Privatizing Water for Profit and Population Control

Reuters
August 5, 2009

French water distribution firm Lyonnaise des Eaux, a unit of GDF Suez, won permission from the European Commission on Wednesday to acquire six firms active in water collection, treatment and supply in France.

Lyonnaise des Eaux (LDE) is to buy shares held by Veolia Eau-Compagnie Générale des Eaux (Veolia Eau) in six subsidiaries owned jointly with Veolia Eau.

The executive arm of the 27-nation European Union said in a statement that its investigation had revealed the proposed deal would not harm competition in the markets concerned.

LDE and Veolia Eau have decided to sell each other their holdings in nine joint subsidiaries which they control together. At the end of the proposed operation, LDE will take sole control of six of these companies, the Commission said.

The transaction would not raise competition concerns given the limited market shares of the companies to be acquired, the Commission said.

Could the EPA Be Building a Case for Strict Regulations on Private Wells?

Associated Press
September 24, 2009

CUTLER, Calif. – Over the last decade, the drinking water at thousands of schools across the country has been found to contain unsafe levels of lead, pesticides and dozens of other toxins.

An Associated Press investigation found that contaminants have surfaced at public and private schools in all 50 states — in small towns and inner cities alike.

But the problem has gone largely unmonitored by the federal government, even as the number of water safety violations has multiplied.

"It's an outrage," said Marc Edwards, an engineer at Virginia Tech who has been honored for his work on water quality. "If a landlord doesn't tell a tenant about lead paint in an apartment, he can go to jail. But we have no system to make people follow the rules to keep school children safe?"

The contamination is most apparent at schools with wells, which represent 8 to 11 percent of the nation's schools. Roughly one of every five schools with its own water supply violated the Safe Drinking Water Act in the past decade, according to data from the Environmental Protection Agency analyzed by the AP.

In California's farm belt, wells at some schools are so tainted with pesticides that students have taken to stuffing their backpacks with bottled water for fear of getting sick from the drinking fountain.

Experts and children's advocates complain that responsibility for drinking water is spread among too many local, state and federal agencies, and that risks are going unreported. Finding a solution, they say, would require a costly new national strategy for monitoring water in schools.

Schools with unsafe water represent only a small percentage of the nation's 132,500 schools. And the EPA says the number of violations spiked over the last decade largely because the government has gradually adopted stricter standards for contaminants such as arsenic and some disinfectants.

Many of the same toxins could also be found in water at homes, offices and businesses. But the contaminants are especially dangerous to children, who drink more water per pound than adults and are more vulnerable to the effects of many hazardous substances.

"There's a different risk for kids," said Cynthia Dougherty, head of the EPA's Office of Groundwater and Drinking Water.

Still, the EPA does not have the authority to require testing for all schools and can only provide guidance on environmental practices.

In recent years, students at a Minnesota elementary school fell ill after drinking tainted water. A young girl in Seattle got sick, too.

The AP analyzed a database showing federal drinking water violations from 1998 to 2008 in schools with their own water supplies. The findings:

• Water in about 100 school districts and 2,250 schools breached federal safety standards.

• Those schools and districts racked up more than 5,550 separate violations. In 2008, the EPA recorded 577 violations, up from 59 in 1998 — an increase that officials attribute mainly to tougher rules.

• California, which has the most schools of any state, also recorded the most violations with 612, followed by Ohio (451), Maine (417), Connecticut (318) and Indiana (289).

• Nearly half the violators in California were repeat offenders. One elementary school in Tulare County, in the farm country of the Central Valley, broke safe-water laws 20 times.

• The most frequently cited contaminant was coliform bacteria, followed by lead and copper, arsenic and nitrates.

The AP analysis has "clearly identified the tip of an iceberg," said Gina Solomon, a San Francisco physician who serves on an EPA drinking water advisory board. "This tells me there is a widespread problem that needs to be fixed because there are ongoing water quality problems in small and large utilities, as well."

Schools with wells are required to test their water and report any problems to the state, which is supposed to send all violations to the federal government.

But EPA officials acknowledge the agency's database of violations is plagued with errors and omissions. And the agency does not specifically monitor incoming state data on school water quality.

Critics say those practices prevent the government from reliably identifying the worst offenders — and carrying out enforcement.

Scientists say the testing requirements fail to detect dangerous toxins such as lead, which can wreak havoc on major organs and may retard children's learning abilities.

"There is just no excuse for this. Period," said California Sen. Barbara Boxer, Democratic chairwoman of the Senate Committee on Environment and Public Works. "We want to make sure that we fix this problem in a way that it will never happen again, and we can ensure parents that their children will be safe."

The problem goes beyond schools that use wells. Schools that draw water from public utilities showed contamination, too, especially older buildings where lead can concentrate at higher levels than in most homes.

In schools with lead-soldered pipes, the metal sometimes flakes off into drinking water. Lead levels can also build up as water sits stagnant over weekends and holidays.

Schools that get water from local utilities are not required to test for toxins because the EPA already regulates water providers. That means there is no way to ensure detection of contaminants caused by schools' own plumbing.

But voluntary tests in Washington, Baltimore, Philadelphia, Seattle and Los Angeles have found dangerous levels of lead in recent years. And experts warn the real risk to schoolchildren is going unreported.

"I really suspect the level of exposure to lead and other metals at schools is underestimated," said Michael Schock, a corrosion expert with the EPA in Cincinnati. "You just don't know what is going on in the places you don't sample."

Since 2004, the agency has been asking states to increase lead monitoring. As of 2006, a survey by the Centers for Disease Control and Prevention found nearly half of all schools nationwide do not test their water for lead.

Because contaminant levels in water can vary from drinking fountain to drinking fountain, and different children drink different amounts of water, epidemiologists often have trouble measuring the potential threats to children's health.

But children have suffered health problems attributed to school water:

• In 2001, 28 children at a Worthington, Minn., elementary school experienced severe stomach aches and nausea after drinking water tainted with lead and copper, the result of a poorly installed treatment system.

• In Seattle several years ago, a 6-year-old girl suffered stomach aches and became disoriented and easily exhausted. The girl's mother asked her daughter's school to test its water, and also tested a strand of her daughter's hair. Tests showed high levels of copper and lead, which figured into state health officials' decision to phase-in rules requiring schools to test their water for both contaminants.

Many school officials say buying bottled water is less expensive than fixing old pipes. Baltimore, for instance, has spent more than $2.5 million on bottled water over the last six years.

After wrestling with unsafe levels of arsenic for almost two years, administrators in Sterling, Ohio, southeast of Cincinnati, finally bought water coolers for elementary school students last fall. Now they plan to move students to a new building.

In California, the Department of Public Health has given out more than $4 million in recent years to help districts overhaul their water systems.

But school administrators in the farmworker town of Cutler cannot fix chronic water problems at Lovell High School because funding is frozen due to the state's budget crisis.

Signs posted above the kitchen sink warn students not to drink from the tap because the water is tainted with nitrates, a potential carcinogen, and DBCP, a pesticide scientists say may cause male sterility.

As gym class ended one morning, thirsty basketball players crowded around a five-gallon cooler, the only safe place to get a drink on campus.

"The teachers always remind us to go to the classroom and get a cup of water from the cooler," said sophomore Israel Aguila. "But the bathroom sinks still work, so sometimes you kind of forget you can't drink out of them."

Next Target Is Your Water Footprint

London Times
September 13, 2009

Environmentally conscious consumers already fret about how to cut their carbon emissions. Now Whitehall officials plan to urge the public to reduce the amount of water they use because of worries about the West sucking up supplies from some of the world’s driest countries.

The government has commissioned research to audit everyday items from a morning cup of coffee to a bag of carrots according to the volume of water used in their production. Eventually products could be labelled with this number.

The Department for Environment, Food and Rural Affairs (Defra), which has set up a water footprint steering group, wants to broaden public awareness of climate change to include water supplies.

Defra believes consumption could be cut if shoppers were aware of how much is used to produce common items. A takeaway latte, according to figures already gathered by officials, requires 200 litres (44 gallons) to grow the coffee beans, transport them and serve the coffee in the cup. It takes another 2.5 litres to make the plastic lid for a takeaway latte. A cotton T-shirt with a slogan on the front uses an estimated 4,000 litres.

The new research will assess items both for how much water they use and for the impact on the country where they are produced. This could mean, for example, that a product imported from a dry country would be rated worse than one from a place where water was plentiful...

