1.  Solutions for the global, regional and local water crises
UN global summits, international organisations, conferences and forums, countless studies and workshops are occupied with one of the most urgent themes for current and future generations; how do we guarantee access to the world’s most important sustenance—water. Already today this is the No. 1 problem for 1.2 billion people world-wide. In 2025—according to UN projections—3 billion people will suffer from water scarcity—the majority of them in developing countries. No less serious for the living conditions of over 2.5 billion people, esp. from the poor and poorest sectors of the population—is the wholly inadequate sewage disposal. Contaminated water and water scarcity cause sickness and death for millions of people each year.

In contrast to the beginning of the 90s (at the Environmental Summit in Rio de Janeiro, this subject played no great role.) public and political consciousness of the water crisis has risen enormously. In 2000, the world’s governments formulated for the first time a clear quantitative and time target for how the global problem of water scarcity is to be dealt with: the so-called Millennium Declaration of the United Nations. By 2015, the number of people without access to clean drinking water is to be halved. The Action Plan of the World Summit for Sustainable Development in Johannesburg reiterated this aim in 2002, adding the same target for sewage disposal. However, the Johannesburg resolutions did not deal with where “water for 600 million water faucets and 1.2 billion toilets is to come from”, in the critical words of the international environmental organisation Worldwide Fund for Nature (WWF), directly after the summit.

The debate around solution proposals and their financing has become critical in the last years. The controversy has centred on if and what role states, multilateral development and financial organisations and, above all, the private sector can or should have in the supply of drinking water and sewage disposal. Is water a public good or merchandise? Should water cost something? What does the recognition of water as a human right mean for future state and private sector action? Who will finance the billions in investment required for the water sector?

Here the Heinrich Böll Stiftung is involved in answering these many questions—not only during the 3rd Development Policy Forum. We participate at various levels in the search for ways and solutions leading out of the water crisis.
For a number of our offices abroad, this subject is urgent. Project partners apply to the foundation searching for information or support for their work—whether it involves dealing with the Asian Development Bank or the GTZ-German Technical Co-operation, whether they are looking for allies in the GATS negotiations, need financing to commission studies, need information about the policies of the World Bank or the Water Initiative of the European Union. We work in national and international networks and support them politically and financially. We organise contacts and dialogue between groups in civil society, political and institutional decision-makers and the private sector. Some of our guests here in Berlin will discuss the pros and cons of water privatisation and conduct discussions with leading European water conglomerates and European parliamentarians in Brussels. The foundation itself has commissioned or funded several studies, which deal with local solution approaches as well as specific water policies and projects of bilateral and multilateral development co-operation and the private sector. We will be able to present some of them here during the Development Policy Forum.

Beyond this very concrete form of support, which already means an intervention through the selection of subjects and/ or project partners, we are often asked by our co-operation and project partners how we position ourselves in the controversial debate over water policy. I would like to take this opportunity to address myself to some of the questions asked.

Water – Human Right or Merchandise?
The elevation of water to a human right is very welcome. In its legal commentary No. 15, the UN Committee for Economic, Social, and Cultural Human Rights defined the national and international obligations which states and supranational organisations must undertake to respect, protect and fulfil the right to water. This legal commentary assigns to the State, in particular, an unambiguous protection mandate, even regarding third parties, defined duties such as guaranteed, non-discriminatory access to a minimum of sufficiently clean water, promote the supply of private households prior to industry or industrial agriculture (agro-industry) and forbids the break up of existing water supply systems. The UN Committee for ESC Rights has thus taken a position in a very controversial discussion and defined water primarily as a “public good”. States can decide for themselves whether these core tasks be structured and implemented publicly or privately. The legal commentary of the ESC Committee is a milestone on the road to a human-rights-based solution to the global drinking water problem. Governments should be committed in their implementation of its definitions and recommendations. In future, that would have far-reaching impact on the formulation of loan agreements and water concessions (quality, safety, pricing) with the private sector. Governments must assure that international organisations like the World Bank, IMF and WTO recognise the human right to water (human and environmental right prior to commercial right). We will politically support and promote such a committed implementation.

This would result in a deep-reaching reform of the entire water sector for the majority of countries, esp. the developing countries. Many states in the so-called “Third World” fail utterly in the task of guaranteeing fundamental services such as drinking water supply. Today especially the urban and rural poor pay horrendous sums to private water dealers as a result.

