It is unfortunate, as water is quickly becoming a source that currently and will continue to drive political and economic interests over the globe. More concerning, the finite resources of freshwater (less than half of one per cent of the world’s total water stock) are being depleted at a fast rate – it is projected by the season 2025, two-thirds of the world’s population is likely to be residing in a state of serious water deprivation. The issue of water management and conservation has received special attention this month as the South-East of England is experiencing among its worst droughts since the 1920s. After 15 months of below average rainfall some areas of the united states is likely to be suffering water supply controls during the summertime – which raises the question of who manages water supplies.
The market of water management is dominated by French trans-national Suez (formerly Suez Lyonnaise des Eaux) and German conglomerate RWE. Ranked 79th and 78th among Fortune’s Global 100 List, both of these water companies capture nearly 40 percent of the present water market share. These multinationals are now gaining a foothold in the United States, where they operate through several subsidiaries. Suez operates in 130 countries and Vivendi in over 100; their combined annual revenues are close to $70 billion. RWE revenues are still over $50 billion (energy included), having acquired water company Thames Water in the United Kingdom.
The businesses have worked closely with the World Bank and other international financial institutions and lobby aggressively for legislation and trade laws to require countries to privatise their water (as a condition for receiving major loans and aid). Across major cities around the world-such as Buenos Aires- the World Bank has flexed its financial muscle to persuade local governments to sign long-term contracts with the major private water companies.
A great exemplory case of this situation is the privatisation of the Buenos Aires water utility by the Argentinean government in 1993. The Argentinean government at that time experiencing a significant economic crisis, characterised by hyperinflation, granted a 30-year concession to run the water system to Aguas Argentinas, a consortium controlled by two French water giants, Compagnie Gnrale des Eaux (now Vivendi) and Lyonnaise des Eaux (now Suez). The consortium didn’t pay any money for the concession, promising to reduce water bills for local citizens. During the time, it said that private firms would do better at bringing water and sewage connections to poor regions of the city. The sell-off of the water company was part of a wholesale auction of state assets to foreign and Argentine businesses. This was an ideal exemplory case of how, in some instances, privatisation deals, while making fast cash for the government – money usually used to pay for debts to the IMF, World Bank and other foreign creditors – are often a poor deal for the public and filled with secrecy and corruption.
Soon thereafter, the World Bank declared the Buenos Aires privatisation an overwhelming success and managed to get a design for privatisations of water that followed in the Philippines, Indonesia, and Australia. and South Africa. In the spring of 2002, the company defaulted on about $700 million in loans and threatened to reduce water services unless the government guaranteed the loans in U.S. dollars. The federal government refused, instead suggesting that Aguas Argentinas could save $6.3 million annually by reducing its executive salaries. The International Monetary Fund then insisted that President Eduardo Duhalde authorise an interest rate hike as a condition for renegotiating Argentina’s foreign debt. President Duhalde had no choice in the summertime of 2002 but to grant Aguas Argentinas a 10 percent increase.
Back France, Suez have come under scrutiny in a number of criminal and civil cases, with accusations including bribery of public officials, agricultural water tanks illegal political contributions, kickbacks, price fixing, operating cartels and fraudulent accounting. Suez have close ties to the French government; the water companies are claimed to be strong resources of income for the political parties, particularly Chirac’s RPR. In 2000, Jrme Monod, CEO of Suez from 1987 to 2000 left the company becoming a senior adviser to Chirac. Interestingly enough, the French government has taken a protectionist method of the water business – no foreign companies have water concessions in France.
There is without doubt large water companies including Suez, Vivendi and RWE have a responsibility with their shareholders to generate returns, however their biggest corporate responsibility ought to be on the fair and equitable management of the host countries waters. Unfortunately, these companies have demonstrated a ruthless method of the management of waters in foreign counties being plagued by corruption and price increase scandals. Government organisations are equally to blame for issues of corruption and misappropriation of resources within their countries. The perfect exemplory case of weak government controls, is the role the Argentinean Water Management Agency, ETOSS played in the disastrous privatisation of Buenos Aires waters. ETOSS subordinated to corporate and government pressures and constantly altered the contracts between the government, municipalities and the water conglomerates.
Thankfully, alternative resources of water management and collection are being developed. As with the Namib fog beetle (in Africa) which collects moisture for sustenance of its body, fog collection is a growing program for the development of affordable water supplies. Fog collection is rather simple and affordable – large vertical shade nets are erected in high-lying areas close to water-short communities. As fog passes through these shades, water droplets are deposited onto the net. Because the droplets become larger, they run down the net into gutters attached at floor level. From there, water is channelled into reservoirs, and then to individual homes. Lets hope the distribution and development of fog collector technology, unlike water concessions, is performed in a equitable and transparent manner.