Report seconds World Bank plea to privatise water supply

If water is a gift from the gods, then the generosity of the deities is evaporating - mainly because the gift is being squandered.

This is the conclusion of a report released in Washington on Sunday, March 9, by the International Food Policy Research Institute, a member of the World Bank-led consultative group on international agricultural research.

''Since ancient times, people have regarded water as a gift from the gods,'' says Mark Rosegrant, the report's author. ''But in many areas now, water scarcity is emerging as the main obstacle to producing enough food to feed people.''

Water use rose by about 500 per cent in Europe, 300 per cent in Africa, and over 100 per cent in North and South America between 1950 and 1990, his report says.

Much of this water was wasted, much of what was left is polluted.

The remaining available water would be enough to meet growth in demand for the foreseeable future, says Rosegrant. The trouble is that ''supplies across countries are uneven,'' with the Americas having the greatest ''water wealth''.

''Governments, businesses, farmers, and consumers must treat water not as a free good, as they often do now, but as a scarce resource that comes at a price,'' he adds.

Just how to set that price, however, has been the subject of controversy in environmental and economic circles.

The World Bank has been pushing governments in the developing world to privatise the water supply. This fits in with the bank's reasoning that governments can raise cash and reduce expenditures by selling off public enterprises to private investors. In turn, the companies' new private owners will upgrade machinery and run it more efficiently than did the state.

Faith in these assumptions has been shaken in at least one country - Chile, held up by some at the bank as a model for water-supply privatisation. According to published reports, neighbourhoods served by a privatised water company have experienced prolonged drought because of chronic mechanical and management problems. Adjacent areas receiving public water reportedly have had no shortage.

Supporters of water privatisation also say that consumers are less likely to waste water if they must pay - or pay more - for what they use. The market, they say, will reveal water's 'real scarcity value'.

Rosegrant agrees. ''The single most important force behind water scarcity is poor water policies,'' including subsidies, he says. As a consequence ''Millions of gallons of water go down the drain unused each day.''

Irrigation water is essentially not priced in developing countries, where it soaks up 90 per cent of all water usage, and in cities, the price of water does not cover the cost of delivery, the report says.

In most cases, the disproportionate benefits of these subsidies are enjoyed by the better-off: urbanites with access to the public water system and rural farmers with access to irrigation. In contrast, poor consumers often must rely on water vendors and end up paying 20 times or more the amount paid by better-off consumers.

Some officials in the World Bank, however, question whether privatisation and consequent water price hikes are the solution. If the poor, who make up the majority, are paying a high price to begin with, it remains unclear what impact privatisation would have on them. Since industry and agriculture account for most usage, the problems of waste and pollution raise broader questions about industrial incentive schemes, enforcing environmental regulations and land rights, a point conceded in Rosegrant's report.

Food and environmental activists have long criticised the agricultural orthodoxy - including the bank - for promoting large-scale, export oriented farming. Subsistence and small commercial farmers who grew food for local consumption have been displaced and replaced by corporations raising flowers and other non-food export crops.

These farms achieve the 'economies of scale' they need to turn a profit by cultivating vast tracts of land, which are then irrigated by wasteful, mechanised means, these critics say.

Herein lies another problem. Keeping costs down on the farm - and therefore in importing countries' shops - will entail some amount of rationing as water is diverted to higher-paying industrial and domestic customers.

''The challenge will be to maintain crop productivity at the same time,'' Rosegrant says. ''Excessive transfers of water from agriculture would threaten food security. Water savings in agriculture must be accompanied by improved efficiency in urban and industrial water use.''

This will involve ''Tough political, institutional, and technical obstacles that must be overcome''. Rosegrant urges building of new dams to harness surface water and the ''sustainable exploitation'' of groundwater.

Critics say dams cost too much in financial, environmental, social, and human rights terms, but Rosegrant insists that alternatives such as rendering sea water fresh are too costly, while re-using waste water or capturing rain or floodwater will be practical in only a few places.

UNI