Private Sector Participation

Privatization In Water Governance

Dictionary Definition

“the act of selling a business or an industry so that it is no longer owned by the government”

Genealogy PrivatizationMichel Foucault

-Genealogy of the everyday-Purposeful investigation into those elements which "we tend to feel [are] without

history"

History of The Tragedy Of The Commons

-Forster Lloyd- “The Boston Commons”-Garret Hardin- “The Tragedy Of The Commons”

-Over exploitation-Over population -Welfare State

-Neo-liberalism of the 1980’s

- A false Dilemma of overexploitation or responsible management?

Variegated Privatization-Pluralistic logic -Path-dependent-Incomplete-provisional, and unstable, -economic order based on co-existence -structural coupling-Asymmetrical-Co-evolution of different

Privatization in PracticePanel Topics

World Bank ParticipationWhite Rock and EPCOR

Metro ManilaCape Town Water Crisis

Economics of Private Sector ParticipationEnvironmental Effects Of PrivatizationSocio-Cultural Effects Of Privatization

Participation

International Financial Institutions

● Bretton Woods :○ International Monetary Fund (IMF)○ The World Bank

■ Structural Adjustment Programs (SAPs)

SAPs and Water Privatization

● Ghana ○ Water treated as an economic good/commodity

■ Creating a market for water■ Water “Human Right” to “Human Need”

Consequences- Social effects- Health effects- Environmental effects

The World Bank’s Response

- Effective water resource management- Lower-income countries are “too poor” and “too

indebted” to subsidize water and sanitation services

Case Study: White Rock and EPCOR

What is the Privatization of Water in the Canadian Context?Can be defined as corporate ownership and commoditization of water sanitation and distribution.

Most water management is overseen by crown (Government) corporations, as a result there are no corporate fees for water treatment and usage in most places.

The Question of Crown CorporationsWhat is crown corporation

Why is the vast majority of water services non privatized?

What does this mean for most Canadians?

The Case of White RockThe municipality of White Rock has never had publicly owned water utilities, historically this responsibility was owned by the Edmonton based company EPCOR.

The city acquired water utility autonomy on October 30th, 2015 for a final purchase price of 13.4 million dollars.

Why did White Rock end their Partnership with EPCOR?Water quality was low

The money being made by EPCOR off of the White Rock community was not going back to the community

When the city took over, White Rock residents began paying less for water

Benefits of White Rock Controlling

Does the privatization of Water Work in CanadaThere are still justifications for water Privatization in Canada

● Assumption that it promotes efficiency and effectiveness, and also relives governments of the burden associated with such services. (Frank K. Ohemeng, John K. Grant)

● Rural communities that are affected by water quality issues the government has failed to fix.

● More direct say as the the quality of service being provided.

Case study: Metro Manila

Manila and Metro ManilaAs the capital of the Philippines, Manila is the 2nd largest city with a population of about 1.78 million

Metro Manila is comprised of 16 cities with a population of about 12.8 million

The larger urban area is estimated at 21.3 million people

Copyright:©simon gurney - stock.adobe.com

Incentives to Privatize

Corporations and industries previously owned by dictator government

Power crisis and privately contracted hydropower in 1994

Municipal Waterworks and Sewerage System (MWSS) supplying 67% of service area

58% of non-revenue water due to poor infrastructure and pilferage

Government and Non-Government EntitiesGovernment:

- National Water Resources Board (NWRB)- Metropolitan Waterworks and Sewerage System (MWSS)

Non-Government:

- Technical Working Group (comprised of both public and private stakeholders)- National irrigation Administration connected to Angat-Maasim River Irrigation

System- Mayniland Water Services Inc (MWSI) and Manila Water Company inc

(MWCI)

Water Sources

Water Treatment Plants:

- 97% of domestic water comes from Angat Dam

- La Mesa Treatment Plant (MWSI)- Balara Treatment Plant (MWCI)- Laguna Lake

Ground Water:

- MWCI stopped in 2003- MWSI stopped in 2009

Copyright: Louise Maureen Simeon -philstar.com

Proposed Water SourcesLaiban Dam Project: most economical option, derived from both the Kaliwa and Kanan Rivers

Angos Dam Project: less environmental and social impacts, also within the Kanan River Basin

Kaliwa Dam: funded by China rather than a smaller project proposed by Japan

Continued backlash from indigenous groups such as the Sierra Madres communities like the Dumagat and Remontados