Democratic vs. Corporate Control of Water: A Fight for Survival

Published By Public Citizen

Perhaps the greatest theft of common resources facing humanity and the planet today is the corporate takeover of the world’s water. Global capitalists argue that our water scarcity problems will be solved by turning water into an economic good – a commodity to be controlled by global corporations and sold to the highest bidder in international markets. Yet who really believes that corporations, whose very purpose is to increase profits for their shareholders, will improve water conservation, help get clean water to those in need, and provide a water secure future for all of us?

Every crisis provides an opportunity. The world’s fresh water crises may be the most critical area of concern for global justice advocates. The fight to protect the global commons – particularly the world’s precious freshwater sources – is a fight for planetary survival that takes its lead from communities in the Global South where the fight against privatization of water has already become a life or death struggle. The movement for direct democratic control of our most precious resource – water -- has the potential to unite the vast majority of people against the forces of corporate greed. It’s not too late to assume collective responsibility for our shared water heritage and spawn a new legacy of responsible, ecologically and socially sustainable, stewardship of our watersheds, but we must act now.

The World Is Running Out of Freshwater

Despite the seeming abundance of water on this planet, less than one half of one percent of the earth’s water is able to support human life. The rest is trapped in oceans and polar ice. A modern legacy of factory farming and flood irrigation, the building of mega-dams, toxic dumping, wetlands and forest destruction, and pollution and urban sprawl has rapidly depleted the world’s limited supply of fresh water. Already, over one billion people lack access to clean water and 2.5 billion people don’t have adequate sewage and sanitation services. Consequently, over 2,112,000 people – mostly children – die annually from diseases such as diarrhea and cholera.

To add to the threats facing the planet’s lifeblood, while the world’s population increases yearly by 85 million new people, per capita water use is doubling every twenty years. This insatiable thirst is being driven mainly by modern industrial farming and manufacturing, which consume respectively 65% and 25% of water used by humans. But humanity is paying the price for the exploitation of this essential resource. By 2020, two-thirds of the world’s population is expected to lack access to clean water if the current development continues.

Conflicts over scarce water supplies threaten to destabilize entire regions and are likely to define the next century in much the same ways that conflict over oil have in recent times. Hotspots where water reserves are dwindling include the Middle East, Northern China, Mexico, California and almost two dozen countries in Africa. Israel, for example, is threatening to re-ignite war against Lebanon if the Lebanese government carries out its plans to tap a tributary of the Jordan River, which is a major source of Israel’s scarce water.

Similar border disputes between the U.S. and Mexico over the Colorado and Rio Grande rivers, which are so over-tapped that they no longer empty into the sea for weeks at a time, may soon escalate as well. In the free trade zones along the US-Mexico border, water is a precious commodity, delivered weekly to many communities by truck or cart. Clean water is so scarce that children are forced to drink expensive soft drinks or bottled water to avoid serious health risks. For the first time in history, more people now live in cities than in rural areas, so the demand for drinking water in urban centers threatens to tap water supplies traditionally earmarked for agriculture, creating a food security crisis.

Profiting from Planetary Misery

Transnational corporations see this water scarcity crisis as a huge profit-making opportunity. If corporations control the limited supplies of an element that no one can do without, they stand to gain untold fortunes. Water is the new oil. In 2001 the water services industry, dominated by just a handful of corporations, made close to a trillion dollars in profits, which is substantially more than the pharmaceutical sector and almost 40% of the oil industry’s revenues. "Water is the last infrastructure frontier for private investors," says Johan Bastin of the European Bank for Reconstruction and Development. Selling water to the highest bidder will only exacerbate the worst impacts of the world water crisis.

Throughout history, societies have viewed water as a sacred, common heritage to be protected and shared. In fact, only 5% of the world’s water is now privately controlled. Because of its vital nature, the United Nations Declaration of Human Rights recognizes access to water as a basic right of all people. The World Health Organization has identified clean water as the single most important factor in determining public health. For centuries, governments have invested public resources in constructing water and sanitation infrastructure in order to deliver safe and clean drinking water. Outbreaks of water born diseases such as typhoid and cholera were nearly eliminated from the Americas after public water utilities were developed in urban centers.

In the United States, for example, 85% of the population receives water from taxpayer-subsidized, publicly owned and operated utilities. Unfortunately, after decades of neglect and mismanagement, the Environmental Protection Agency estimated, in the late 1990's, at that time it would cost approximately $375 billion to repair and upgrade decaying water and sewage infrastructure over the next 20 years.

Corporations and investors are ramping up a concerted, multi-pronged effort aimed at forcing governments to privatize public services and to commodify water in the global commons. Already, much of England and France have privatized water systems. The result has been rate increases, deteriorating service, loss of local control and increased corruption. Since water services were privatized in France, customer fees have increased by as much as 150%. A number of public officials have been convicted of accepting bribes from companies bidding on public service contracts and sentenced to time in prison.

Private corporations seek to increase profit margins by cutting costs; hence lay-offs and inferior services almost always accompany privatization. In England, private companies fired nearly 25% of the work force, approximately 100,000 workers, when they acquired rights to the water system. Delays in service and accidents routinely follow the firing of often the more experienced personnel. Since 1999, Thames Water, the largest water and wastewater company in England, has been convicted of environmental and public health violations two dozen times and fined roughly $700,000 after allowing raw sewage to flow into open waterways, over streets, onto people’s lawns and over children’s toys—even into people’s homes.

The same multinational corporations aggressively taking over the management of public water services around the world are now vying for the lucrative U.S. market, one of the world’s largest with annual revenues estimated at $90 billion. A change to the U.S. tax code in 1997 opened the way to greater private sector involvement in the U.S. water delivery and treatment business. Companies are now able to bid on 20-year contracts that include the operation, design of new plants or upgrades, maintenance and even complete transfer of ownership of water systems to the private sector.

Until now, mainly small public utility operators have controlled the U.S. water industry. In rural areas, small, privately owned utilities were common, but multinational corporations are rapidly buying even these out. These companies have weaseled into venues like the U.S. Conference of Mayors where they peddle privatization as a simple, cost-saving solution to cities’ aging infrastructures and regulatory compliance headaches.

On a global scale, water privatization is being pushed by the World Bank and International Monetary Fund in dozens of financially-strapped countries, where global water conglomerates are dramatically raising the price of water beyond the reach of the poor and profiting from the Global South’s search for solutions to its water crises. Corporations, such as Vivendi, Suez, RWE and Bechtel, cherry pick the profitable urban water systems while letting shantytowns and rural areas fall by the wayside.

The World Bank has made privatization of urban water systems a condition for receiving new loans and debt cancellation. In Ghana in 2001, the World Bank required urban water rates to be increased 95% to prepare for privatization by making the water system appear more lucrative for international bidders. Following these rate increases, a number of people were jailed for being unable to pay their water bills. Many people who live in urban slums without access to tap water pay even higher prices for water delivered by private tanker truck operators. The poor, particularly women or girls whose traditional duties include collecting water, and babies suffer considerable hardship, illness and even death when they are forced to consume unsafe water after public supplies become too expensive.

Water for All, Not for Sale

All hope is certainly not lost. The fight to protect the world’s water from corporate control is well underway and rapidly gaining new ground. Powerful, vibrant social movements against water privatization have gained a number of key victories in countries including Bolivia, Argentina, Nicaragua, Ghana, South Africa and the United States.

In August 2002, the Nicaraguan National Assembly became the first parliament in the world to suspend private profit making in the use of water. Nicaragua has faced the privatization of its banks, telecommunications and electricity plants, but when the government, at the behest of the World Bank and the Inter-American Development Bank, began to push for the privatization of the major hydro-electric plants and the water utilities in the country, the people of Nicaragua drew the line in the sand. The Nicaraguan anti-privatization law sets an important precedent across the Americas.

In Cochabamba, Bolivia, thousands of workers, peasants, farmers, and students soundly rejected water privatization by ousting Bechtel in 2001 after the company raised water rates by up to 200% and began taking over local wells. This heroic battle was not without grave consequences, leaving one young man dead, and a number of wounded. Bechtel – a company that made $14 billion in profits in 2001, nearly double Bolivia’s entire GDP -- is now using an investment treaty to sue the Bolivian government for $25 million in estimated lost profits. The case is being heard not in a domestic court in Bolivia, but in the World Bank’s secretive International Court for Settlement of Investment Disputes based in Washington, DC. Hundreds of social and environmental justice groups and pro-democracy organizations have called on Bechtel to drop this egregious suit.

