Ethics problems of privatizing water supply services. Paper submitted for Ethics class, with good reseach on Chinese market.
Privatization of public systems has been going on in both developed and developing countries for many years, maybe with more strength on developing countries in the last decade because of their higher reliance on public companies.
The inefficiency of many public companies and its burden to the countries bearing them has been probably the reason most commonly used to justify them. Other reasons have also been: expertise of the private companies, fewer capital funds needed to start the project (in case of new projects) and less resources needed from the government to control the day-to-day operations from the company.
Water supply systems have also been a target for privatization in many countries, especially in low-mid income countries (see figure 1).
Fig 1: Investment in privatization of water supply systems in millions of dollars from 1991-2005 for low-mid income countries
As we can see in Fig 1 the areas with higher concentration of water supply privatization have been Asia pacific & Latin America.
Nevertheless, why is privatization of water supply controversial? Many countries establish in their constitutions that water is a right to their citizens and according to the United Nations Committee on Economic, Social and Cultural Rights, the access to water is a human right (November 26, 2002, “The human right to water entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses”).
However, how can we ensure that this right is enforced when private companies are the responsible for providing the service? Let us see the t...
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...municipal concession should be between 8 and 12 percent, but the 2002 Opinion on accelerating the Marketisation of Urban Utilities indicates that Chinese authorities cannot issue guarantees to investors for privatizations. ) The fact is then that the central government is supportive of price rises but the provincial government, that has to deal with unpopular price rises, tends to protect the customers.
On the other side investors with bargaining power (mainly foreign investors) can manage in some cases to secure better deals, like provisions for compensation in the event of changes in regulations, a higher starting tariff, or a more beneficial tariff adjustment formula.
Definitely, the challenge for the Chinese authorities is to be able to develop a robust regulatory regime for privatization in water services that is suited to China’s specific characteristics.
Maude Barlow’s “Water Incorporated: The Commodification of the World’s Water” gives a voice to a very real but vastly unknown issue: the privatization of water. I refer to it as vastly unknown because it wasn’t until this article that I was even aware such a power struggle existed. Barlow first introduces startling statistics, meant to grab the attention of its reader. Once she has your attention, she introduces the “new generation of trade and investment agreements.” (306) This includes referencing many different acronyms such as, FTAA, NAFTA, GTAA and WWF. FTAA, NAFTA, and GTAA are the villains of this story. Simply put, the privatization of water would end in socioeconomic turmoil and dehydration worldwide.
Water privatization at a glance seems like a knight in shining Armani. Foreign companies go into poor countries with bad water sources, shmooze the government with an offer to pay off the country's World Bank debt in exchange for a contract, and these white knights set up shop to make the water drinkable. In richer areas, the temptation of what these foreign companies brand as safer, cheaper, better managed water is a no brainer. Even in American cities, the offer was too good to pass up. Many of these states are learning they've been given a run for their money. Companies buying and selling water as a good has brought many unseen downfalls. As many around the world are learning, water treated as a commodity has a lower quality, higher price, and for many, may be the cause of much suffering; therefore, water privatization is a poor solution for the water crisis.
In the documentary, Blue Gold: World Water Wars, it follows several people and countries world-wide in their fight for fresh water. The film exposes giant corporations as they bully poorer developing countries to privatize their own supply of fresh water. As a result of the privatization, corporations make a hefty profit while the developing countries remain poor. Blue Gold: World Water Wars also highlights the fact that Wall Street investors are going after the desalination process and mass water export schemes. This documentary also shows how people in more developed nations are treating the water with much disregard, and not taking care of our finite supply. We are polluting, damming, and simply wasting our restricted supply of fresh water at an alarming speed. The movie also recognizes that our quick overdevelopment of housing and agriculture puts a large strain on our water supply and it results in desertification throughout the entire earth. The film shows how people in more industrialized nations typically take water for granted, while others in less industrialized nations have to fight for every drop.
All of the case studies presented show a unique mixture of issues stemming from property rights, public goods, externalities, interjurisdictional spillovers and a fantastic illustration of Coase Theorem and Hardin’s Tragedy of the Commons. Water usage and rights are a pertinent and urgently growing issue that often pits economic development, sustenance and environmental health externalities at odds with each other.
