Water Services

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How the false promises of water privatization harm the poor in the United States and in South Africa

Blue Gold Rush

Water privatization imperils low-income communities in the United States

When most people think of families without water, they picture people in impoverished countries in Africa or Latin America. But right here in the United States, dozens of communities are struggling for access to clean, affordable water. In 2001, the city of Detroit introduced an aggressive debt collection plan that threatened to suspend water services if residents could not pay the quarterly charges. Within a year after the plan was introduced, more than 40,000 residents of Detroit had their water cut off. Today, many of these families—mostly low-income and black—are still without water, relying on the kindness of neighbors willing to share their hoses.

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 Also in 2001, the city council in Laredo, Texas, hired a private water company to run their water system. United Water, a subsidiary of the French multinational corporation, Suez, promised the city that under the five-year contract, the company would save money, expand services and improve efficiency.  But their services have not been extended to the informal settlements on the edge of town—known as colonias—where Rosalia Guerrero works with a community development agency called Centro Aztlán. “There is no running water or paved road in these communities,” says Guerrero. “The nearest spigot is seven to ten miles away. The county has been promising us water for over ten years, but the end of the year always comes and there’s no water.”   In response, Guerrero and her neighbors organized a water cooperative that delivers 300 gallons of water trucked in from prepaid meters to 125 families each week. That’s approximately the same amount of water the average American family uses every day.

The struggle for clean and accessible water in these communities illustrates the growing economic value of water in today’s economy. Sometimes referred to as “blue gold,” water will likely define the next century in many of the same ways that oil, and the conflicts over it, have defined recent times.  Corporations, teamed up with pro-privatization government officials, are already making plans to bottle, export, deplete, pollute and otherwise consolidate control over this essential resource. 

In contrast, the environmental justice movement has been working for decades to ensure that local and state governments provide universal access to clean, affordable water while also addressing historic inequities in service, water quality and access that often afflict poor communities. Now many of these communities are faced with the threat of privatization, making the struggle for accountability and affordability even more difficult.

Global Water Barons
Historically, cities created municipal water and sewage utilities to prevent the spread of communicable diseases such as cholera. After more than a century of massive public investment, approximately 85 percent of the people in the United States receive their water from a publicly owned water utility. However, as old water infrastructure crumbles and the federal government cuts funding, cash-strapped local governments are turning to private companies to remedy their water problems. 

Masquerading as knights in shining armor coming to solve cities’ water woes, the same multinational corporations that have taken over the management of public water services around the world are now targeting the lucrative U.S. “market”—one of the world’s largest with potential annual revenues estimated at $90 billion. Three giant European-based multinationals—Suez, Veolia (formerly Vivendi), and RWE Thames Water—currently monopolize the private water sector. In the United States, Vivendi now owns USFilter; Suez operates through its subsidiary United Water; and RWE Thames bought up American Water Works, the largest investor-owned water company in the United States.

Private companies often promise to increase access and improve service to impoverished communities. But the real-life experience of privatization is often disastrous for consumers and adds new hurdles for low-income families. According to research conducted by Public Citizen and other public interest organizations, privatization often leads to a weakening of democratic institutions and increased corruption; layoffs of public sector jobs; higher rates and cutoffs; and lower water quality standards.

Municipalities that hoped to save money are finding that privatization can be a costly experiment that drains money out of the community and can leave cities heavily in debt. Suez’s first major contract in the United States was recently terminated by the city of Atlanta after the company fired half the workers, created a backlog of service and debt collection problems, and billed the city for work it didn’t perform. In 2002, Suez delivered brown water to residents, forcing the state Environmental Protection Agency to issue boiled-water alerts. Atlanta officials estimate that the cost of transitioning the water system back to public control will top $10 million.

The Price of Privatization
A number of cities, including New Orleans, Detroit, Indianapolis, and Stockton and Richmond, California, have also contracted the management of their water and/or sewage utilities to private corporations; many more cities are flirting with the idea. However, municipal governments should not be duped into thinking the only way to save money is through privatization, because private companies incur a number of costs that cities don’t, including shareholder dividends, high executive pay and corporate taxes.

Furthermore, corporations that exist to make a profit are less likely to consider the needs of low-income communities. In Detroit, the “debt collection” program was the idea of Victor Mercado, the new director of the Detroit Water and Sewerage Department (DWSD). Mercado, who worked for two private water companies (British-based Thames Water, and United Water) before heading up DWSD, has a hard-line, pro-business approach. He runs the DWSD like a profit-making corporation, cutting costs by eliminating services to the poor, and even going so far as to cement areas around the valves to prevent desperate residents from turning the water back on. In 2003, Detroit water rates rose 9 percent and they are scheduled to increase 16.9 percent this year. Some residents suspect that after years of starving city services, Mercado is setting up Detroit for privatization.

