Corporations and the World Water Crisis

“If the wars of the 21st century were fought over oil,
the wars of the next century will be fought over water.”
Ismail Serageldin, former Vice President, World Bank.
Newsweek, 1995.

It would be foolish and somewhat erroneous to pinpoint a particular event or time that heralded the steady erosion of water’s sovereignty as a public good but some critics see the 1992 Rio “Earth Summit” and the prioritisation given there to the provision of clean water and proper sanitation as an economic goal as opposed to a human right as the moment when corporate encroachment began in this hitherto public domain. Through intensive lobbying of the international financial institutions (IFI’s) corporations managed to depict themselves as the white knights who would help achieve the Millenium Development Goals by spearheading a revolution in water utilities management. They told the major international lenders (World Bank, the Inter-American Development Bank and the Asian Development Bank) who, evidently, required little inducement, that privitisation was the only route to follow if they wished to beef up the ailing infrastructures of municipal water utilities, expand coverage and increase those connection rates to safe and secure sources that were so vital in reducing incidences of water-borne diseases such as cholera and diarrhea. The plan seemed good on paper and matched the ideological bent of these institutions at the time since, for the policy planners and economic advisors in the IFI’s it was only an extension of the Washington Consensus model of development; privitisation, deregulation and public sector retrenchment.

The most grevious charge that can be laid at the door of the multinationals is that they have piggybacked on the goodwill expressed in the MDG’s to acquire and consolidate their ownership of key freshwater resources at a time when climate change and corporate usage itself (Nestle pumping Lake Michigan, Cut flower exporters draining Lake Naivasha in Kenya, Coca-Cola’s bottling plants in India) is creating ever more water-stressed regions. Today, every one of Africa’s 677 freshwater lakes is officially listed in dangerous decline.

In less than a decade, and in tandem with these resource pressures, water is undergoing a silent transformation from public good to privately-held (and traded) commodity. Big water companies such as Suez and Vivendi are now double-listed on the major stock exchanges and we seldom think nothing of buying bottled water, even in restaurants. Reports of excessive fluoridation and other hazards associated with the public management of water utilities now seem commonplace. Yet, unreported is the fact that even by the Food and Drug Administration’s own admission the bottled water industry is the most unregulated sector on their books. We have been habitually groomed into accepting as natural the idea of water as just another commodity. Hadji Guiss, special rapporteur on water rights for the UN Subcommission on the Protection and Promotion of Human Rights laments that water in his own Senegal and most everywhere else in the developing world has become a commodity that is “sold to the highest bidder”.

By 2003, Maude Barlow, veteran water campaigner and author of two devastating critiques of corporate involvement in the water crisis (“Blue Gold” and “Blue Covenant”) could comment darkly in the UK’s Guardian that: “the private sector was the first to notice: the planet is running out of fresh water at such a rate that soon it will be the most valuable commodity on earth.” (Feb 26th).

The pattern of IFI lending has become all too familiar offering a one -track solution to a multi-dimensional problem. Neoliberal programmes of privitisation and deregulation suited to the conditions that prevailed in the Western economies have been assumed appropriate to the completely different circumstances of emerging economies. The charge made by Joseph Stiglitz, former World Bank chief economist, of a rigidly inflexible template for economic reform been grafted wholesale and without consideration of regional peculiarities seems doubly appropriate in the case of the water industry. For privitisation in the developing world, far from being the promised panacea has too often led to opportunistic monopolising with exclusionary pricing structures, price gouging and the cherry-picking of profitable management sectors.

For example, in 2006, after years of water service cut-offs, flooding due to lack of proper drainage, huge rate increases and multiple broken promises, the Argentine government unilaterally annulled its 30-year contract with Aguas Argentinas, a Suez subsidiary, to provide water to the 10 million residents of Buenos Aires. So vexed were the Argentine authorities that the courts have been asked to prevent top corporate executives from leaving the country, pending possible criminal charges for allowing high levels of nitrates in the capital city’s drinking water. The World Bank had helped Suez secure the contract in 1993 in what was then the world’s largest transfer of a public water system into private hands. Suez’ neglect of the unprofitable sewage treatment wing of its operation has meant that today the Rio de la Plata is one of the few rivers in which industrial pollution can be seen from space.

