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The private sector can get water flowing to the poor - FREDRIK

By Jeremy Woods,2014-04-20 19:36
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The private sector can get water flowing to the poor - FREDRIK

    The private sector can get water flowing to the poor - FREDRIK SEGERFELDT.

    By FREDRIK SEGERFELDT

    764 mots

    25 août 2005

    Financial Times

    Asia Ed1

    Page 11

    Anglais

    (c) 2005 The Financial Times Limited. All rights reserved

    Worldwide, 1.1bn people, mainly in poor countries, do not have access to clean, safe water. The shortage of water helps to perpetuate poverty, disease and early death. However, there is no shortage of water, at least not globally. We use a mere 8 per cent of the water available for human consumption. Instead, bad policies are the main problem. Even Cherrapunji, India, the wettest place on earth, suffers from recurrent water shortages.

    Ninety-seven per cent of all water distribution in poor countries is managed by the public sector, which is largely responsible for more than a billion people being without water. Some governments of impoverished nations have turned to business for help, usually with good results. In poor countries with private investments in the water sector, more people have access to water than in those without such investments. Moreover, there are many examples of local businesses improving water distribution. Superior competence, better incentives and better access to capital for investment have allowed private distributors to enhance both the quality of the water and the scope of its distribution. Millions of people who lacked water mains within reach are now getting clean and safe water delivered within a convenient distance.

    The privatisation of water distribution has stirred up strong feelings and met with resistance. There have been violent protests and demonstrations against water privatisation all over the world. Western anti-business non-governmental organisations and public employee unions, sometimes together with local protesters, have formed anti-privatisation coalitions. However, the movement's criticisms are off base.

    The main argument of the anti-privatisation movement is that privatisation increases prices, making water unaffordable for millions of poor people. In some cases, it is true that prices have gone up after privatisation; in others not. But the price of water for those already connected to a mains network should not be the immediate concern. Instead, we should focus on those who lack access to mains water, usually the poorest in poor countries. It is primarily those people who die, suffer from disease and are trapped in poverty.

    They usually purchase their lower-quality water from small-time vendors, paying on average 12 times more than for water from regular mains, and often more than that. When the price of water for those already connected goes up, the distributor gets both the resources to enlarge the network and the incentives to reach as many new customers as possible. When prices are too low to cover the costs of laying new pipes, each new customer entails a loss rather than a profit, which makes the distributor unwilling to extend the network. Therefore, even a doubling of the price of mains water could actually give poor people access to cheaper water than before.

    There is another, less serious, argument put forward by the anti-privatisation movement. Since water is considered a human right and since we die if we do not drink, its distribution must be handled democratically; that is, remain in the hands of the government and not be handed over to private, profit-seeking interests. Here we must allow for a degree of pragmatism. Access to food is also a human right. People also die if they do not eat. And in countries where food is produced and

    distributed "democratically", there tends to be neither food nor democracy. No one can seriously argue that all food should be produced and distributed by governments.

    The resistance to giving enterprise and the market a larger scope in water distribution in poor countries has had the effect desired by the protesters. The pace of privatisation has slowed. It is therefore vital that we have a serious discussion based on facts and analysis, rather than on anecdotes and dogmas. True, many privatisations have been troublesome. Proper supervision has been missing. Regulatory bodies charged with enforcing contracts have been non-existent, incompetent or too weak. Contracts have been badly designed and bidding processes sloppy. But these mistakes do not make strong arguments against privatisations as such, but against bad privatisations. Let us, therefore, have a discussion on how to make them work better, instead of rejecting the idea altogether. Greater scope for businesses and the market has already saved many lives in Chile and Argentina, in Cambodia and the Philippines, in Guinea and Gabon. There are millions more to be saved.

    The writer is author of Water for Sale: How Businesses and the Market Can Resolve the World's Water Crisis (Cato Institute)

    20050825J111.037

LETTERS TO THE EDITOR

    Private sector admits that it cannot deliver. By VICKY CANN

    201 mots

    29 août 2005

    Financial Times

    Asia Ed1

    Page 10

    Anglais

    (c) 2005 The Financial Times Limited. All rights reserved

    From Ms Vicky Cann.