The Action Plan of the Johannesburg Global Summit calls on governments to develop national water strategies by 2005. The human right to water offers an excellent reference point: in the national strategies state duties and their regulatory frameworks need to be defined with which the human right to water can be realised.
Water defined as a public good and thereby also as a task of the State makes clear that it cannot be left to the self-regulating forces of the market like a commodity or merchandise.
Water can certainly have an economic value—and it is ultimately an environmental good—to prevent water waste, water must cost something. State water revenues are urgently needed to maintain and expand drinking water and sewage disposal infrastructure. Every community, every state can agree on the principle of social pricing. Free access to the poor can be paid for by high and higher prices for large consumers. The rich should subsidise the poor. Today it is not seldom the other way around. Free water for irrigation intensive export agriculture is no solution but rather has been a part of the water scarcity/ pollution problem for a long time in many countries throughout the world. State regulation and supervision is therefore absolutely necessary. But what is to be done in weak or degenerated states? The private sector won’t help here either. It has no interest in investments in these countries. Here is just where bilateral and multilateral development organisations would have an important role to fulfil. However, there are often no adapted concepts or small-scale solutions to promote self-organised communities beyond state structures.                                                      

State or Private Sector?
Governments and development agencies have increasingly relied on private sector participation in the search for solution concepts in order to mobilise the necessary billions in investment. “Without involvement of private enterprises and private capital, it is not possible to finance the necessary investment”, according to (Germany’s) Development Aid Minister Wieczorek-Zeul in the Frankfurter Rundschau daily in June 2003 (FR 2 June 03). Meanwhile it has become clear that private sector participation offers no “yellow-brick road” to reach the Millennium and Johannesburg targets. The private water industry neither fulfils the expectations for their ability to invest nor do they serve the poor and poorest layers of the population. An industry study by the World Bank’s evaluation department concluded that the expectations for substantial additional financing from international water conglomerates were too optimistic. Moreover, the private sector concentrates almost exclusively on urban target groups with high purchasing power. It is interested in the profitable “choice cuts”. Those who urgently need access to clean drinking water and sewage disposal, the urban poor and rural population, continue to be dependent on public investment. Even civil society has absurdly overestimated the role of international water supply conglomerates in the past years.
Above all in the 90s, the private sector joined infrastructure projects in the form of public-private partnership projects or even privatisation of the water industry (Manila, etc.) Now there have been numerous studies of these investment models, which have evaluated the experiences with the private sector. In the past, NGOs, labour unions, social movements all participated in this criticism in various forms. Primarily the anti-social pricing by private service providers has been criticised, the very high vulnerability to corruption of the monopolistic water sector, as well as quality and safety deficits.
The public-private partnerships—so highly praised by development aid ministries and organisations—have been seen very critically because of their use of scarce public funds to subsidise private enterprises and mainly large infrastructure projects. These public funds are wanting when it comes to financing adapted, affordable technologies for low-income urban and rural populations or the establishment of state regulatory agencies.

It is currently being discussed whether a so-called multi-stakeholder review, involving governments, supranational organisations and societal groups, ought to systematically evaluate the experience with private sector water supply.
Aren’t the experiences already documented and the criticism—certainly justified in part—sufficient today to reorient the water sector? I ask this question because the experiences with such multi-stakeholder processes—whether the World Commission on Dams or the very recent Extractive Industries Review evaluating project realities in mining, oil and natural gas sectors, have been sobering enough for civil society.
If the Millennium targets are to be reached—to half the number of people with no access to safe drinking water and sewage disposal by 2015—then conceptual course corrections and higher budgets are urgently necessary, esp. from the international development and financing organisations.

The international utility conglomerates have already reduced their engagement since their profit expectations have not been fulfilled. Local and international criticism of individual privatisation projects has done the rest, leading the water industry to act more cautiously.

If the somewhat euphoric forecasts for the private sector’s willingness to deliver the needed billions for drinking water and sewage disposal have not been fulfilled, then stronger public investment from the budgets of the respective countries and international development co-operation are required.
That in no way rules out the private sector completely. It can build or operate the infrastructure for drinking water and sewage disposal. However, local government and the State must define and supervise compliance with the requirements and strategies of water policy. Establishment and expansion of state regulatory agencies must have priority over “fast” projects with the private sector.

Public funds – for whom?
Public funds have to flow first where the private sector has no economic interest: to the urban and rural poor.
This also happens in numerous projects of bilateral and multilateral development co-operation. Nevertheless, it is impossible to overlook the great hopes still placed in the involvement of the private sector in the context of public-private partnership projects. Even great infrastructure projects, including large dams for drinking water supply are on the “list” of the World Bank or the EU Commission, which are supposed to be financed by the 9th Development Fund of the EU Water Initiative announced in Johannesburg.
It is urgent to test and correct the conditions for the World Bank’s structural adjustment loans, the multilateral development banks and the International Monetary Fund, which continue to force privatisation and price policies that even their own evaluation units see as subject to severe criticism.
A look at the external public financing flows for the water sector shows that it is an industry emphasis for many bilateral donors. Despite that it is apparent that even the public funds for the water sector are declining. Moreover, according to the OECD, it is not necessarily the countries “most in need of water” that profit from the inflows of public funds. In the 90s, only 12 percent of official development aid (ODA) flowed to those countries in which less than 60% of the population has access to sufficient water supply.  There has been a slight decline in funds for African countries with urgent needs for financial support for the water sector. Although most funds flow for construction of drinking water and sewage disposal supply, investment in the efficiency of existing water systems is neglected—even though high water loss, for example, has long been recognised as a major problem.