In Ghana, where the UK’s Department for International Development (DFID) made its aid payments conditional on part-privitisation, rate increases have shot up 50-70% in some areas. Priced out of the market many have no option but to resort to drinking water from contaminated sources. In Tanzania, Biwater brought the cash-strapped government to court for breach of contract despite their record of higher rates, water shortages and erratic supplies. Despite winning the case the govt. of Tanzania still owes the World Bank the original $140 million loan.

In Johannesburg, the pro-corporate iGoli 2002 privitisation drive has been renamed “E-Coli 2002” by frustrated locals. In KwaZulu-Natal province the installation of pre-paid meters led directly to a cholera outbreak that claimed 200 lives in August 2002. Despite instances where municipal workers would come back at night and show locals how to break into water meters many were still left with no option but to drink from rivers with cholera warning signs. This incident, among others led a Johannesburg High Court judge on 30th April 2008 to declare the use of pre-paid meters to be “illegal and unconstitutional”. It is a ruling that was made possible by such initiatives as the non legally binding General Comment by the United Nations Committee on Economic, Cultural and Social Rights in November 2002 that “access to water is a human right” and that it is a “social and cultural good, not merely an economic commodity”. At the time, WHO director-general Gro Harlem Brundtland called the declaration of water as a human right ” a major boost in efforts to achieve the UN ‘s Millennium Development Goals” – deeply ironic given IFI/corporate assurances over the desirability of water commodification.

Anthropocide – A Last Gasp for Gaia?

One of the virtues of the reports of the Intergovernmental Panel on Climate Change is that they must be seen to transcend ideological debates in order to present scientifically rigorous data. Written to inform the United Nations Framework Convention on Climate Change and predating Kyoto ratification they are intended as the principle contribution towards debates on international policy formation. Though not intended to dictate policy they nevertheless presuppose a steady increase in anthropogenic Green House Gas emission rates. Thus, the narrative of the IPCC’s ‘Special Report on the Regional Impacts of Climate Change’ is most often embedded in an imagined future-world of 750 parts per million volume CO2.

In the section dealing with the effects of climate change on Africa some ammunition is supplied to the right of the political spectrum through several examples of ‘positive’ transformations. For instance, in a doubly concentrated CO2 atmosphere C3 crop species such as wheat, rice, barley, cassava and potato will increase their water-use efficiency (WUE) and C4 plants such as maize, sugercane and sorghum will remain relatively unaffected. Also, grasslands will become more resilient to drought and highlands will become more suitable for cropping due to increased temperatures and the lack of frost. Under optimum conditions of nutrient availability overall biomass can increase by an estimated 300% . However, the overall message is clear; temperature rises will significantly increase the hardships already encountered by the average African.

Case studies of the Nile and Zambezi basins showed that ‘runoff decreases in these basins even when precipitation increases, due to the large hydrological role played by evaporation’ . Rising temperatures will thus increase the rate of evapotranspiration and reduce the runoff that supplies an already diminishing water-table. The report admits that its Global Climate Models have ‘no model memory of groundwater depletion in the preceding year’ and so they dramatically underestimate the effects that back to back droughts can have on reservoir levels, food security, agriculture and water quality itself. More worryingly, the report adds; “The temperature-precipitation-CO2 forcing of seasonal drought probably is less significant than the prospect of large-scale circulation changes that drive continental droughts that occur over several years. A change in the frequency and duration of atmosphere-ocean anomalies, such as the ENSO phenomenon, could force such large-scale changes in Africa’s rainfall climatology.” (1)

A major criticism of the Atmosphere – Ocean Global Climate Models used in the 2001 IPCC Third Assessment Report such as the Hadley CM3 is that they do not include positive biosphere feedbacks. Likewise the 35 Special Reports on Emissions Scenarios that provide the raw data for these models are based upon demographic, technological and economic ‘driving forces’ that exclude consideration of alterations in ecosystem dynamics once the temperature rises resulting from these changes actually begin to occur. It seems extraordinary that we can readily quantify data relating to the shrinking of the per capita income gap ratio between developed and developing countries and somehow extrapolate from these imponderable complexities an emissions value that can be used as a variable in climate modelling, yet we cannot, for example, track the path of non-sentient methane molecules escaping uniformly from a melting permafrost.