    Sir, We agree that the debate on water privatisation needs to be "based on facts and analysis", but there was a remarkable lack of either in Frederik Segerfeldt's article.

    "Substantial grants and soft loans are unavoidable to meet required investment levels . . . If it does not happen the international water companies will be forced to stay at home." This is not an anti-privatisation campaigner speaking, but J. F. Talbot, the chief executive of Saur, one of the world's largest water companies, speaking in 2002. The private sector admits that it simply cannot deliver the investment required to enable the world's poorest communities to access clean water and adequate sanitation. Extending access to water for the poor can only happen through the public sector. Perhaps if you work for a Washington-based think-tank, water prices are not the "immediate concern". The poor of Manila, who have had to cope with water price increases of between 500 and 700 per cent since privatisation, may beg to differ.

    Vicky Cann,

LETTERS TO THE EDITOR

    Water monopolies will not benefit the poor.

By WENONAH HAUTER

    284 mots

    29 août 2005

    Financial Times

    Asia Ed1

    Page 10

    Anglais

    (c) 2005 The Financial Times Limited. All rights reserved

    From Ms Wenonah Hauter.

    Sir, Fredrik Segerfeldt's stance on privatised water caters to the free market while disregarding reality ("The private sector can get water flowing to the poor", August 25).

    Private interests do not take better care of natural resources than public interests. Consider the extractive industries, such as mining, that have destroyed the land in order to extract as much of a given commodity as is possible. Now think about public parks. If private interests owned these priceless treasures, many of them would likely be covered with housing developments and unavailable to the public.

    Generally, the poorest communities are least likely to receive water under privatisation because it is priced out of their reach. In El Alto, Bolivia, approximately 200,000 people were effectively denied water because of an inequitable water contract with Suez-owned Aguas de Illimani. The service areas included only neighbourhoods with existing water lines and households that could pay the increased price of service. The result was a "Swiss cheese" service area, created to avoid investment in poor neighbourhoods. Even within the service area, 70,000 people were unable to afford the steep Dollars 445 connection fee in a country where the minimum wage is Dollars 60 per month. Further, water rates increased 58 per cent between 1997 and 2005.

    Consumers, especially poor ones, are not benefiting from this water monopoly. Corporate shareholders naturally get maximum profit; we should not expect them to be social service agencies. Privatised water will never deliver safe and affordable water for all.

    Wenonah Hauter,

    Director, Water for All Campaign,

LETTERS TO THE EDITOR

    Campaign will cause millions to suffer. By FREDRIK SEGERFELDT

    213 mots

    30 août 2005

    Financial Times

    Asia Ed1

    Page 10

    Anglais

    (c) 2005 The Financial Times Limited. All rights reserved

    From Mr Fredrik Segerfeldt.

    Sir, Wenona Hauter and Vicky Cann (Letters, August 29), in response to my article about letting private enterprise distribute water in poor countries, present the usual nonsensical arguments of the anti-privatisation lobby.

    Ms Hauter writes that "generally, the poorest communities are least likely to receive water under privatisation". Consider the findings of a UN study of 15 poor countries with public water regimes: 80 per cent of the poorest quarter of the population is without water. And then consider the millions of poor households that have been connected to water mains following privatisations in Argentina and Chile, in the Philippines and Cambodia, in Gabon and Morocco. Hundreds of thousands of lives have been saved.

    Ms Cann cites a corporate manager to prove me wrong. She then ignores the effects of the fierce, ideological campaign she and others have been running against private water investment in poor countries. Let me cite one of her fellow campaigners, David Boys, of Public Service International: "There is evidence that water corporations are already backing out of the developing world because of tough civil pressure." Millions of people will suffer because of this campaign.

    Fredrik Segerfeldt,

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