Reforming public water services

A beginner's guide
01 June 2009
Primer

Q and As on why reforming public water services is the best way to deliver clean water to all.

Contents

  1. Water is critical to life
  2. What is public water service provision?
  3. Why not privatise water?
  4. Water is a human and ecological right
  5. Why is public water management often better for delivering water for all? 
  6. Why does public water need to be reformed?
  7. What is good and progressive water management?
  8. Give me an example of progressive water management
  9. What is TNI doing on Public Water?
  10. What are Public Public Partnerships (PUPs)?
  11. So is reform of public services enough?
  12. So in the end we are talking not just about water, but democracy
  13. Where can I get more information?
 

Water is critical to life

According to the World Health Organisation, 884 million people in the world do not have access to safe water. This is roughly one eighth of the world's population. Meanwhile 2.5 billion people do not have access to adequate sanitation. The lack of access to water is a breach of human rights and has catastrophic consequences with an estimated 1.4 million children dying every year from diarrhoea caused by unclean water and poor sanitation.

The international community recognised the importance of water when it pledged through the Millennium Development Goals to reduce by half the proportion of people without access to safe drinking water and basic sanitation.

 

What is public water service provision?

90% of water and sanitation services are currently in the public sector. Public water provision means that water and sanitation services are run without profit, owned by a public or communal authority, based on the ethos of providing a common good considered to be of public interest.Public water and sanitation services are owned by the state and/or local authorities, or also by collectives or cooperatives.

During the 1990s, there was growing support by donor governments and international financial institutions such as the World Bank to privatise water and sanitation services – either through involving private sector in different areas of service delivery or through leasing and contracting out entire provision of water services.

 

So why not privatise water? 

The promise of privatisation was that it would deliver much needed investments in infrastructure, be more efficient, improve quality, and reduce costs.

The evidence however shows that it failed to deliver on any of these promises. Even PPIAF, the World Bank agency which has actively promoted privatisation for over a decade, could not find any evidence of lower prices or higher investment, saying: “the private operator may reap all the gains through profits, passing on none of the cost savings to consumers”.

Not surprisingly, opinion polls show that large numbers of people believe water should not be privatised. When new privatisation plans are revealed, political parties, social movements and trade unions are often able to rapidly build strong (and frequently successful) resistance to these attempts.

This public and political opposition to water privatisation is so widespread that the city of Paris itself, in the homeland of the water multinationals, is re-municipalising its water service from January 2010.

 

Water is a human and ecological right

As well as the practical evidence that privatisation hasn’t delivered, there is also a very important philosophical reason for keeping water in public hands. Water is unlike any other resource, because it is essential to life and the health of the ecosystems in which we live. It is therefore imperative that it is not treated as another commodity that is only available to those who can afford to pay – a process that is an inevitable part of privatisation.

Many activists in the South, especially indigenous communities, believe that water is also a sacred resource that can not be “owned” – let alone sold by corporations.

The struggle to have water recognised as a human right has been taken to both the United Nations and the corporate-dominated World Water Forum. In 2009, over 25 countries declared that “access to water and sanitation is a human right” and committed themselves “to all necessary actions for the progressive implementation of this right.” National constitutions in Uruguay, Ecuador, and Bolivia now enshrine water as a human right and bar it from being sold into private hands.

 

Why is public water management often better for delivering water for all?

  1. Public water companies can set policies that favour extending access to those who can least afford to pay. In Porto Alegre in Brazil, richer users pay more for the water they consume, allowing them to subsidise poorer users. In Phnom Penh, Cambodia, there is a policy not to disconnect any user, especially those from the poorest communities.

  2. Profits go back into the utility rather than into the hands of shareholders. In Uganda, the reformed public utility has boosted service coverage from 48 per cent in 1998 to 70 per cent in 2006. In these eight years, the utility has gone from producing a loss to tripling its turnover and producing a surplus which is used to finance network expansion and maintenance programmes.

  3. A “public” ethos can lead to greater transparency and accountability. The utility workers in the reformed public utility in Tamil Nadu, India have shifted from thinking of themselves as purely engineers concerned with infrastructure, pipes and taps, to thinking about the people using the system - their needs and demands.

  4. Public utilities can access cheaper financing than private firms. Even low income developing country governments can access finance at favourable terms from development banks (eg, by borrowing money from the World Bank), meaning better value-for-money for tax-payers and water bill-payers.


Why does public water need to be reformed?

Being public does not of course automatically mean that a company is doing a good job. Poor services by cumbersome public authorities, corruption and high rates of water loss are also found in public companies.

Decades of neoliberal restructuring and failure to support the public sector, have left too many public water operators lacking the institutional strength, the human resources, the technical expertise and equipment, or the financial or managerial capacity to provide accountable, honest public institutions that are necessary to reach a universal service.

The fact that we are still so far from achieving universal access to clean water and sanitation shows that public water authorities, in their current state, are not working well enough.

Yet there are public water companies doing a great job and modelling the best forms of public management. As Ryutaro Hashimoto, former Japanese Prime Minister, notes: “Public water services currently provide more than 90 per cent of water supply in the world. Modest improvement in public water operators will have immense impact on global provision of services."

We need to find out the best practices by public water companies and share and embed those in public water management worldwide.

 

What is good and progressive water management?

