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The Enclosure and Commodification of the Fresh Water Commons: How It’s Done

This sudden and intense interest in water as a commodity is a direct contradiction to the notion of water as a Commons, with its emphasis on collective access and shared responsibility.

There is no better example of a “runaway market engine” than the corporate cartel now being created to own and profit from water. Private sector interest in the world’s dwindling water resources has been building for two decades, and has dramatically increased in recent years. Transnational corporations view water as a saleable and tradable commodity, not a Commons, and are set to create a cartel resembling the one that now controls every facet of energy, from exploration to production to distribution.

Private, for–profit water companies now provide municipal water services in many parts of the world; put massive amounts of fresh water in bottles for sale; control vast quantities of water used in industrial farming, mining, energy production, computers, cars and other water-intensive industries; own and operate many of the dams, pipelines, nanotechnology, water purification systems and desalination plants government are looking to for the technological panacea to water shortages; provide infrastructure technologies to replace old municipal water systems; control the virtual trade in water; buy up groundwater rights and whole watersheds in order to own large quantities of water stock; and trade in shares in an industry set to increase its profits dramatically in the coming years.

“Water is hot,” says Schwab Capital Markets. “Water is a growth driver for as long and far as the eye can see,” adds Goldman Sachs. “The water industry is the largest and perhaps most dynamic industry in the world,” claims Seidler Capital. The water business is the fastest growing of the “big three” assets industries – the others being energy and electricity, reports the Summit Water Equity Fund, one of dozens of exchange-traded funds and indexes dealing exclusively with water that have sprung up in the last several years. “Water commodities used to be thought of as defensive, boring stocks,” reports MoneyWeek. “Not anymore. The U.S. water sector has returned 244% over the past five years, outperforming the S&P 500 by about 260%.” At the launch of Australia’s PL100 World Water Trust in May 2007, its CEO declared, “The water industry resembles the oil industry during its golden era.” This sudden and intense interest in water as a commodity – something to be used for private profit and personal gain – is a direct contradiction to the notion of water as a Commons, with its emphasis on collective access and shared responsibility. It is far from clear which definition will prevail.

Selling water as a commodity

The notion of water as a commodity did not happen in a vacuum. It was deliberately imposed on the global South by global institutions and water companies (and their governments) in an open attempt to capitalize on the desperate water crisis in poor countries. There was more than a little hypocrisy in foisting private water services on the South by countries that had been well served by public systems. In Europe and North America, public delivery of water helped to create the political stability and financial equity necessary for the great advances of the industrial age. As well, it was understood that public water and sanitation services protected public health and advanced national economic development. With few exceptions, these countries still understand the benefit of water as a Commons and continue to provide water as a public service. However, the World Bank and the big water companies set out to promote a major shift in water policy in the global South (a model they have gone on to try to sell in the North) by actively seeking the buy-in of non-governmental organizations, think tanks, state agencies, the media and the private sector in order to manufacture consent for the commodification of water. When the carrot of persuasion failed, the World Bank used the stick of financial compliance.

The most important global institution to enlist in this crusade was the United Nations, which, as early as 1992 at the crucial Dublin Summit, declared water to be an economic good and encouraged user fees, even for the economically poor South. Since then, the UN has worked closely with the big water corporations and the World Bank to promote a private model of water development through its Millennium Development Goals. Several major business organizations were formed to promote private water delivery in the global South, the most notable being the World Business Council for Sustainable Development, which was influential in watering down environmental commitments in the original Earth Summit in 1992, and AquaFed, the recently formed International Federation of Private Water Operators. A major player in the promotion of a private water services model has been the World Water Council (WWC), formed in 1997 by the World Bank, the big water transnationals, the United Nations and the development agencies of a number of wealthy countries. WWC members have been dubbed “the Lords of water” for their powerful role in promoting a private water model to governments that attend the WWC’s huge World Water Forums held every three years.

Corporations are involved in many aspects of water, including the construction of big dams, pipelines and municipal infrastructure, which are worth trillions of dollars. Corporations take water from the atmosphere with high technology and buy and sell water, including sewage water, on the open market. Agribusiness interests purchase and control local water rights to divert vital water resources from municipal water taps to irrigate cash crops and factory livestock production. There are three ways, however, in which corporations are gaining direct control over actual water supplies and, as a result, are making life and death decisions about who has access to water and who does not.

Privatizing water utilities

Until recently, just two companies, Suez and Veolia of France, dominated the water services industry. Both are counted among the Fortune 100 list of companies and have spread their operations throughout the global South, and more recently in Europe, North America and China. In recent years, however, a raft of new private operators has sprung up to challenge the “big two.” In 1990, only a fraction of theNovember 6, 2008and where they did, the companies were generally local. Today, big private water companies provide water to about 15 percent of those in the world who have access to piped water. The utility companies predict (and hope) that within 10 years, the number of people buying their “product” will double.