Development professionals will be no doubt delighted to be informed that the worst case scenario with respect to the per capita income gap between ‘North and ‘ South’ is a ratio of 9:1. Given that the gap has in reality widened from 16:1 in 1990 to today’s 25:1 it is to be hoped that this particular speculation is not reflective of the quality of the science found elsewhere in the document. However, this is a critique perhaps that belongs elsewhere, for the present we must note that the consensus viewpoint urges us towards talk of “global mean temperature rises” but what is most striking, in fact, if the data can be relied upon, is the non-uniform manner in which these rises are taking place.

Thus, in the HadCM3 coupled ocean-atmosphere climate change model depicting temperatures for the year 2100 using the IS92a scenario (used in the IPCC SAR) which assumes ‘mid-range economic growth’ with ‘no measures to reduce GHG emissions’, atmospheric concentrations of CO2 have doubled from present day levels.

In this scenario it is noted that ‘business as usual’ unregulated emissions will result in a differential distribution of temperature increases and the greatest increases will occur precisely in those areas that have the potential to produce the largest positive feedbacks; the Antarctic ice sheets, the Amazonian rainforest and the methane held in ice clathrates in the Western Siberian permafrost. According to Sergei Kirpotin, a botanist at Tomsk State University, the western Siberian sub-arctic region has warmed faster than almost anywhere else on the planet, with an increase in average temperatures of some 3°C in the last 40 years. The permafrost concerned covers a peat bog the size of France and Germany combined and contains some 70 billion tonnes of methane. To put this figure into perspective we may note that in the decade or so of consciousness raising since the landmark Earth summit at Rio in 1992 total global emissions have risen from 20 billion tonnes CO2 equivalent to over 27 billion tonnes CO2 e today. As we know, methane has a strong global warming potential over a 100yr period; its molecule is 22 times more effective than carbon dioxide at absorbing solar radiation. However, over a shorter time period, such as twenty years, its GWP is 64 times that of CO2. So, if only 1% of this total were emitted over the next decade and assuming a loss of half that figure again due to an air fraction ratio of 50%-60% we would still have an atmosphere engorged with an extra 21.4 billion tonnes of CO2e.

Moreover, there are positive feedbacks to be considered as the melting of shiny reflective surfaces reduces the natural albedo effect and the newly exposed dark under surface instead becomes a net absorber of energy thereby increasing overall ambient temperature. Kirpotin noted that melting in this region had only begun in the last 3 or 4 years so some kind of threshold may have already been reached. The question is how rapidly will this gas be released and in what form because under certain conditions the methane may oxidise to form carbon dioxide. The sudden release of methane hydrates have been implicated in at least two of the five ‘great’ extinction level events; the Paleocene-Eocene Thermal Maximum and the Permian-Triassic extinction event or as geologists refer to it ‘The Great Dying’.

However, this is only one major ecosystem among thousands in the natural world that function as complex open systems. Relations in these systems are always non-linear meaning the effect is not necessarily proportional to the cause. In chaos theory a small perturbation, ‘the butterfly’, in the initial conditions of a dynamic system may produce large scale variations over the long term behaviour of that system. Peter Cox of the Hadley centre estimates that a temperature rise of only 2°C ‘ is all that is required to turn rainfall patterns upside down, leaving the Amazon dry, and prone to all-consuming fires that will sweep across thousands of kilometres’. The Amazon forest, the ‘lungs of the earth’ currently absorbs one tenth of the total carbon we emit each year. Could this be the ‘butterfly’ that consumes Gaia? The truth is we cannot know for certain, but what we do know is that the further temperature deviates from its current levels today’s improbabilities are more likely to become tomorrow’s certainties.

