can’tpay are cut off.… When privatisation hits the Third World,those who can’t pay will die (Barlow, 2000).This diagnosis has not stopped many institutions and privatecompanies from developed countries to continue promotingprivatization of water and sanitation services as the only way toensure efficiency and reliability of access. Long-term contractscontinue to be executed between governments of developingcountries and multinational water corporations with little or noexternal advice on their terms and conditions. It is claimed thatprotection of the poor will be insured if an adequate regulatoryframework (mainly a regulating agency) is rapidly put in place. Butdeveloping such capacities cannot be achieved rapidly enough in mostof the developing countries and the efficiency of new regulatorybodies remains questionable. Examples of these efforts to protect thepoor can be found in Ghana, Indonesia, Nepal and Philippines.The ‘optimal’ degree of privatization in water and sanitationservices remains the subject of major debate. While significant gainsin efficiency may be expected by privatizing some of the services,the ‘natural monopoly’ characteristics of water services argue infavour of a stronger public control in providing these services. In thiscontext, the factual summary prepared by UNCSD (2001) notes that:The effect of globalization is noticeable in the increasinginterest of the private sector. However, globalizationshould not be seen as a panacea for sustainable waterdevelopment and management. In order for globalizationto take roots there needs to be sufficient funding,robust institutional structures, adequate humanresources and a solid understanding and assessment offreshwater resources in relation to social, economic andenvironmental processes.In the preparatory process leading to the WSSD in Johannesburg(August/September 2002), all major groups (with the notableexception of business and industry groups) have raised concernsover privatization. It is essentially argued that control of the assetshould remain in the hands of government and the users, and theneeds of the poor should be duly considered.There is an increasing involvement of private water companies inthe urban water supply and sanitation of developed countries, asfull or partial privatization is taking place in many OECD countries(OECD, 1999a). It is also notorious that world and regionaldevelopment banks have been heavily criticized for pushingprivatization as an investment agenda. In this context, the AfricanDevelopment Bank has been in the vanguard and has alreadyadopted a policy statement on social issues (see box 13.7).One valid criticism of public-private partnerships is that theymay actually fail to increase investment. Where concessions forwater utilities are won on the basis of the lowest tariff bid, theconcession company may maximize its profit by minimizinginvestment. There is a risk that the existing assets will be run down,which may lead to a critical situation at the end of the concession.