June 21, 2002
Rio + 10 Series: How the Private Sector Can Help Solve Global Water Problems
by William Baue
Solving the world's water problems may depend on properly regulated water privatization and
corporate initiatives that introduce new technologies and reduce water consumption.
Last month, United Nations Secretary-General Kofi Annan introduced five focal concepts for the World Summit on Sustainable
Development, also known as the Johannesburg Summit or Rio + 10. The acronym WEHAB encompasses
the five key areas that need to be addressed at the summit: water and sanitation, energy, health,
agriculture, and biodiversity. In the upcoming weeks, SocialFunds.com will address each of these
five issues as they concern social investors.
Everyone recognizes that water is a
necessity of life. However, there has been a recent trend toward the privatization of water, which
shifts control over water access from the public to the corporate sector. This creates both
threats to water access and opportunities for better water quality. Private control of water
potentially threatens the basic human right of access to affordable potable water and wastewater
sanitation. On the other hand, privatization may create market incentives that encourage greater
efficiency in water delivery and wastewater sanitation methods.
In February, the Pacific Institute for Studies in Development,
Environment and Security, an Oakland-based independent, nonpartisan research organization,
released a report on
water privatization. Entitled The New Economy of Water: The Risks and Benefits of Globalization
and Privatization of Fresh Water, the report posits that water privatization can serve as both
a social and an economic good. However, the report also cautions that water privatization must be
closely monitored and regulated in order to create this dual benefit.
"There is little
doubt that the headlong rush to private markets has failed to address some of the most critical
issues and concerns about water," said Dr. Peter H. Gleick, director of the Pacific Institute and
lead author of the report. "Part of the problem is that there are few formal guidelines and, in
most cases, inadequate public oversight. How can we protect the world's poorest people? How can we
ensure that the environment gets a fair share? How can water quality be protected for future
generations? All of these questions must be answered before we move forward with more
The report points out that underdeveloped regions with weak governments
stand to benefit the most from privatization, but they also stand the greatest risk of inadequate
oversight. The report concludes with a series of suggestions for safeguarding public and
environmental interests in water privatization, such as creating market incentives for water
conservation. However, the report does not offer a clear solution for protecting developing regions
from corporate exploitation.
The Pacific Institute does not oppose privatization but does
call for cooperation between the public and private sectors. Indeed, the private sector is a key
contributor in resolving the challenge of providing adequate water supplies and wastewater
sanitation to a growing world population that is already straining global resources.
recognition of the role that business plays in providing clean water and safe waste disposal, the
World Business Council for Sustainable
Development (WBCSD) established the "Access to Water" Council Project. Among other initiatives,
the project published several reports that examine public-private partnership approaches to
resolving water problems. These case studies illustrate the challenges and successes of private
initiatives. One example the reports offer is the story of how Nestlé (ticker: NESZn) worked with
local communities in South Africa, the site of the Johannesburg Summit, to improve water
The WBCSD also collaborates with the Stockholm International Water Institute (SIWI) to present the
Stockholm Industry Water Award during World Water Week, which will convene in Stockholm two weeks
before the Johannesburg Summit. The award recognizes corporate development of water and wastewater
technologies that decrease a corporation's impact on the environment.
This year's award
will go to Norway-based Kaldnes Miljoteknologi AS for its Moving Bed Process, which treats water
and wastewater using a polyethylene biofilm that serves as a "home for bacterial cultures." The
technology enables smaller, more efficient treatment facilities that are flexible and easier to
build and upgrade. Kaldnes is a subsidiary of Anglian Water Group of Huntington, England, and
Kaldnes North America operates in Providence, Rhode Island.
Last year's award went to General Motors de Mexico Ramos Arizpe
Complex (GM), which increased production while simultaneously decreasing water consumption.
General Motors did this by reusing both industrial and sanitary wastewater in the production
process. Between 1986 and 2000, the plant increased annual production seven-fold while decreasing
annual well water withdrawal from 1,470,000 cubic meters per year to 700,000 cubic meters per year.