South Africa is at the heart of the international movement to demand access to clean and sufficient water as a fundamental human right. Coalitions such as Anti-Privatization Forum and Soweto Electricity Crises Committee are organizing against the illegal cutoffs of water and electricity in poor townships. South Africa is the only country to guarantee basic water rights to every person in their national constitution. Yet more than 10 million residents have had their water cut off since the government implemented a World Bank-supervised cost recovery program. More than 100,000 people in Kwazulu-Natal province became ill with cholera recently after water and sanitation services to local communities were cut off for nonpayment. Privatization has also involved the installation of pre-paid water meters – a technology that was legally outlawed in England.

The Real Solutions are Clear and Simple

The solutions to the world’s water scarcity crises are readily available: expand public and community controlled water utilities, repair dilapidated water systems, save water by installing drip irrigation systems rather than flooding, stop polluting existing supplies, increase water conservation, reclamation and watershed management just to name a few. None of this will happen if corporations are permitted to turn the global commons into profit playgrounds.

If we allow the commodification of the world’s fresh water supplies, we will lose the capacity to head off the impending water crises. We will be condoning the emergence of a water elite that will determine the world’s water future in its own interest. In such a scenario, water will go to those who can pay the most, not to those who need it. This is a scenario we cannot afford.

In the United States, organizations such as Public Citizen’s Water for All campaign are helping communities to fight the privatization of water services and corporate takeover of water supplies. They are also uniting the U.S. movements with other countries that are fighting against many of the same corporate actors to keep their water safe and protect water as a human right. This is a global movement that is just beginning to flex its power and develop new strategies to protect the global commons.

This movement shares the views that water is a common good and access to water is an inalienable human right. Water belongs to the Earth and all species and must not be treated as a private commodity to be bought, sold and traded for profit. Because the global water supply is a shared legacy, protecting it is a collective responsibility – not the responsibility of a few shareholders.

The Meaning of Privatization

Published By the State Environmental Resource Center

Overview of Privatization of Water Utilities in the U.S.

Historically, about half of U.S. water systems were privately owned. That number decreased after World War I due to the availability of government financing.

According to the National Association of Water Companies, the proportion of water services in the United States provided by private water companies, whether measured by customers served or volume of water handled, has remained close to 15 percent since World War II.

In 1995, private- or investor-owned water supply utilities accounted for about 14 percent of total water revenues and for about 11 percent of total water system assets in the United States.

While municipal water in the United States has been traditionally viewed as a public resource, private management and ownership are on the upswing, particularly by international companies. The market is now estimated at $2.5 billion per year.

The French and German conglomerates have been expanding the market of water management services in the United States.

Corporate Players

The European companies that specialize in the privatization of water services have bought America’s largest private water utilities. United Water Resources was purchased in 2000 by Paris-based Suez, the world’s largest water company. Vivendi, the second-largest French water giant, bought U.S. Filter in 1999 and became a member of the powerful U.S. Coalition of Service Industries through its subsidiary, U.S. Filter. On January 10, 2003, RWE, a German utility conglomerate, purchased American Water Works, which serves 15 million people in 27 states and three Canadian provinces and is the largest publicly-traded water company in the United States.

European-based utility giants have been bidding aggressively for new contracts to run American water systems. American Water Works, bought by RWE, now controls Illinois-American Water Co. U.S. Filter, owned by Vivendi, treats sewage for Oklahoma City and New Orleans, supplies drinking water to Tampa and Indianapolis, and recycles Honolulu’s wastewater. Suez treats sewage for Indianapolis, Milwaukee, and Springfield, Massachusetts, and supplies drinking water for Pittsburgh, Hoboken, New Jersey, and Plainfield, Indiana, through its United Water subsidiary.

Private water companies are pushing for legislation to require cash-poor municipal governments to consider privatizing their waterworks in exchange for federal money. From 1995 through 1998, the water utility industry, its employees, and their political action committees, spent less than $500,000 on campaign contributions. But in the last two election cycles from 1999 to 2002, campaign spending more than tripled to roughly $1.5 million. More than half of the sector’s campaign spending came from two large New Jersey-based companies, United Water and American Water Works, both of which are owned by foreign private water companies.

Federal Trend Toward Privatization

Both the Clinton and Bush administrations have asked for less federal regulation in deference to more state independence, and states have become more comfortable in outsourcing to the private sector certain activities that were once wholly the province of municipal government.

In 1996, the U.S. Environmental Protection Agency (EPA) released a report that identified the need for improvements in the U.S. water infrastructure. By 2001, bipartisan legislation to fund these projects had been introduced in Congress. It required utilities for the first time to consider alternate management options, including private partnerships, before they receive federal money.

In 1997, the Internal Revenue Service (IRS) extended the privatization contract limits to 20 years, which encouraged private water companies to begin expanding their operations in the United States. Liberalization of federal tax laws has helped encourage private participation in the operation of publicly-owned plants that were funded by public bonds or grants. Industry representatives are now pushing for even more incentives to use the tax code to increase privatization activity, especially in the water area.

State Trend Toward Privatization

From 1988 to 1997, the rate of privatization in the U.S. increased by more than half. In the name of smaller government, states will likely consider numerous privatization schemes in the next few years.

Reluctant to raise rates, local officials seek private partners to share the financial burdens of upgrading treatment plants and monitoring for a growing list of regulated contaminants.

Cities have viewed privatization as an option for many years. The U.S. Conference of Mayors, a nonpartisan organization of cities with populations of 30,000 or more, joined with the Washington-based industry group, the National Association of Water Companies, to lobby the Internal Revenue Service (IRS) to change language in the tax code that penalized cities with loss of tax-exempt status if they contracted private companies for more than five years.

Long-Term Water Contracts and State Actions

The number of water systems that are operated under long-term contracts by private companies has grown from approximately 400 in 1997 to about 1,100 today. Urban utilities can now enter into contracts of up to 20 years for the operation of such systems under liberalized federal tax laws. Vivendi and Suez secured 20-year, billion-dollar contracts in some of America’s largest cities, including Atlanta and Indianapolis. Cities from Camden, New Jersey, to Stockton, California, also have contracted or are looking to contract with these companies.

Privatizing Water: The Profit Stream

By Hugh Jackson, Las Vegas Review-Journal
February 29, 2004

You've got to hand it to Oscar Goodman. Most mayors go to the U.S. Conference of Mayors annual meeting and get lobbied by companies. Oscar, ever the clever one, used the meeting to let his kid's company lobby the mayors.

What's more, face time with a national collection of muckety-mucks who control purse strings usually doesn't come as cheap as the price of a rented room and a few drinks.

In fact, it's not Las Vegans who should be upset with Oscar. It's the multitude of corporate citizenry who get in the same room with all those mayors the old-fashioned way -- dishing oodles of money to the U.S. Conference of Mayors. They probably think Oscar and his kid are poachers.

See, the conference has what it calls a "Business" Council, but which should be called a corporate council, in that nearly every one of the 84 members is a large, publicly-traded corporation. Each of them pays $12,000 a year to belong to the council, and some of them fork over more than that to sponsor and support periodic shindigs like the one Oscar and his kid were attending in Washington.

And perhaps nobody has hooked up tighter with the conference than the European conglomerates on a mission to -- drum roll please -- privatize water.

The three big ones are Suez, RWE and Veolia. They belong to the conference Business Council under the names of their U.S. subsidiaries, United Water, American Water Works, and USFilter, respectively (though USFilter changed its name to Veolia Water a few days ago). They've tried to control water and charge too much for it in nations around the globe, but it hasn't worked out like the companies hoped -- it's been a big fiasco, mostly. So in the past few years the companies have focused on the United States, because ... you know, that's where the money is.

But 85 percent of the water that pours from a tap in the United States is delivered by a publicly owned and operated system, and polling shows overwhelming support for publicly-funded water systems. How's a corporation going to convince a city to hand over control of its water?

By schmoozing mayors. For instance, at January's conference meeting in Washington, Veolia footed the bill for mayors to film video presentations to be available at the U.S. Mayors Web site. The program was an extension of the "Meet the Mayors" database long-sponsored by Veolia and prominently featured in the upper right corner of the usmayors.org homepage.