“When you have 40,752 people with no water and over 100,000 with no health care, you have a human rights crisis of epic proportions,” said Maureen Taylor, director of the Michigan Welfare Rights Organization, a group that is mobilizing against privatization. “But because it is affecting low-income and poor people, most folks can simply choose to ignore it.” 

Ironically, in November 2002, the same month that DWSD decided to cement shut the water valves, the United Nations Committee on Economic, Social and Cultural Rights adopted a new amendment on water, stating that: "The human right to drinking water is fundamental for life and health. Sufficient and safe drinking water is a precondition for the realization of all human rights." The debt collection policies of DWSD defied even United Nations’ standards.

Water Justice
The solutions to the world’s water scarcity crisis are multiple. They include expanding public and community controlled water utilities; repairing dilapidated water systems through public funding; saving water by installing drip irrigation systems; enhancing water reclamation and conservation programs by installing low-flow toilets and showers; and improving watershed management, to name a few. But the push for increased corporate control of the global water commons undermines these community-based, commonsense solutions. 

If the threat of privatization to low-income communities of color is to be stopped, people of color in particular need to be included in water governance decisions. A recent study of water issues facing Latinos in California found “a chronic and pervasive lack of representation of Latinos and other people of color at every level of water policy planning and decision making.” The report, written by Paola Ramos of the Latino Issues Forum, concluded that “[i]t is important for the regional water quality control boards, local water agencies and other bodies to be representative of the populations they serve, in order to understand constituents’ needs and be better prepared to respond to their concerns.”

To fight privatization, grassroots water justice activists are also reaching out across borders to learn from communities in the global South that have been battling privatization for years. Participants in the People’s World Water Forum, held in January 2004, called for solidarity in the fight against privatization by Suez and Coca-Cola’s bottled water operations (see www.wateractivist.org for more information).

In the United States, Public Citizen, Michigan Welfare Rights Organization, Centro Aztlán, the Alliance for Democracy, the Indigenous Environmental Network, and other organizations committed to environmental justice have created the Water Allies Network. To find out about their activities, help build a movement to safeguard our water heritage, and spawn a new legacy of responsible, ecologically and socially sustainable stewardship of our precious watersheds, go to www.waterallies.org. The network is also sponsoring many events at the Boston Social Forum (July 23-25), a regional forum within the World Social Forum process and a first in North America. Join with them in repeating the call, “Water for Life, Not for Profit!” 

Juliette Beck is the California coordinator of Public Citizen’s Water for All campaign, based in Oakland (www.wateractivist.org).

Article Sources

Currents newsletter, Public Citizen's Water for All Campaign, January, 2003, www.citizen.org/cmep/ Water/new/currents/articles.cfm?ID=8850.

Rosalia Guerrero, personal interview, March 23, 2004.

Maude Barlow and Tony Clarke, Blue Gold: the Fight to Stop the Theft of the World’s Water, April, 2003.

Maude Barlow, Blue Gold: The Global Water Crisis and the Commodification of the World’s Water Supply, a special report issued by the International Forum on Globalization, Spring 2001.

Water Privatization: A Broken Promise, Public Citizen’s Critical Mass Energy and Environment Program, October, 2001, Washington, D.C.

Maureen Taylor, personal interview, March 23, 2004.

Paola Ramos, Promoting Quality, Equity, and Latino Leadership in California Water Policy, Latino Issues Forum, June, 2003.


Running Dry

South Africa’s water policy results in cutoffs, evictions and disease

In 1955, the African National Congress (ANC) adopted the Freedom Charter as a popular expression of the desires of the majority of South Africans. One of the most important clauses in the Charter—which the present-day ANC government still claims as their guiding manifesto—states that “the national wealth of our country, the heritage of all South Africans, shall be restored to the people.”

When the vast majority of South Africans, made up of the poor and working class, gave political victory to the ANC in 1994, they were also giving the new government the power to fulfill the Charter and ensure that natural resources like water would be accessible to all citizens, irrespective of race or class. Despite this popular mandate, the ANC unilaterally decided to pursue a water policy that has produced the opposite result.

In 1996, the ANC adopted the “Growth, Employment and Redistribution Programme” (GEAR), the government’s macro-economic policy framework. GEAR effectively turned water—a resource essential to all life—into a market commodity to be bought and sold for profit. Since then, South Africans have witnessed the gradual commercialization and privatization of water, a development that has increasingly been met with mass, organized resistance.

