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| Sunday, 27 June 2004 |
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| News Business Features Editorial
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Who wants to privatise water? First lesson in elementary economics showed water as a "free good" because it was one of the few things whose availability exceeded need. However, with the rapid growth in population and urbanisation, the availability of fresh water for human use and agriculture has gradually become shorter than needs; consumption of water is doubling every 20 years. Consequently, in 2025, 2/3 of the world population will have no access to clean water. This new development has given an opportunity for the World Bank and the IMF and other international organisations to interfere with the domestic economic policies of the developing countries, by recommending to the governments to place a price for water. The present position of the water can be presented thus. Only less than one half of one percent of water on earth is available as fresh water. The rest is ocean, or frozen in ice caps. A billion of people lack access to safe drinking water. The world water industry is a $400 billion a year business. Ten corporate giants, of which two French Vivendi and Suez Lyonnaise, three British Thames Waters, Anglia Waters and United Utilities are behind the move to force developing countries to privatise water. The arguments in favour privatisation of water are: The private sector is more likely than the government to possess sufficient resources to invest and maintain the water infrastructure. The private sector has technical expertise and aptitude to efficiently run operations. Financial incentives are built into private sector contracts to encourage, improve performance and service. Increased investment in water systems would improve access and availability, particularly in rural areas. Consumer user fees encourage responsible usage of water which is a scarce good. Arguments against privatisation are: Water is an essential basic need, therefore the government should develop a system to ensure that everyone, regardless of financial circumstances has ready easy access. The private Sector may provide water on ability to pay rather than actual needs; therefore the poorest members of society may be deprived of adequate quantity of water. Poverty stricken rural areas may suffer as it may not be profitable and economically viable for the private sector to invest in water systems. Increase in the prices of basic water supply may cause social conflict and may force the poor to rely upon traditional, often polluted water sources. There is an increased risk of corruption due to the commercialisation source and operations. However the World Bank in March 1966 recommended privatisation of water and full cost pricing of water as a means of discouraging paddy farming Sri Lanka and a strategy of encouraging the shifting from low value domestic production to high value export crop production. Its recommendations covered land titling granting "free holder titles" to all small-holder farmers to encourage them to sell their land and move out of agriculture. These proposals are included in the poverty Reduction strategy. Based on these recommendations former UNF government introduced New National Water Resources Policy and a national Water Resource Act. . To encourage public-private sector partnerships in water supply projects in all urban areas, which would lead to pricing and marketing of water by big international water Companies mentioned earlier. . Issuing of water Entitlements by the National Water Resources Authority is a process gearing towards diverting water away from irrigation and agriculture to other uses such as urban supplies for industries of trans-national corporations. . Introduction of tradable water rights and transferable water entitlements as another device of getting farmers who have traditional water rights to sell away their water rights. . Poverty Reduction Strategy Paper clearly suggests full cost pricing of domestic water supplies to enable private water companies to charge commercial rates for water. A large number of infrastructural development projects have been identified for irrigation and water supply. Over $5,000 million were to be borrowed for these developments. Fortunately persistent protest by various pressure groups this proposed legislation was made to set aside by the Supreme Court, which was a land mark achievement in the journey towards development of an autonomous Sri Lanka. |
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