And the schmoozing, apparently, works. Atlanta entered into a private water contract during the administration of then-mayor Bill Campbell, a former conference committee chair and key voice on behalf of the organization's congressional lobbying efforts. New Orleans began spending money on a privatization process under the administration of then-mayor Marc Morial, a former conference president. Stockton, Calif., privatized its water system under Mayor Gary Podesto, a prominent member of the conference's industry-sponsored "Urban Water Council" who credits the conference for turning him on to the wonders of water privatization.

But while schmooze works, privatization hasn't. Atlanta got out of its contract four years into a 20-year pact when it became clear that the private company could deliver brown water but not the promised financial savings. New Orleans has dropped $6 million in six years, only to learn that it's still impossible to tell if privatization will save any money, and the privatization process has stalled. Stockton officials sidestepped a public referendum and rammed privatization down the throats of an unwilling citizenry, only to have it thrown out in court for failing to account for environmental impacts of the deal.

Coming up empty in big cities and larger towns, the water privateers are now heading for smaller communities, like the Village of Hempstead, N.Y. If cities such as New Orleans and Atlanta have trouble obtaining credible, timely information from these companies and holding them accountable, it's frightening to think about how corporations might run roughshod over small towns. Oh, the mayor of Hempstead Village, by the way, is the current president of the U.S. Conference of Mayors.

The conference does some decent work -- a couple years ago, at the height of the congressional fight over White House designation of Yucca Mountain as the planet's one and only nuke dump, it adopted a resolution opposing nuclear waste transportation.

But the conference has also been infiltrated by corporations who actually work against the interests of the nation's cities: the big water corporations want Congress to make it harder for cities to get federal water infrastructure assistance, in an effort to put even more financial pressure on cash-strapped cities so they'll be forced to scramble for wild-eyed solutions like privatization.

So perhaps Las Vegans have a beef with Oscar after all. The next time he attends a conference meeting, instead of shilling for his kid he should make himself useful and ask his colleagues from around the country what the hell they think they're doing sucking up to companies that want to control people's water and turn it into a profit stream. Oscar's a persuasive guy. Maybe he can help stop the corporate water privatization push before it comes to a town near you.

Henderson resident Hugh Jackson is a researcher and policy analyst for the consumer advocacy group Public Citizen.

Water and Wages Illustrate a Partisan Divide

By Michael Teitelbaum, CQ Politics
March 15, 2009

"The water companies have also dramatically increased their lobbying and federal election campaign spending. In Washington, they have already secured beneficial tax law changes and are now trying to persuade Congress to pass laws that would force cash-strapped municipal governments to consider privatization of their waterworks in exchange for federal grants and loans. Government and industry studies have estimated that U.S. cities will need between $150 billion and $1 trillion over the next three decades to upgrade their aging waterworks." - Bill Marsden, Cholera and the Age of the Water Barons, February 3, 2003

The House passed legislation March 12 reauthorizing $13.8 billion over five years in wastewater treatment grants and loans as part of a broader $19.4 billion package of water quality measures.

The bill passed, 317-101, after the House rejected a Republican amendment, 140-284, to strip language requiring contractors to pay prevailing wages. The bill (H.R. 1262: Water Quality Investment Act of 2009) included five water quality bills that separately passed the House in the last Congress.

Although the bill enjoyed solid bipartisan support, there was vigorous debate over an amendment by Connie Mack , R-Fla., that would have removed a provision applying the Davis-Bacon Act (PL 88-349) to projects receiving federal funding.

Davis-Bacon — a Depression-era law that enjoys union backing and is a lightning rod for Republican opposition — requires contractors on federal projects to pay prevailing wages. The water bill would extend that requirement to state and local projects receiving grants or loans through the Clean Water State Revolving Fund...

The underlying bill would reauthorize the Clean Water State Revolving Fund, which provides low-interest loans and grants to local communities for construction of wastewater treatment facilities, for the first time in 15 years.

It would provide $300 million each year through fiscal 2014 in state management assistance and $100 million in annual grants to nonprofit organizations to provide technical and management assistance in improving wastewater treatment systems in rural areas, small municipalities and tribal communities.

The bill includes a “Buy American” provision that would require most steel, iron and manufactured goods used in projects financed by the revolving fund to be produced in the United States.

House members expressed frustration that clean-water legislation stalled in the Senate in the last Congress. In combining five bills that passed the House last year, members said they hoped to make it easier for the Senate to clear the legislation.

The Senate Environment and Public Works Committee is expected to mark up its own water quality bill at the earliest opportunity, building off legislation that the panel approved in 2008...

Investing: The Best Water Plays

By David Bogoslaw, BusinessWeek
July 26, 2009

Put on your snorkel and get ready for an expected flood of investing in water-related stocks as the push for government spending on water infrastructure and services to meet higher environmental standards accelerates. That bodes well for a number of water-related stocks and mutual funds.

On July 15, Representative Earl Blumenauer (D-Ore.) introduced a bipartisan bill that would create a water trust fund for investing in America's broken drinking-water and sewage-treatment systems. The Water Protection & Reinvestment Act (H.R. 3202) would create a $10 billion annual fund to repair decaying pipes and sewer systems that threaten public health, the environment, and overall security.

And a bipartisan Senate bill (S. 1005) that would reauthorize the Clean Water State Revolving Fund and Drinking Water State Revolving Fund and provide $38.5 billion for Environmental Protection Agency water-infrastructure programs over the next five years reportedly has the support of both parties and is expected to be acted on by the Senate in the near future. These revolving funds haven't been reauthorized in 22 and 12 years, respectively. A House version called the Water Quality Investment Act of 2009 (H.R. 1262), which would reauthorize the Clean Water State Revolving Fund at $13.8 billion over five years, was passed in March.

Of course, there's quite a bit of fiscal stimulus already flowing toward companies that can help rebuild the country's faltering water infrastructure. William Brennan, co-manager of the $17 million Kinetics Water Infrastructure Advantaged Fund (KWIAX), estimates that $13.9 billion of the Obama Administration's stimulus package has been put toward overhauling water infrastructure and other water-related activities but says "that's just a Band-Aid on an open-heart-surgery patient." The U.S. is roughly $600 billion behind in revamping water pipes and sanitation systems, Brennan says, and he expects the government to push for rebuilding with greater voracity.

Expecting a Surge of Investment

U.S.-based water funds are currently much smaller than their counterparts in Europe. U.S. investors have been slow to appreciate the importance of water as "the backbone of every activity," from manufacturing to energy to daily living. And so far, Americans haven't experienced water shortages to the same degree as people in other parts of the world, Brennan says. He expects a surge in water investment to begin over the next one to three years: "Water-stress areas in California, Texas, and Florida are real and are only getting worse."

Other states have water woes, too. In a dispute over water in the Apalachicola-Chattahoochee-Flint basin, which includes Lake Lanier, that dates back to the 1970s, Florida and Alabama are seeking a permanent injunction to prohibit withdrawals in Georgia in excess of 2000 levels, according to the metropolitan Atlanta Chamber of Commerce. A U.S. District Court ruling on July 17 declared almost all of the water Georgia has withdrawn from Lake Lanier illegal, since the lake was built to provide hydroelectric power. That means Atlanta may soon need to find alternate sources of water. The judge said the Army Corps of Engineers needed to get approval from Congress before the Atlanta metropolitan area could use Lake Lanier as its primary water source.

Among Brennan's top holdings are Veolia Environnement (VE) and URS (URS), which provides engineering, construction, and technical services to the power, infrastructure, federal, and industrial and commercial market.

Calvert Global Water Fund (CFWAX) holds 30% of its assets in water utilities, 40% in infrastructure companies, and 30% in water technologies. Jens Peer, a portfolio manager for the $1.4 billion fund, says 65% to 70% of the 100 to 105 water stocks he's identified worldwide are pure plays, which he defines as deriving more than 50% of their revenue from water-related activities. The pure plays tend to be small- and mid-cap stocks, while the larger-cap names usually include other components besides water.

"We only invest in non-pure plays if they have at least 10% of their revenue coming from water activities, and they have to be a top-three player in their markets," Peer says. While General Electric (GE) owns a top desalinization business, its overall water exposure is too small for him to invest in the company.