There is no exemplary model of “good” or “progressive” public water management, as the quantity and quality of water, needs for water, and even different cultures of water vary worldwide. However the following elements have emerged as important:

  • Good quality – for consumers and also for fragile ecosystems
  • Universal service – equal access for all and no disconnections for private households
  • Effectiveness in meeting peoples’ needs – assessed through participatory democratic processes.
  • Social – access must not be dependent on social status, with tariffs adjusted for individual’s financial circumstances
  • Solidarity – public water companies should look to build up capacity of water and sewage services in other regions
  • Sustainability – protection of a natural water cycle ie using water only in responsible quantities, no pollution and giving back to the water cycle at a high quality
  • Good working conditions for employees, who should also be fully integrated into public discussions on the development of their services.
  • Democratic structures and control - allowing full public participation in decision-making beyond the formal but often indirect mechanisms of representative democracy.
  • Progressive legislation - needs to give financial and legal backing to revitalised public water companies


Give me an example of progressive water management

The most well-known example of participatory water management is probably the public water company, DMAE, of Porto Alegre in Southern Brazil.

DMAE allows a far-reaching level of public participation and democratic control over its operations and investments. Not only does a council of local civil society representatives control the daily work of the company, DMAE’s operations and investment decisions are subject to a participatory budget process.

This participatory model is one of the reasons that poor communities in Porto Alegre have gained access to clean water: their needs are prioritised because they participate directly in deciding about new projects. Some 99.5% of the residents of Porto Alegre have access to clean water, far more than anywhere else in Brazil.

DMAE’s water price is one of the lowest in Brazil, but at the same time environmental information campaigns and the progressive price structure has made overall consumption go down.

 

And what about elsewhere?

  Since 2001, water in the French alpine town Grenoble has been managed by a public company. Before that, for a period of 12 years, management was delegated to a private company, in a decision marked by corruption. After a change of majority in the city council, a strong campaign by a local water movement and a series of lawsuits the city finally decided to take its water back in own hands.

The remunicipalisation led to a stabilisation of water prices and to a significant increase in investment. In the new company, along with six representatives elected by the city council, five experts from civil society are members of the board, appointed by the city council. Access to relevant information by users and the general public has improved substantially as there are regular consultations with a new users committee and documents on management are now published.

The remunicipalisation in Grenoble has set an example for restructuring a company to work not for profit but in the interests of and under the control of the people. There are many more examples listed in TNI’s “Reclaiming Public Water” book.

What is TNI doing on Public Water?

TNI’s Water Justice Project functions as the facilitating hub of the Reclaiming Public Water network, a growing international network of civil society activists, trade unionists, academics as well as water utility managers and engineers working together to promote people-centred democratic public management as the way to make the human right to water a practical reality for everyone.

A central feature of the RPW network is practical solidarity work and support for local civil society campaigns. The Water Justice project created a book “Reclaiming Public Water” (translated into 13 languages) as a catalogue of diverse cases of successful public water systems from around the world. It has an online resource centre www.waterjustice.org and is active lobbying and campaigning for greater recognition and financing for public water management reform.

It also has a growing focus on advocating and facilitating public-public partnerships (PUPs).

 

What are Public Public Partnerships (PUPs)?

PUPs, also known as “twinnings”, draw on the expertise of the public sector itself and are cost-effective, practical and low-risk means to support weak public, cooperative or community-run operators.

They improve the capacity and effectiveness of one partner in providing water or sanitation services – focused on areas such as training and developing human resources, technical support, improving efficiency and building institutional capacity, financing water services, and participation.

PUPs are collaborations between two or more public authorities or community organisations, nationally and internationally. They are based on solidarity. No commercial profit is involved, neither directly nor indirectly.

There are now over 130 PUPs in around 70 countries. One example is the PUP that has developed between the Peruvian public water utility in Huancayo and ABSA (Aguas Bonaerenses S.A), a union-owned and run public water operator in the state of Buenos Aires, Argentina. Together they have a serious and workable plan for utility reform and improvement that aims to reduce costs, increase maintenance and investment, to orientate service delivery to the needs of the population, and institutional reform to democratise the utility and make it accountable to the public.

Since 2006, PUPs have received some backing from the UN’s Water Operator Partnerships (WOPs) initiative. However the UN’s inclusion of private water firms in partnerships has raised fears that private companies will treat WOPs as another marketing opportunity for profit-seeking, not development.

 

So is reform of public services enough?

No, although it is a crucial factor. In the struggles to realise water access for all, it has become clear that there is a need for an enabling environment to make public water succeed. This includes progressive water legislation and more public finance to expand water and sewage infrastructure in both the South and the North.

 

So in the end we are talking not just about water, but democracy

Integral to the fight for water is another fight, equally fundamental, for a new model of citizen power and a new accountability from the state. Oscar Olivera, a spokesperson for the popular movements that throw Bechtel Corporation out of Bolivia in 2000, is fond of saying that, “Behind the fight for water is the struggle for democracy.”

Moreover it is about deepening the definition of democracy from one of periodic elections of officials to active and ongoing involvement in decision-making on resources that are critical to life and the planet. As Saúl Atanacio Roqué Morales, an elder statesman for control of indigenous water from Mexico, reminds us, “the nation is us, the people.”

 

Where can I get more information?