So what has been the international policy response to over three decades of environmental lobbying culminating in the contributions of thousands of scientific specialists worldwide who are unanimous in the view that ‘the question is not whether climate will change in response to human activities, but rather how much (magnitude), how fast (the rate of change) and where (regional patterns)? Is the Kyoto Protocol, a legally binding international treaty which finally came into force on February 16th 2005 and which commits ‘developed’ countries to reduce their GHG emissions by 5.2% by the year 2012 compared to 1990 levels capable of being the panacea its drafters hope for?

First of all, its ratifiers amount to only 61% of global emissions; Australia and the US (who alone produces a quarter of the world’s emissions) have refused to sign. For those on board, national politics can have a decisive influence over the efficacy of future compliance. Canada, whose emissions are currently some 60% above 1990 levels and who, if the Protocol were to be strictly enforced would in my estimates be liable for a fine of between $4 and $6billion have, unfortunately, returned the Conservatives in their recent general election. Stephen Harper, the Conservative leader, said during the campaign that he would abandon Canada’s Kyoto target and ‘that the Liberals’ plan would force Ottawa and polluting industries to buy billions of dollars worth of emissions credits from other countries’. The centrepiece of the Liberal’s plan was a $5 billion Climate Fund, which would pay $15 to farmers, businesses, government agencies and others for every tonne of greenhouse gas reductions achieved by small and medium-sized projects. Bill Hare, of Greenpeace International described the result as ‘not a positive development’.

The UNFCCC’s Richard Kinley reports that ‘as a whole, developed countries emissions in 2003 were down 5.9% compared to 1990 levels‘. This figure, however, is achieved almost entirely on the back of the massive drop in emissions that followed post-1990 economic stagnation for the ‘transitional’ economies of Eastern Europe. All Annex 1 countries or developed countries negotiate their own quota for the first period of implementation (2005-08). If they succeed in limiting emissions below this margin they are given the option to sell quotas to those countries who exceed their limits. Japan has set theirs at 6%, the EU at 8% and Russia, because of its massive drop in emissions from 3billion CO2e to 1.8 billion CO2e have been presented with special arrangements to ensure that their not in the absurd position of making billions of dollars of profit from trading unused and, in fact, unusable quotas. Within the European Emissions Trading Scheme (EETS) a ton of carbon has stabilised at around 25 euro while the penalty for a company overshooting its quota is 45 euro per ton. For the EU, the scheme at present only covers six key sectors; steel, energy, cement, glass, brick making, and paper/cardboard; industries that compose some 60% of emissions. A monitoring and evaluation system is currently in place to assess the difficulties posed by further extensions that will have to include other key areas such as transport.

A caveat to this implied market incentivisation to transfer ecologically sound technologies is the arguments put forward by Gregory C. Unruh with respect to ‘carbon lock-in’. He argues that a Techno-Institutional Complex has developed through a path dependent, co-evolutionary process and points especially to the many inter-related components of many carbon fuelled technologies and their relationships to networks of supply and demand that have succeeded in entrenching fossil fuel dependency. According to Nick Robins of Henderson Global Investors the EETS has created an estimated 35billion euro market and Chris Rowland, a City analyst, in typically upbeat mode calls it “ possibly the biggest change the European utilities industry has seen since the industrial revolution”. Many find the logic of emissions trading irresistible and argue that as along as the fines remain sufficiently high and are strictly enforceable (which they appear to be otherwise the market for cheaper quotas would have collapsed)that in ideal circumstances the system is capable of forcing businesses into seeing that the adoption of renewable energy alternatives is their only cost-effective way to stay in the marketplace. What the green lobby must do, and there hasn’t been too much evidence of it as yet, is to continually press for greater fines thereby driving up the price of carbon credits.