Timing is Key

Of the $480 billion in fiscal stimulus that is expected to be spent by governments around the world over the next two years on green components, Peer estimates that roughly 20%, or $96 billion, will go to water-linked projects. Half of that will be spent in China, and the majority of the remainder will be spent in the U.S., he says.

Although the enormous spending on water infrastructure Peer foresees should trigger greater investment in water companies, he says the timing of the fiscal spending is important. For example, Tetra Tech (TTEK), a consulting and engineering company, will be one of the initial beneficiaries, while companies that make larger pipes will benefit closer to the end of the projects.

Peer thinks American Water Works (AWK), which provides water and wastewater services to residential, commercial, and industrial customers in North America, looks cheap and is benefiting from the regulatory climate that supports higher rates.

Slightly more risky but worthy of attention is Calgon Carbon (CCC), which specializes in filtration equipment but also does mercury removal, which Peer says will be a big topic in 2010 and 2011. He also likes Insituform Technologies (INSU), which repairs sewers and water pipes with minimal digging up of streets and disruption of traffic. He expects to see repairs accelerate in some states because of underinvestment in recent years.

Manufacturing and Pharmaceutical Discharge

Brennan estimates that 70% of the 2 million miles of underground water pipes in the U.S. are beyond their useful life and need to be replaced. Water quality has declined over the past 50 years, with manufacturing discharge going into rivers and surface water, and bigger concentrations of prescription pharmaceuticals being discharged in wastewater. That will drive the need for wastewater treatment and other water-purification services. Brennan expects the EPA to target those areas for improvement in the next couple of years.

Bozena Jankowska, who co-manages the $53 million Allianz RCM Global Water Fund (AWTAX), focuses primarily on water utilities in view of the relative shortage of other pure-play water stocks. That's mostly a result of industry consolidation in recent years, in which smaller technology manufacturers have been swallowed up by conglomerates such as GE, Siemens (SI), and ITT (ITT).

"So if you want to invest in technology, you're getting other types of products," she says. "If you buy ITT, you're getting part defense, part water pumps. At Danaher (DHR), industrial technology [generates just] 25.7% of total revenue and includes water technology, while the remainder is medical technology."

Utilities are a good way to capitalize on the global growth prospects of water because of the need to replace aging infrastructure and build new systems in emerging markets, as well as the need to comply with tighter environmental standards, says Jankowska. Growing awareness in the U.S. of the need to invest in infrastructure is prompting regulators to approve higher rates for public water utilities, which will enable them to replace equipment and should improve returns over time, she says.

Water utilities are expected to spend up to $1 trillion over the next 20 years to improve their systems, according to Neil Berlant, lead manager of the PFW Water Fund (PFWAX). He says he avoids utilities entirely on a belief that none of the money these companies spend to improve their systems in order to meet tougher local and state regulations will result in higher revenues.

But Isn't Access to Clean Water a Human Right?

True, utilities will have to charge higher prices to pay for their capital spending, but that in turn will drive consumers—both households and manufacturers—to look for ways to cut down on their usage, which will only exacerbate the problem for utilities, he says.

While water utilities have "enormous opportunities," when it comes to "parlay[ing] an explosion of interest in water, I don't see them as primary candidates for [investment]," says Berlant. "Their prospects, by and large, are nowhere near those of companies they have to purchase from, like pump makers and filter makers."

Another challenge utilities face comes from the growing trend by states such as Connecticut and other countries to declare access to affordable, clean water and sanitation a human right. What the pricing implications are for utilities whose business it is to supply water is one issue the Interfaith Center on Corporate Responsibility is flagging in a new report that scores public and private utilities on 21 key disclosure issues.

Berlant prefers technology companies such as Energy Recovery (ERII), whose products can remove salt from water in a much less energy-intensive way. That should attract money from socially responsible investment managers. But at nearly 36 times projected 2009 earnings and more than 24 times estimated 2010 earnings, it's too expensive for some fund managers, including Jankowska.

Indeed, one good bet for the future is that water—and the shares of the companies that supply it and make it fit for human consumption—will become more costly as the world's thirst for the life-giving liquid intensifies.

Stop Congress from Pushing Water Privatization

By Food & Water Watch

The Water for the World Act 2009 sets the goal of bringing safe drinking water to 100,000,000 people for the first time. This is an important goal for which the U.S. should strive. However, the bill contains a corporate-biased peripheral component that encourages public-private partnerships, which have been used in the U.S. and abroad, to privatize municipal water systems. Act now by telling Congress to remove this corporate-biased component of the bill.

Chances are good that you, like 85% of Americans, receive your household water from a publicly owned and managed water company. This ensures that decisions are made locally and that revenue is reinvested at home.

The Water for the World Act 2009 was introduced in the House as H.R.2030 by Rep. Blumenauer (D-OR) and in the Senate as S.624 by Senator Durbin (D-IL). Food & Water Watch has written alternate language that removes the privatization loophole, and we are lobbying the bill's sponsors to get it corrected, but Congress needs to hear from you. Tell them it is unacceptable for the U.S. government to be pushing privatization on poor countries.

Aqua America: A Water Profiteer

Published By Food & Water Watch
September 2008

In the United States, 86 percent of people on community water systems receive their drinking water from a public utility, and these public operators have kept drinking water safe and affordable for most households. Public utilities provide nearly 250 million people with high quality water that costs less than a penny per gallon.

But even the best management can’t stop the effects of time.

Across the nation, water and wastewater systems are aging, pipes are crumbling and growing populations are straining already overburdened water supplies. The mounting repair and replacement costs are taxing many municipalities, especially small towns that have limited financial resources.

The federal government has traditionally provided assistance to these struggling utilities, but that funding is going dry. In the face of seemingly insurmountable improvement costs, as a last resort, cash-strapped municipalities are selling their water and sewer systems to corporations that are aggressively marketing themselves to local officials.

Aqua America, Inc., is one company trying to cash in on the infrastructure crisis. It is voraciously eating up small systems.

With nearly 200 acquisitions over the last 10 years, Aqua America has grown into the second largest publicly-traded water and wastewater corporation based in the United States, serving three million people in 13 states (including Florida, Pennsylvania, Virginia, North Carolina, Texas, Illinois, Missouri, New York, New Jersey and Ohio). It has pushed its way to the top through a strategy of aggressive acquisitions and drastic rate increases.

Aiming to make several dozen acquisitions a year, the company targets smaller systems to avoid a citizenry armed with resources to fight the takeover. And it pursues systems in states that have fast growing populations, corporate friendly regulatory environments, and considerable investment needs. Of course, all of this is done with an eye toward its bottom line.

Not long after taking over a system, the company begins its almost continual process of increasing rates. In just the first nine months of 2007, the company increased rates in nine locations. It has nine additional rate increases pending and plans even more over the course of 2008.

While families see skyrocketing water bills, the company sees booming revenue growth: 13 percent in 2007 alone. But rather than reinvesting all the money from community bills into improving their water and sewer systems, as a public utility would do, the company is “delivering solid returns to its shareholders.”

Discontent is growing among its customers, and many communities are beginning to speak up. In some cases, they even are kicking out Aqua America and reclaiming public control over their vital water and sewer infrastructure.

Aqua America is failing to protect the public interest. Instead of private control of their water systems, communities need — and overwhelmingly support — a national trust fund for clean and safe water. Federal support for public utilities will do what Aqua America has not done; and a trust fund will help ensure families across the country have access to clean, safe and affordable water.

Key Findings:

• Aqua America is hiking up water bills through rapid-fire rate increases and infrastructure surcharges.


• Aqua America is aggressively acquiring new systems, especially places with high population growth, little competition and weak regulation.


• Aqua America is cutting and running on communities with the greatest needs and least profitability.


• Aqua America is expanding into unregulated industries to avoid public oversight of pricing.


• Communities are fighting to kick out Aqua America and reclaim public control over their vital drinking water and clean water infrastructure.

Who Owns the Country's Drinking Water?

Published By the Center for Responsive Politics
Originally Published on September 13, 2002

Across America, pipes are cracking, water systems are failing and century-old infrastructure is badly in need of repair. By some estimates, it will cost more than $300 billion to upgrade all of the aging water facilities in the country.

Congress is currently considering legislation that would pour money into communities to fix the ailing systems.

But tucked into the House version of the water bill is a little-noticed provision that could decide whether drinking water remains a public resource or becomes a private commodity. Under the House bill, if a community wants federal funds to help upgrade its infrastructure, then it has to agree to consider privatizing its water system. The bill also would make it easier for private water companies to be eligible for the same subsidies that public utilities currently receive.

