Resource or commodity?

March 13, 2020 / By mobanmarket

Resource or commodity?

Water needs to be given a value to discourage waste, but campaigners fear privatisation could harm vulnerable groups.

Opponents of the European Union’s austerity regime in Greece have accused the policy of depriving people of medicines, shelter and a social safety net. But in recent months new accusations have emerged – that the EU is depriving Greeks of that most vital of commodities , water.

The bail-out conditions imposed by the European Commission, the European Central Bank and the International Monetary Fund on Greece and Portugal include privatisation of municipal water systems. The dual aims are to cut public debt with the income from these sales, and to reduce the volume of state subsidies and guarantees.

Enraged environmental campaigners reject the notion of subjecting the supply and management of water to the whims of the market. Food & Water Europe and the European Federation of Public Service Unions (EPSU) were among signatories to a recent letter to the Commission urging a change to this policy. They were even more enraged by the reply.

“The Commission believes that the privatisation of public utilities, including water supply firms, can deliver benefits to the society when carefully made,” the response said – acknowledging that “at the same time, public access to basic goods must be ensured”.

Campaigners have concluded with dismay that the Commission sees privatisation as the preferred general policy for the water sector. “Not only is there no evidence at all to support the view that the private sector is more efficient, but there is very strong public resistance to privatisation,” said Jan Willem Goudriaan of EPSU. “Article 345 of the Lisbon treaty requires that the EU be neutral on the ownership of services of general interest,” says Gabriella Zanzanaini of Food & Water Europe. Members of the European Parliament have also tabled a question to the Commission about its water privatisation policy.

Water pricing

The controversy demonstrates the sensitivities around the issue of water pricing and water management. Even where there is agreement that water should be priced to reflect its actual value, there is disagreement over just how to do that. Water campaigners refused to participate in the World Water Forum held in Marseille in March – although the event was attended by four European commissioners. Campaigners have been sceptical about the forum, organised by the partly privately-funded World Water Council, ever since a 2009 meeting descended into acrimony over whether to describe water as a “basic human need” – for which a charge might be levied – or a “basic right”. So this year they staged their own ‘Alternative World Water Forum’ at the same time.

A 2010 survey on water privatisation published in the Journal of Policy Analysis and Management failed to identify cost savings from privatisation in the water sector, and campaigners point to a recent rethink by many municipalities of the wave of privatisations in the 1990s. Paris recently remun-icipalised its water services after negative experiences with privatisation, and in 2004 the Dutch government passed a law banning private sector water supply.

Advocates of privatisation argue that municipal systems have failed to price water in a way that reflects its value, resulting in waste. Privatising water systems, while ensuring basic access for all people, could be a more efficient way to encourage more responsible usage, they contend. Barcelona has awarded a 35-year contract to Spain’s largest private operator, Agbar.

In July, the European Parliament passed an own-initiative resolution calling for water metering to be made binding across the EU. But it stressed that social issues and human needs should be taken into account when setting prices. Richard Seeber, a conservative MEP with a high profile in the European debate on water, says there should be a balance. “Water is not a commodity like other commodities,” he says. “We need air and we need water. But if we use more water for certain purposes, then it should be properly priced. And here, the Commission has not developed a proper pricing model.”

The Commission’s water blueprint (see pages 18 and 19), published yesterday, says that water should be priced but does not say how.

“The Commission should come forward with some ideas, but this is a politically hot issue,” says Seeber. “It is necessary, on a European level, to have a proper discussion before setting pricing policies.”