Cutoffs and Cholera
The privatization of water in South Africa began in earnest when the ANC—under pressure by multinational water companies and the World Bank—halted subsidies and other financial support to local governing councils. Previously, governing councils had received the vast majority of their revenue from the central government. When the ANC took over in 1994, their challenge was to redistribute these subsidies to benefit the black majority. Suspension of the subsidies, however, forced the councils, with Johannesburg at the forefront, to turn toward commercialization and privatization of basic services to generate the revenue that was no longer provided by the state.

The immediate result was massive increases in the price of water that hit poor communities hardest. The price increases were exacerbated by the government’s goal to “recover” additional costs associated with the World Bank-funded Lesotho Highlands Water Project, which included dams built to provide water to the Greater Johannesburg area. The first price hike instituted by the newly privatized water service in Johannesburg was an astronomical 55 percent. 

Following the World Bank’s advice to introduce a "credible threat of cutting service," the Johannesburg council began cutting water supplies to tens of thousands of people who couldn't afford the increased prices. The “full cost recovery” model—including an International Monetary Fund-promoted legal process to recover debt from “customers”—has also resulted in the forced evictions of tens of thousands of poor people across South Africa. In Johannesburg alone, nearly 100,000 people suffered from water and electricity cutoffs during the first half of 2002. Nationally, the privatization program has imposed water cutoffs on more than 10 million South Africans as well as evictions on more than 2 million. Both the urban and rural poor have suffered tremendously as a result.

In addition to the cutoffs and evictions, privatization has triggered several outbreaks of cholera. Not long after Suez, a French multinational corporation, took over Johannesburg’s water supply in 2001, a cholera outbreak sickened thousands of poor families who had resorted to drinking from polluted streams in the Johannesburg township of Alexandra. The same year, more than 200 people from the province of Kwa-Zulu Natal died of cholera. The epidemic was brought under control only after community mobilization forced the national government to step in. 

Despite these problems, the latest weapon in the arsenal of water privatizers has been the widespread introduction of pre-paid water meters, devices that are installed on an individual’s property. To access water, residents must buy tokens, of varying values, to insert in the meters. The amount of water they get depends on the value of the token inserted. As soon as the value is spent, the meter automatically shuts off. Most recently, the privatized Johannesburg Water Company embarked on the installation of pre-paid water meters in the sprawling settlement of Orange Farm (south of Johannesburg), as well as in the Phiri section of Soweto.

Water as a Human Right
In response to these water privatization measures, poor communities in Johannesburg, Durban, Cape Town and other smaller towns and peri-urban areas across South Africa have responded with active resistance. One of the new social movements that has emerged is the Anti-Privatisation Forum (APF), an umbrella organization for grassroots community groups in the Gauteng Province, which includes Johannesburg and Pretoria. Formed in 2000, the APF’s guiding principle has been that basic needs, such as water, are fundamental human rights, not privileges to be enjoyed only by those who can afford them.

With the assistance of the APF and other progressive organizations, township residents have launched a campaign called Operation Vulamanzi (Water for All). The campaign has helped residents defy certain privatized water “control” measures, such as trickler systems, or devices that severely limit the amount of water flowing from a tap, and rerouted piping. Residents bypass these controls by tampering with the trickler systems or by laying pipes to access water from central mains. Led by the APF, residents in Orange Farm and Phiri communities have destroyed the pre-paid meters.

Yet, ANC politicians and government bureaucrats have publicly labeled community residents who resist privatization as “criminals” and “anarchists” trying to institutionalize a “culture of non-payment.” These attacks have been accompanied by a large-scale crackdown on dissent. Over the last three years, hundreds of activists and community members have been arrested and imprisoned. While repression has not prevented continued resistance in poor communities, the resistance has also not stopped the ANC government, along with the privatized water entities, from continuing their onslaught.

While anti-privatization struggles have not yet succeeded in reversing the privatization process, popular pressure forced the ANC to announce, in late 2002, a partial free water policy plan. However, the plan to allocate 6,000 liters of free water per household, per month, comes nowhere close to meeting even the basic sanitation requirements of the average poor household in South Africa. The World Health Organization has set a minimum standard of 100 liters of water per person, per day. That means that for the average South African household (black urban or rural), which includes eight people, the minimum would be at least 24,000 liters per month. 

For these reason, the APF continues to intensify the campaign against privatization in all its forms. Through the APF and other groups, the poor majority in South Africa has once again moved to the forefront of the struggle to reclaim basic human rights and dignity. Water is life and life can never be a privilege. 

Dale T. McKinley is media/information officer and spokesperson for the Anti-Privatisation Forum in South Africa.