The bill is at the top of the private water industry's legislative wish list. Only a few cities in the United States have privatized their water—San Francisco and Atlanta among them—and the industry has been struggling to compete with public utilities. The private water companies have long complained that the federal assistance offered to the public utilities gives them an unfair advantage in the marketplace, and the water companies have seized on the House bill as a way to force open the market.

The roster of private water companies in the U.S. is a complex web of foreign-owned subsidiaries that are constantly merging into even larger companies. The French firm Suez owns United Water Resources, the company that supplies water to the city of Atlanta. Paris-based Vivendi Universal is primarily an entertainment company, but it also runs the largest water distributor in the world, Vivendi Environnement. Vivendi Environnement, in turn, owns U.S. Filter, which distributes Culligan bottled water. And the German corporation RWE paid $4.6 billion this year to acquire American Water Works, the largest private water company in the United States.

The companies themselves have done some lobbying, but they've left most of the work in Congress up to their trade group, the National Association of Water Companies (NAWC). NAWC spent more than $360,000 on lobbying in 2001, and formed the "H2O Coalition" to push for privatization. The H2O Coalition also includes the Water and Wastewater Equipment Manufacturers Association and the National Council on Public-Private Partnerships as members, but it's primarily NAWC's creation. Representing the coalition, NAWC's executive director testified before Congress on the water bills.

The going for the industry's lobbyists has been tough. Despite the work of the H2O Coalition, pro-privatization language was removed from the Senate water bill earlier this year. NAWC acknowledged that it was outgunned by the larger, more powerful Water Infrastructure Network, an association of environmentalists, labor unions and trade groups. The network has heavily lobbied Congress for federal funds, mainly geared toward public utilities, to help upgrade the nation's water systems. Among the group's members is the International Brotherhood of Teamsters, which has contributed $1.8 million so far in the 2002 election cycle in individual, PAC and soft money donations, 83 percent to Democrats; and the Carpenters and Joiners Union, which has given $3.2 million, 85 percent to Democrats.

Against such a tide of giving, contributions from private water companies are barely a drop in the bucket. Vivendi Universal has given the most, more than $780,000 so far in the 2002 election cycle, 72 percent to Democrats. But only about $23,000 of that total came from the company's American subsidiary, U.S. Filter. American Water Works has given nearly $160,000, 74 percent to the GOP, while United Water Resources has contributed nearly $100,000, 75 percent to Democrats.

NAWC has contributed a little more than $38,000 to candidates, 69 percent to Republicans. In its 2001 annual report, NAWC bewailed a "downward trend" in industry contributions to the group's political action committee. The trend was "principally due to industry consolidation," the association wrote, with the PAC raising a "disappointing" $21,100 in 2001. Looking ahead to the 2002 elections, NAWC noted in its annual report that it had developed a series of "new procedures and practices designed to heighten awareness of the PAC and increase receipts."

NAWC did throw a successful fundraiser for Sen. Charles Grassley (R-Iowa), raising more than $23,000. Grassley is the ranking Republican on the Senate Finance Committee, which oversees tax issues. NAWC and the water companies have been lobbying the government to lift the federal cap on private-activity bonds, which the water companies use as a cheap way to borrow money. In 2001, Grassley added an amendment to the Senate's tax bill that would have allowed the industry to get around the cap, if they used the money they raised to meet arsenic safety standards. But Grassley's amendment was struck from the bill at the last minute.

Grassley is also a favorite of the water companies because of his strong support for the fuel-additive ethanol. Over the years, the Iowa senator has introduced several bills that would ban the use of the a rival additive, MTBE, and replace it with corn-derived ethanol. MTBE has been found to contaminate groundwater and has been linked in some scientific studies to cancer. Water companies have been footing the bill to purify the water of MTBE contamination and have been lobbying for either federal funding for the cleanup, or an outright ban of MTBE.

Privatizing U.S. Drinking Water

By Erica Gies
August 11, 2008

We turn on the tap, and clean water flows. Most of us take this service for granted because we consider water, necessary for life, a basic right. In fact, this notion stems back to an ancient Roman legal precedent called the public trust doctrine. This fundamental tenet says that crucial natural resources, especially water, belong to everyone.

But 1.1 billion people worldwide do not have access to clean water, according to the United Nations. Waterborne diseases such as cholera and dysentery kill 2.2 million a year. This was true in the United States until government took over our water infrastructure as a public health measure.

However, now many aging U.S. municipal water systems are deteriorating. One-fifth of our drinking water is lost to leaks, while overworked treatment plants release 1.2 trillion gallons of raw sewage into waterways annually, according to the Congressional Budget Office.

Stark estimates show that Americans will need to spend up to $1 trillion by 2019 to make necessary upgrades. Unfortunately, federal funding for water systems has plummeted, and some strapped communities have turned their facilities over to private companies, hoping they will make water system improvements government hasn’t.

Thirteen percent of U.S. municipal water systems have been privatized already, mostly turned over to European multinational companies with misleading names such as American Water Works and United Water.

Privatization advocates argue that corporations can best provide and update water infrastructure. However, early adopters, including Atlanta; New Orleans; Indianapolis; Jersey City, N.J.; and Lexington, Ky., have seen privatization fail by a number of measures.

Water prices usually rise shortly after privatization -- sometimes dramatically. Privately owned water utilities charge customers significantly higher rates than those publicly owned: up to 50 percent more, according to Food & Water Watch, which compared rates charged by publicly and privately owned utilities in California, Illinois, Wisconsin, and New York.

High water prices can be catastrophic for the poor. In Bolivia in 1999, the government granted a 40-year water privatization contract to a Bechtel subsidiary. Rates increased immediately by as much as 200 percent. Many families were paying one-fifth their income for water, which resulted in rioting, government instability, and Bechtel’s withdrawal from the country.

In some parts of the U.S., new industry-backed laws allow utility managers to turn off water due to customer nonpayment. In Pennsylvania in 2005, managers cut off water to thousands of people unable to pay their bills.

The significant environmental costs of privatization are just as troubling. Some companies push expensive, environmentally destructive schemes to increase water supply -- such as desalination plants -- because their profits are tied to how much they spend on infrastructure improvement. High-cost projects generate huge profits for the corporation, while draining public coffers. Tampa Bay Water partnered with private company Veolia Water to build the largest desalination plant in the nation. The facility cost $158 million and will serve just 10 percent of the area’s water customers.

The simple, inexpensive solution to meeting U.S. water needs is not privatization but conservation. California, the country’s biggest water consumer, could cut its wasteful use of water by 20 percent in the next 25 years, while meeting the needs of a growing population, a healthy agricultural sector, and vibrant economy, according to the Pacific Institute. Stormwater capture is also an important, less expensive strategy. But corporate water managers have little interest in conservation because the more water they sell, the bigger their profits.

One of the best and cheapest ways to assure a clean water supply is to let nature work. In 1989, New York City contemplated a new $6 billion water filtration plant. Instead, the city spent $1.2 billion over 10 years to purchase and restore its watersheds, allowing a 2,000-square-mile forest to clean the water. Other communities, such as Auburn, Maine, have done likewise. Private companies oppose this watershed approach, because it reduces the need for costly treatment methods, thus reducing water prices and profits.

In fact, water privatization can actually reduce water quality. In the United States, the National Association of Water Companies lobbies congress and the EPA to block higher clean water standards, which it views as an unnecessary expense.

For all these reasons, communities are breaking contracts with corporations. The list of the disenchanted includes Laredo and Angleton, Texas; Felton, Stockton, and Santa Paula, Calif.; Buffalo, N.Y.; East Cleveland, Ohio; Bridgeport, Conn.; Rockland and Lynn, Mass.; and Milwaukee, Wis.

A 2005 poll by an independent research company found that 86 percent of Americans support a national, long-term trust fund for water infrastructure. So do I. This solution would allow us to update aging community water systems, while keeping our drinking water securely in public hands.

Americans have a fundamental right to life, liberty, and the pursuit of happiness. Clean affordable drinking water is essential to life; it too is an inalienable right.

Erica Gies is a freelance reporter whose work has been published by the International Herald Tribune, Wired News, Grist, E/The Environmental Magazine, and The San Francisco Bay Guardian.