Water Crisis, March 2019MWCI takes responsibility for water shortages and Cardona Treatment Plant in Laguna Lake

Water Policy prioritizes municipal and domestic needs

Proposal of Wawa Dam

Kaliwa Dam Project set to start construction in July, 2019

Case Study: Cape Town Water Crisis

Summary of the Crisis

● The Crisis began in 2015● Water levels in six major dams fell from 71.9% to 50.1% ● May 2017 they reached 21.2% ● April 12, 2018 was recorded as the largest drought for municipal water failure

in modern history

“Day Zero”● The day that dam storage reached 13.5% ● Taps across the city would be shut off● Residents would have to go to water collection sites to receive daily allocation

of 25 litres per person

Governmental Response ● Citizens required to collect their water ● Water Tariffs were increased ● Campaigns and education programs were launched ● Residential water consumption dropped by 30%

Water Tariffs- Cape Town Report ● Based on the amount of water you use● “Sanitation for stand-alone residents were charged 70% of your metered

water consumption” ● “Sanitation for cluster (flats and sectional tile units) is charged at 90% of

metered water consumption” ● “Registered indigent households in Cape Town with a direct water and

sanitation connection get their first 6000 litres of water and 4200 of sewage per month free of charge”

Cases of Privatization in South Africa

● Dolphin Coast ● Nelspruit ● Johannesburg

Water Privatization within Cape Town

● The fear of “Day Zero” forced the Mayor to look at other options ● January of 2018 the Mayor was meeting with many private options● Coca-Cola came in and provided free labelled bottle water ● The country still relies on the 6 major dams and 4 catchment areas

within the country

Cape Town After the Crisis

● With consistent rainfall the dam levels increased to 67.7% ● Water restriction levels decreased ● Educational platforms are still in place

The Economics of Private Sector Participation

A Brief Economic History● 1990’s was a turning point● Influence of neoliberalism

○ State-based to market based economies● “water is the next oil” because of the water industry’s growing commodification and profits ● Emergence of a “global water industry”

What is Private-Sector Participation?● The legal arrangement in which private enterprises are involved in the provisions of services

that elsewhere are provided by government agencies

What is the Economic Goal of Privatization?

● Achieve and increase efficiency● Expand water and sanitation services● Increase accessibility and distribution of resources ● Gain profits

Water as a commodity

● “Fresh water is a finite and vulnerable resource; essential to sustain life, development and the environment . . . Water has an economic value in all its competing uses and should be recognized as an economic good.”

� International Conference on Water and the Environment �ICWE�, Dublin, Ireland, 1992�

The Creation of Different Market Economies

1. Natural Monopolies

1. Oligopolies

1. Natural Monopoly

Example: England’s Water and Sanitation Sector

Result:

● No competition

● High pre-tax profits

● Rise in sewerage and water prices

● Accumulation of disproportionate wealth by company directors

● Inadequate investment, leading to poor water conditions

2. OligopolyExample: Bottled Water Industry

Result:

● Water prices are high ● High profits ● High demand

Benefits of Privatization● Increased efficiency ● Increased investment + economic growth● Productivity of water use● Reduces political interference

Costs of Privatization● Higher costs● Less transparency ● Profits as an incentive rather than public interest● Hard to regulate private-sector participation

Environmental Effects of the Privatization of Water

Pro:Eroding Water Systems:

https://www.michiganradio.org/post/expert-says-michigan-officials-changed-flint-lead-report-avoid-federal-action

Pro:Water Prices Go Up With Privatization:

https://www.foodandwaterwatch.org/insight/water-privatization-facts-and-figures

Con:Bottled Water Industry:

https://morningglorycatering.net/products/bottled-water

Con:Loopholes:

https://phys.org/news/2016-08-choices-effects-runoff-productivity.html

Social and Cultural Implications

Lower-Income GroupsNot an attractive market to multinational water companies, a lot of financial risk

Neglected during privatization, poor water quality under public utilization systems

Water as a Human Right?The UN says yes. Water is necessary for life.

Some say no. Conservation and privatization is more important than public access.

Societal Privatization Concerns1. Employment loss2. Higher water rates due to the profit system3. Loss of control for long-term growth and economic development

(Limbach, 1993)

Global Conflict10% of global population receives water from private entities.

Freshwater resources are often shared by 2+ countries.

Women in the Global South are tasked with fetching water under public systems and have less time for education and skill learning.