United Nations Development Programme. (2006). Human Development Report 2006.Beyond scarcity: power, poverty and the global water crisis.
Governments’ power decaying in the water administration by global water lords. Corporations, water companies, and elite organizations are controlling countries financing them with loans to develop sustainable infrastructure in becoming stable economically and improve their infrastructure in various aspects such as education, social service, and healthcare etc. Water companies are overcoming these countries with the help of the organizations such as the IMF, WTO, and World Bank. For instance, if a country wants loans, the WTO makes a requirement to the loaners to privatize their public water system and let the corporations offer their water services to the citizens. In the book “Blue Gold” by Maude Barlow &Tony Clark illustrates the mission
The total area of Mexico’s surface is slightly less than 2 million km2 (UNESCO 2006). The population is about 103 million people (Castro and Heller 2009). In the last two decades, as the population of the country has been growing intensively, the demand of water also dramatically increased. According to Armentia and Cisneros, the number of people who don’t have an access to water supply is about 11 million, almost 11% of Mexico’s population (Castro and Heller 2009). But there are far more people who don’t have an access to safe water. Moreover this situation with lack of water is exacerbated by malfunction of sewer systems. But to understand the causes of scarcity of water in Mexico and to evaluate the policy of the government in this sector, it needs to be observed thoroughly.
Although the government of the Dominican Republic has been working on providing access to water to its population, they have not made sufficient progress. For example, the government has yet to invest in “the construction of water delivery systems”. The government also fails to enforce regulation that can protect the quality of water it delivers to the population (Castro, Mataya, and Stark, 2007, p.
This is because only a small part of the population, particularly in developing countries, have access to water of acceptable quality. It is estimated that in some countries only 20% of the rural population has water of satisfactory quality. Based on these statistics, it is clear the urgent need for awareness about caring for water use. Almost without realizing it, we are seriously jeopardizing this essential resource, not for us but for our children's children and their generations, aware that in other parts o...
There are 80 countries that have been suffering from a lack of clean water, and two billion people lack access to freshwater, especially South Africa (Alois). This area of countries is the driest in the world - Sudan, Ethiopia, Egypt and so on. Like in the book A Long Walk to Water by Linda Sue Park, Nya, who lives in Sudan, has been lacking clean water. She has to find water every day for her family. Luckily, Nya got help from Salva who used to live in Sudan and came back from America to build the water system for her village. However, there are still many people around the world that have been suffering to find clean water for basic use. There are many factors that cause a lack of clean water around the world: geography of countries, deforestation,
For Nestlé Corporation during such crisis, water was still a commodity to be sold in the open market. Nestlé drained 80 million gallons of water a year from Sacramento aquifers during the time of crisis of record drought. The mayor of Sacramento city gave the rights to Nestlé for significantly less amount to bottle the water and sell it for outrageous profits while the people of California suffered tragic draught situation. Nestlé Water Company paid 65 cents per 750 gallons of water to the city of Sacramento. This means, for 215,000 gallons of water the company paid $186. This water is sold for $2.1 million USD, resulting in a difference of 10,000% of what it should cost and what people paid. People were upset because of the lack of regulation and control when a giant corporation is taking their water for minting money. There were rallies organized in Sacramento and other parts of California. The mayor of Sacramento should have been more concerned about managing the public water resources properly rather than giving corporations the opportunity to bottle it, in fact the corporations should understand the responsibility to manage water wisely. Nestlé was even given a tax break and wasn’t required to pay the commercial rate for the water which it sold back to people at humungous
"Water Crisis." World Water Council. 7th World Water Council, 2012. Web. 18 Nov. 2013. http://www.worldwatercouncil.org/library/archives/water-crisis/
Safe water and sanitation as a basic human right, household water treatment, rainwater harvesting ... and reports from Kyoto, Madagascar, Uzbekistan, Guinea and other countries around the world.
One main causes of water scarcity is water mismanagement worldwide. Water mismanagement has become a crisis of governance that will impact heavily ...
Cherain, T., Unni, K., and Sophie, L. 2010. China – India water shortage. Bloomberg News. http://www.grailresearch.com/pdf/ContenPodsPdf/Water-The_India_Story.pdf (accessed November 1, 2010).