The Blue Gold Rush (Excerpt)

By Kayla M. Starr, Sentient Times
Originally Published in December 2002/January 2003

Water Privatization

Because multinational corporations now realize that water scarcity and pollution are going to define the next century, a huge movement is taking place to commodify and privatize ownership of water. Poised to capitalize on this crisis are giant “corporate water bandits,” multinationals who are searching the planet for opportunities to turn the misery of water-starved regions into profits for their executives and stockholders. As Bob Dylan sang, “The pump don’t work cause the vandals took the handle.” The results are higher bills, bad water, poor service, non-functioning fire hydrants—and no control over the corporate owners. The very survival of untold millions of people could rest on decisions being made today behind closed doors in corporate boardrooms and government offices throughout the world. With each drop of water that falls into the hands of private interests, any sustainable solution to the global water crisis moves further and further from the public’s grasp.

It goes without saying that those who control water supplies will exercise economic and political power at almost unimaginable degrees. Bulk water exports—transporting water from water-rich countries to water-poor countries—could have disastrous consequences. Massive extraction of water from its natural sources results in ecological imbalance and destruction. Groundwater is being over-extracted as it is, and once aquifers are emptied or polluted, they are almost impossible to restore.

There is a false perception that when water services are privatized, the financial burden will shift from the public to the private sector, which will save taxpayer money by assuming the costs of repairing, upgrading and maintaining infrastructure. In reality, taxpayers simply wind up paying for these projects through their monthly bills. Tax-free public financing translates into lower-cost projects, while taxable private financing results in higher interest rates. As a result, consumers are also forced to make higher payments on company loans.

In the U.S., the National Association of Water Companies is lobbying hard to push the Water Quality Investment Act through Congress. It contains a provision that requires cities to “consider” privatizing their water systems before receiving any federal support for upgrading or expanding municipal water systems. This boondoggle would spend your local taxes to offer your water for sale to private corporations, or else the city could be sued.

Once a government agency hands over its water system to a private company, withdrawing from the agreement borders on the impossible. Proving breach of contract is a difficult and costly ordeal. And multinational trade agreements, such as NAFTA and the pending FTAA, provide corporations with powerful legal recourse. A private company, for example, can use the North American Free Trade Agreement secretive tribunals to contest challenges to privatization. And in World Bank loan deals, which often makes water privatization a condition for loans to poor nations, companies are usually guaranteed cash payments if a government agency returns its water system to public control.

Both the World Bank and the International Monetary Fund strongly encourage the governments of developing countries to sell to private, multi-national companies the rights to deliver essential services, such as water, to the population. This is part of their controversial policy of “structural adjustment” for debt repayment.

As Marq De Villiers tells us in his well-researched book, “Water: The Fate of Our Most Precious Resource,” the trouble with water “is that they’re not making any more of it.” Maude Barlow and Tony Clarke, in their recent book, “Blue Gold: The Fight to Stop the Theft of the World’s Water,” echo his sentiment, writing that groundwater depletion is “one of the great unseen but looming crises facing our planet.” According to Barlow’s research “Aquifers cannot be cleaned once polluted and they’re shrinking rapidly. Global warming trends are rapidly destroying wetlands. Desertifi-cation is spreading and suppressing rainfall. There’s hardly a river flowing that’s not choked with human runoff. As the world’s population rapidly expands, these devel-opments are gradually intensifying into a ticking time bomb under the industrialized world’s complacent assumption that the water supply is endless. The world’s water supply is fast falling prey to corporate desire for the bottom line. Indeed, the human race has taken water for granted and massively misjudged the capacity of the earth’s water systems to recover from our carelessness.”

Vivid evidence mounts that corporate profits are increasingly drinking up scarce water resources. In some cities and countries, water has already been privatized, leading to higher rates of consumption and depleted resources. And in other places, poorer residents actually pay more for water than their richer neighbors, while Perrier, Pepsi and Coke’s sales of bottled water are taking water away from municipal supplies. Experience has been that the foreign company immediately raises prices so that many vulnerable members of the population are no longer able to afford the service they once had. This translates to disease and death for the helpless poor. As the population becomes resentful, riots and killings create a negative environment and the company may leave the area with losses and a bad reputation.

The Costs of Privatization

In places like Cochabamba, Bolivia the results of water privatization are resoundingly negative for the population, the local governments and the multi-national company. The Cochambamba water company was privatized in 1999, to a consortium including the Bechtel corporation, which engaged in an engineering scheme to drill a 19km tunnel in the hills to channel water to the city. To help finance this, water bills went up as much as 200%. Residents were enraged. Some people had to literally choose between buying food or water. Finally, tens of thousands of people protested, blocking roads out of Cochabamba for several days. Police responded with violence, killing several people. Bechtel ultimately canceled the contract, but filed a demand of $25 million from Bolivia to recoup its investment and to recover a portion of their anticipated profits.

With the privatization of water in Manila, capital of the Philippines, both consumers and workers shared the cost of creating enterprises profitable enough for the multinationals. Although the winning consortia had bid at certain price levels, within two years one company—led by International water, a UK/US consortium—was demanding a doubling of prices. Employees were reduced by a succession of measures. Workers were then effectively forced to apply for their own jobs. The net result? 7,370 employees were reduced to 4,580.

Cutting off consumers from a water supply has become a common occurrence under privatization. In 1992 in the UK, where there were sharp price increases following the privatization of water, a massive 21,282 customers were disconnected and there was widespread alarm at the health implications for poor families. The British Medical Association called for the disconnection of water supplies to be made illegal because of the vital role of water in health and disease prevention. New guidelines reduced the cutoffs, but the companies then introduced pre-payment meters, which effectively functioned as devices by which the consumers cut themselves off if they could not afford to pay. There continued to be bitter criticism from consumer groups, medical groups and the press. In 1998, after a court ruling, the new Labor government announced it would make it illegal for companies to cut off water supplies to homes, schools or hospitals for non-payment.

In the Czech Republic a multinational takeover of water dramatically raised prices. VaK Jizníechy, a subsidiary of the UK-based Anglian Water, increased water rates to households by 100.7% from 1994 to 1997, nearly double the national average. In 1999, following the company’s acquisition of the majority of the equity shares, water rates to households increased by 39.8%, while sewage rates to households increased by 66.6%, far higher than any other increase in the price of water in the country.

Here in the United States

Mecosta County, Michigan sits at the center of the largest supply of fresh water on Earth. But when the Perrier Group of America was given permission to drill wells and extract up to 260 million gallons of water per year for free, bottle it, and sell it throughout the Upper Midwest, the people of Mecosta County grew very concerned. A group of residents formed the Michigan Citizens for Water Conservation, and sued to stop the company, pointing out that water, like air, is a public resource—not a commodity.

In the mid-nineties the municipal water utility in Atlanta, Georgia, was sold to United Water Resources. URW has since been taken over by French-based Suez Lyonnaise, the biggest water conglomerate in the world, which has reaped millions in profits. Their first step in Atlanta was to cut 400 of the 700 employees from the water works. Customers began to complain that brown water was flowing from their faucets, fire hydrants were going dry, pipes leaked, water bills increased, and they were unable to get the company to respond. The city government is demanding that these problems be addressed or they will find the company in default of their contract. However, the taxpayers must pay for the expensive legal battle to attempt to regain control of their own water. Similar events occurred when URW took over the water system in Jacksonville, Florida. The residents have finally bought back their water service in a $219 million buy-out. The citizens of Huber Heights, Ohio and Chattanooga, Tennessee are now engaged in similar legal battles to get their water back.

These are but a few examples of the disastrous effects of privatization and what consumers are doing to save their water supplies. As citizens become more educated, they are finding ways to reclaim the rights to their own water.

Fighting Back

Water activists recommend a set of standards that should be included in any agreement of public-private partnerships in the water delivery sphere: The involvement of water users in the planning of the systems, local stewardship and watershed protection, water preservation and reclaiming of polluted water systems. Underlying all these standards is the recognition of water as an essential part of life and the right of all beings to clean water, whatever their social or economic status.

Barlow and Clarke lay the blame for the world’s water crisis squarely and unequivocally at the feet of global corporations. Blue Gold lavishes scorn on governments that “are abdicating their responsibility to protect and conserve water” while pointing fingers at oil, gas, rubber, paper, car, and commercial farming industries who use more than 25 percent of the world’s water and trash much of the rest. Governments, they argue, should eschew globalization and embrace “a set of principles and ethical considerations directly opposed to the predominant standpoint of the global economy.” Water must be “decommodified,” they explain, restored to its natural state, and turned over to local public control. Only then will access to water become a right rather than a privilege. Conservation projects must filter through political systems throughout the world and wash away once and for all the corporate scum that has so long treated water as an endlessly exploitable resource. We can all drink to that.