However, the privatization of water services has been a terrible failure in almost every community where it has been tried, and it is far from certain that privatization of the water Commons will accelerate at the same rate. Water commodification has left a legacy of corruption, sky-high water rates, cut-offs of water to millions of people, reduced water quality, nepotism, pollution, worker lay-offs and broken promises. A multitude of studies has shown that private water companies have not brought new investments into the global South. In fact, because both the lending banks and the development agencies of many wealthy countries assumed that privatization would bring in new water services investment, they pulled back on their own investments, resulting in a net loss in funding to provide water to the global South over the last 15 years – the very time when demand was exploding. Studies have also found that the big water transnationals have so much power with the World Bank and other regional development banks, that they actually often decide which countries and communities will receive bank aid, ensuring that poor countries with no possibility of profit for the companies are left behind. The story is now repeating itself in municipalities in the global North that have opted for a for-profit water system.

Bottling water

In Europe and North America, public delivery of water helped to create the political stability and financial equity necessary for the great advances of the industrial age.

Perhaps there is no better example of the enclosure of the water Commons than bottled water. Humans take free flowing water from its natural state, put it in plastic bottles and sell it to one another at exorbitant prices. In the early 1970s, about one billion liters of bottled water were sold globally. In 2007, more than 200 billion liters (50 billion gallons) were consumed, and the bottled water industry is growing at over 10 percent a year. Because bottled water costs anywhere from 240 to 10,000 times more than tap water, depending on the brand, profits are very high in this sector. The bottled water industry is conservatively estimated to bring in $100 billion annually. Four companies dominate the industry: Nestle, Danone, Coca-Cola and PepsiCo. “This is an industry that takes a free liquid that falls from the sky and sells it for as much as four times what we pay for gas,” explains Indian State University anthropologist Richard Wilk. In recent years, the bottled water industry has targeted children, teaming up with movie and television companies selling famous children’s characters now featured on their favorite bottled water.

There is a growing backlash against this form of enclosure of the water Commons. The bottled water industry is now understood to be one of the most polluting on earth as well as one of the least regulated. Plastic water bottles are made up of chemicals and fossil fuels that leach into groundwater and human bodies. Nearly one-quarter of all bottled water crosses national borders to reach consumers, using enormous amounts of energy to transport. One million bottles of exported bottled water cause the emission of 18.2 tons of carbon dioxide. Fewer than five percent of bottled water containers are recycled. Water extraction for bottled water is draining communities all over the world, from the Great Lakes of North America to the rural villages of India. In most places, bottled water corporations pay little or no extraction fees, openly profiting from the local water Commons, and favored by governments over the needs of local communities.

Funding expensive water recovery and purification technologies

Water commodification has left a legacy of corruption, sky-high water rates, cut-offs of water to millions of people, reduced water quality, nepotism, pollution, worker lay-offs and broken promises.

A more recent form of water Commons enclosure is the practice of relying on high technology solutions to the global water crisis instead of protecting the source waters of the water Commons. Far more attention is being paid (and billions of dollars annually invested) to cleaning up dirty water using expensive high water-reuse technology, than in stopping pollution and the destruction of the water Commons itself. The water industry’s technology sector is growing at twice the rate of its utility sector and already accounts for more than one-quarter of all revenues. Desalination is one of the key technologies being touted. Global demand is expected to grow by 25 percent every year for decades, with capital investments of at least $60 billion in the next decade. There are 30 plants planned for the coast of California alone. Due to the high-energy requirements of desalination, there are plans to build nuclear-powered desalination plants in several countries. Large investments are also going into water nanotechnology, where company scientists look to the sub-microscopic world of molecules to clean dirty water. As well, giant transnationals like GE, Siemens, Dow Chemical and ITT Corp. have invested billions in “toilet to tap” recycling and are now the water industry’s heavyweights.

There are very serious questions to be asked about this industry, not the least of which is who will own the water these large corporations clean. No doubt the companies think they own it and who is to say differently? All of the technologies themselves give rise to serious questions. Desalination technology is expensive, fossil fuel intensive and polluting. It releases a chemical/salt brine back into the ocean that kills aquatic life for miles and adds to the acidification of the world’s oceans. The move to run this technology by nuclear power adds a whole new dimension to the threat. Nanotechnology is completely unregulated, and warnings that it may hold dangers are unheeded by governments keen on a high-tech solution to the water crisis. Several key studies by independent groups and universities indicate that the smallness of the particles used in this technology may be a problem because they may break free and find their way into the skin, livers, lungs, kidneys and even the brain of people who consume it. And many studies show that even the most sophisticated filtration purification technologies are not removing all traces of toxic substances, hormones, antibiotics, chemotherapy medication, birth control and endocrine-disrupters from recycled water.

 

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updated November 6, 2008