Many critics of Kyoto rightly focus on the Clean Development Mechanism (CDM) and the questionable allocation of carbon credits to companies who have initiated carbon sequestration projects (such as tree plantations) whose precise value in terms of alleviating GHG emissions is notoriously difficult to define. Graham Erion argues for instance that; “75% of all carbon credits certified to date are for projects capturing landfill gas (methane) or hydro fluorocarbons, neither of which contribute to sustainable development but generate enormous carbon credits as their gasses are much more potent than carbon dioxide”. CDM’s, by their nature will inevitably produce a flurry of applications from questionable projects. Applicants must be penalised heavily for evidently wasting the CDM Executive Board’s time with ludicrous claims. One supplier of anti-flatulence supplements for cattle in Uganda, for instance, has claimed thousands for his novel methane reduction measures. More serious is the saga of the Brazilian Plantar project’s attempt to secure millions of carbon credits for 21,000 hectares of eucalyptus trees which will eventually be felled to provide charcoal for pig-iron processing. Despite the fact that Plantar have been using eucalyptus for this very purpose for the past 20yrs they are claiming that this ‘new’ plantation is an ‘avoidable fuel-switch’, a transfer to a more GHG friendly technology and ‘threatens’ in the absence of being granted credits, to resort to using fossil fuels. The corporations in the state of Minas Gerais acquired the land during the military dictatorship of the 60’s and 70’s and in the process of expelling the Tupinikim and Guarani Indigenous peoples burned millions of hectares of ‘cerrado’ (native vegetation) and atlantic forest. Researchers for the World Rainforest Movement assessing Plantar’s claim for certification discovered that the ‘cerrado’ itself made up at least 20% of the fuel for the pig-iron processing.

Sinkwatch rightly points to the hypocrisy of the World Bank’s disproportionate funding of fossil fuel projects whilst vaunting its Kyoto credentials through the support of carbon projects. It may also be added that the entire thrust of IMF/World Bank ‘structural adjustment’, be it called SAP, ESAF or PRSP by switching subsidies from subsistence production to export cash-cropping and facilitating a trade liberalisation that undercuts domestic suppliers has transformed formerly food-sovereign rural homesteads into areas for nitrate-intensive monoculturing. The surplus labour force is then readily absorbed by the now ubiquitous Export Processing Zones and their ‘wage’ integrated into the unsustainable consumption patterns of urban life.

It is worth bearing in mind that carbon projects under the CDM, Joint Implementation (JI) and the World Bank’s Prototype Carbon Fund as yet constitute a relatively small proportion of the overall carbon market but their potential for unravelling the ‘spirit‘ of Kyoto cannot be underestimated. In the village of Chapaldi, India, women who make biofuel from pongamia seeds and use it to power a small electricity grid and irrigation pumps, sold, in 2003, 900 tons of CO2e emissions to Germany for $4,164; ‘the equivalent of a year’s income’ our reporters jubilantly observe. While this is good news for the village it also means that Germany has received 900 tons of carbon eight times cheaper than it would have found it on the European market. Has the surplus value swelled the coffers of the Global Environment Facility only to spawn similar projects that provide virtually free carbon or has it merely being pocketed by business astounded by the naivete of the entire system?

 One way of overcoming this difficulty is to set a universally applicable absolute value per quantity of carbon based upon a predetermined finite amount that can be emitted in the future and this is the notion that underlies the so-called ’Contraction and Convergence’ scheme of the Global Commons Institute. Based upon the IPCC TAR’s WG1 a figure of 450ppmv has been determined by the GCI as ‘not safe’. A ‘contraction budget’ derived from an internationally negotiated rate of linear convergence is then to be distributed equally per person globally. The resultant ‘currency’ has already been boldly christened as International Energy Backed Currency Units or EBCU’s. Richard Douthwaite of Feasta even envisions this new monetary unit becoming the world’s reserve currency thereby reversing seignorage or ‘unearned’ royalties currently obtained in their trillions by the dollar, yen and euro into the hands of the commons.

Because of its implacable good sense and unquestionably democratic credentials it is however, unlikely to impress the ‘powers that be’ whom I suspect are unlikely to yield their position of privilege quite so dramatically, even, and perhaps especially, in the face of an environmental meltdown where increasingly scarce resources can be commodified to their nth degree.