Resources: Public Citizen’s “Water for All Campaign” works with grassroots groups in the U.S. to oppose the privatization and bulk sale of water resources and to protect universal access to clean and affordable drinking water by keeping it in public hands. Public Citizen offers information on water privatization, networking and expertise for local groups fighting corporate water takeovers. You can learn more and get help by contacting Public Citizen at www.citizen.org/cmep/water; cmep@citizen.org; 215 Pennsylvania Ave., S.E., Washington, D.C., 20003, (202) 546-4996.

California Farmers Say Feds Make Drought Worse

USA TODAY
July 28, 2009

FIREBAUGH, Calif. — The road to Todd Allen's farm wends past irrigation canals filled with the water that California's hot Central Valley depends on to produce vegetables and fruit for the nation. Yet not a drop will make it to his barren fields.

Three years into a drought that evokes fears of a modern-day dust bowl, Allen and others here say the culprit now isn't Mother Nature so much as the federal government. Court and regulatory rulings protecting endangered fish have choked the annual flow of water from California's Sierra mountains down to its people and irrigated fields, compounding a natural dry spell.

"This is a regulatory drought, is what it is," Allen says. "It just doesn't seem fair."

For those like Allen at the end of the water-rights line, the flow has slowed to a trickle: His water district is receiving just 10% of the normal allocation of water from federal Bureau of Reclamation reservoirs. He says he's been forced to lay off all his workers and watch the crops die on his 300 acres while bills for an irrigation system he put in are due.

"My payments don't stop when they cut my water off," Allen says.

Although some farmers with more senior water rights are able to keep going, local officials say 250,000 acres has gone fallow for lack of water in Fresno County, the nation's most productive agriculture county. Statewide, the unplanted acreage is almost twice that.

Unemployment has soared into Depression-era range; it is 40% in this western Fresno County area where most everyone's job is dependent on farming. Resident laborers who for years sweated in fields to fill the nation's food baskets find themselves waiting for food handouts.

"The water's cut off," complains Robert Silva, 68, mayor of the farm community of Mendota. "Mendota is known as the cantaloupe capital of the world. Now we're the food-line capital."

Three years of dry conditions is being felt across much of the nation's most populous state.

Gov. Arnold Schwarzenegger declared a water emergency in February and asked for 20% voluntary cuts in water use. The U.S. Department of Agriculture's Drought Monitor lists 44% of the state as in a "severe" drought.

In arid Southern California, cities and water districts have raised rates to encourage conservation and imposed limits on use. In Los Angeles, restaurants are banned from serving tap water unless diners ask for it. Residents can't hose down driveways or sidewalks. Lawn watering is permitted only on Mondays and Thursdays.

This drought is in line with conditions two decades ago, says Elissa Lynn, senior meteorologist for the California Department of Water Resources. But the new federal rulings to protect smelt and salmon have limited water pumping from the Sacramento and San Joaquin River Delta, a vital link between water and its users.

Here in the state's biggest farming region, fingers are pointing at the government, not nature.

"As California standards go, this is not a drought," says Bill Diedrich, a Firebaugh farmer and director of a water district.

"It is the pumping restrictions."

The federal restrictions arise from environmental suits brought under the Endangered Species Act that argue pulling water out of the delta harms fish. A federal judge in 2007 ordered new biological studies and restrictions on water pumped out of the delta for farmers.

A group of water authorities filed countersuits. While the issue remains unsettled, the rulings have idled the water pumps for 11 months a year, Westlands spokeswoman Sarah Woolf says. Environmental groups say water officials and farmers are overstating the problem.

"This is not a fish vs. farms problem," says Peter Gleick, president of the Pacific Institute, an environmental research group in Oakland. "I believe they're using the drought as an excuse to try and overturn these environmental decisions."

Richard Howitt, professor of agriculture and resource economics at University of California-Davis, estimates that statewide about 30% of the water shortage is a result of the environmental restrictions and 70% is drought. But the impact of the regulations hits particularly hard here in the farm region, he says, because complicated water-rights laws leave Allen and his neighbors at the end of the line in water distribution.

Howitt says his studies suggest that the restrictions could put as much as 45% of irrigated acreage in the Fresno area out of production — jacking up prices for melons, broccoli, tomatoes and other produce. The area also is a big producer of almonds, pistachios, lettuce and wheat.

Potential solutions such as more dams or a canal to bypass the delta and bring water to users are pipe dreams for a state with a huge budget deficit.

Meantime, the roads along this farm area are filled with signs warning that less water means less food. "If you like foreign oil, you'll love foreign food," says a sticker on Allen's truck.

"I wish they'd just put humans first and turn those pumps on," Allen says.

Food Aid Grows in California's Agricultural Heart

The Wall Street Journal
September 2, 2009

California's Central Valley normally serves as the nation's food basket. But amid a severe drought in the region, so many farmers have lost their jobs, they are being forced to line up for food handouts and other assistance.

Selma, Calif. - The combined punch of drought, water restrictions and recession has created an ironic situation in California's Central Valley: Officials are handing out tons of food in the heart of one of the nation's most productive agricultural regions.

At a dusty flea market in this Fresno County town last week, more than 800 people -- many farmworkers -- lined up for two weeks' supply of cereal, rice, canned tomatoes and other basics. They waited in 99-degree heat as the food was distributed from 6 a.m. until late afternoon.

"We either have money for gas and medicine, or food -- not both," Helen Hernandez, a 51-year-old mother of four, said after collecting a pallet of food from the relief drive. Ms. Hernandez said her husband, David, 49, has been out of work since losing his $1,200-a-month job at a tomato-packing house last year.

For the 12-month period ended June 30, the Fresno Community Food Bank distributed a record 14.5 million pounds of food to residents of a three-county area -- double the previous year. So many people mobbed one food-distribution center two weeks ago that some who had waited in triple-digit heat for hours were turned away empty-handed after the food ran out. Unemployment in the counties in July ranged from 13.9% to 15%, compared with 11.9% for California as a whole, state officials say.

"There's never been this kind of need in the Central Valley, ever," said Dana Wilkie, chief executive of the Fresno food bank. "In some communities, we're serving 80% of the residents."

The Central Valley, a 400-mile-long, 18-county inland area that relies heavily on agriculture, has suffered in the recession amid low demand for products like milk and almonds as well as a collapse in its once-booming housing market. At the same time, the region is grappling with drought and federal environmental rulings that have reduced water shipments to local farmers to as little as 10% of their normal allotments.

Some farmers have sidelined much of their acreage, throwing packers and field pickers out of work. In the Westlands Irrigation District, which serves about 700 farmers in the western part of the valley, more than 260,000 of the 600,000 acres that are typically home to tomatoes, lettuce and other crops have been taken out of production this year, officials say.

In all, farmers in the valley stand to lose between $1.2 billion and $1.6 billion in revenue this year, with 60,000 to 80,000 people thrown out of work, projects a study by the University of California, Davis.

"This is the worst I've ever seen it in the valley," said John Harris, chairman and chief executive of Harris Farms in Coalinga, Calif., which is farming about 4,500 acres compared with a normal total of about 14,000.

In June, Gov. Arnold Schwarzenegger proclaimed a state of emergency for nine Central Valley counties and asked President Barack Obama to declare Fresno County a federal disaster area. The designation was intended, in part, to help finance food shipments to the county.

But officials at the Federal Emergency Management Agency rejected the request, saying state and local entities had adequate resources. Mr. Schwarzenegger last week appealed the denial, which FEMA officials say they are reviewing. In the meantime, Mr. Schwarzenegger's office allotted about $4 million for five weeks' worth of food shipments, which began about a month ago.

At the recent food distribution in Selma, 46-year-old Leticia Reyes waited to load food in her car. Laid off a few weeks ago from her $1,200-a-month job at a fruit-packing plant, the mother of four said the family is left to pay its $600 monthly rent and other bills on her husband's $900-a-month pay as an auto mechanic and her $600 in monthly unemployment benefits.

"We're really struggling, so this food helps a lot," said Mrs. Reyes.