In the second part of our special blog series on water, Julian Claudi asks – is it necessary to privatize water, what are the different approaches around the world and what has happened in instances where a private corporation has indeed got its hands on the neighborhood pump or the household tap?

To pick a prominent example of the kind of passions and conflicts water privatization can unleash, let’s go back to the year 2000 – to Bolivia. There, the Andean city of Cochamaba erupted in protest after a private, foreign-led consortium took over the city’s water system. The previous year, in September 1999, the Bolivian government privatized the water supply in Cochamaba and allocated the rights to Aquas del Tunari, an affiliated company of Bechtel Corporation (Bechtel Group) which is ranked as the fifth-largest privately owned company in the US.

It must be said that Cochabamba suffered from a chronic water shortage. Most of the poorest neighborhoods were not hooked up to the network, so state subsidies to the water utility went mainly to industries and middle-class neighborhoods. In the World Bank’s view, it was a city that was crying out for water privatization.In a nutshell, the World Bank threatened to freeze credit to Bolivia if it did not privatize water.

But the consequences for the people were drastic – Aquas del Tunari raised the water rates many times over, which led to a national uprising. As a result, the Bolivian government backtracked and disbanded the contract with the company. In turn, Bechtel tried to sue Bolivia for over $50 million in compensation. Battered by several years of bad publicity, Bechtel finally settled the $50 million lawsuit for a symbolic amount of about 30 cents on January 19, 2006.

To get a glimpse of what happened in Bolivia in 2000, it’s worth watching “Abuela Grillo,“ an animated short film by a group of Bolivian artists which is based on the events in Cochamaba as well as on a myth from the Bolivian lowlands and deals in a metaphorical way with the issue:

Abuela Grillo from Denis Chapon on Vimeo.

The European Union may be far away from such a scenario nowadays, but there are already over one million Europeans who have signed the citizen’s initiative “Water is a human right“. Their biggest worry is that the EU will privatize European waterworks in the mid-term and through the back door.

The reason for the concerns are a much quoted proposal from the EU Commission to change a concessions directive to bring more market competition between public and private water suppliers “to ensure that EU companies have access to business opportunities and that public authorities get the best value for money.”

At the same time, the Commission insisted repeatedly in several press releases earlier this year that “the proposed directive will therefore not lead, under any circumstances, to imposed privatization of water services.”  So will that really be the case? Not exactly, according to the non-profit foundation and campaign group Corporate Europe Observatory (CEO). It says the planned directive on concessions of the EU commission could have unforeseen consequences.

“Municipalities who have some form of private participation in their water supply, even a small part, would have to offer their water contracts for EU-wide bidding. This would give private water multinationals like Suez and Veolia new opportunities to expand,” the group says.

At the end of June this year, the EU Commission then unexpectedly said it would reconsider its position in light of “the concerns expressed by so many citizens.”

It’s probably not the last word in the public discussion about water privatization in the European context. Meanwhile, in many places around the world, water privatization is already a hot button issue with various models and strategies being discussed, practiced and fought against.

Advocates of privatization have many arguments. A common one is that “private entrepreneurs are more efficient in increasing access to clean drinking water and have more technological skills and more assets for investment.”

Another is that privatization is the right thing in general if “a government that is strong enough to uphold regulations and to force the private company to do a good job.”

Meanwhile, opponents have their own list of convincing points – mainly that the environmental price for privatization is simply too high. “Privatization has been accompanied by the degradation of water quality, increase in water loss, deterioration of infrastructure and increase in prices,” according to some.

There are yet other, more moderate voices that suggest that say that water must have a certain price to avoid ongoing water scarcity in many places. The Irish think tank, Institute of International and European Affairs (IIEA), for instance, comes to the conclusion that “water pricing” is an option which must be considered:

Another school of thought sees a constructive solution in re-municipalization – that means putting the water supply back in public hands. That’s what happened in Paris and Argentina:

A project from Greece called “Initiative 136” takes a different tack. It’s an attempt at a third way by avoiding both water privatization as well as public-private-partnerships.

“The idea is that if every water user bought a non-transferable share, ‘the public could own the water company through a system of neighbourhood co-operatives of water users coming together through a single overall co-operative.’136 euros is the figure you get from dividing the 60 million euros for which the company is to be put on the stock market by the number of water meters in the city.”

At the time, activists from the citizen campaign “Human Right to Water” are going in the same direction but aiming at high level EU institutions directly. “We are taking up the challenge to get implementation of the human right to water and sanitation’ on the European political agenda,” they say.

Meanwhile in Bolivia, residents of Cochabamba’s southern zones “frustrated with both the private and public water management models,[…] are increasingly relying on traditional community-run water systems as an alternative.”

There are a host of players involved in the water privatization debate – public state supply advocates, private companies, public-private-partnerships and cooperative citizen shareholder movements. They all have their own concepts about how access to water can be best ensured. In the best case, the different ideas will merge into a sustainable and resilient supply system and contribute to a fair and free global right to water distribution for everyone.

Surely this goal is only achievable under the premise of a local and global framework of sustainability and participation and not with an overarching focus on profit.

 

We recently reported on corruption in the climate change industry. Now, a new report by the European Union’s police authority, Europol, says the Italian mafia is increasingly zooming in on clean energy projects such as wind farms in Italy as a way of laundering their illegal money.

The report say that green schemes in Italy “offer attractive opportunities to benefit from generous EU grant and tax subsidies.”

Though Italy is struggling with recession and unemployment, the renewables industry in the country is booming. Reports suggest the Italian government, helped by EU funds to promote clean energy, has provided more than $75 billion to producers of wind and solar energy over the past six years, leading to surging revenues.

That boom, the Europol report says, as well as the legal business structures that the renewable projects offer make the industry attractive to the mafia.

“The Italian mafia is investing more and more in renewable energy, especially in wind farms, to profit from generous European grants paid for by member states which allow them to mix dirty money with legitimate economic activities,” the report said.

In April this year, Italy made its biggest confiscation of mafia assets in history, including dozens of alternative energy companies worth a total of over $1.6 billion, according to news agency Reuters.

The owner Vito Nicastri, a 57-year-old businessman , once dubbed the “Lord of the Wind” because of his vast wind farm holdings, invested money made from extortion, drug sales, and other illicit activities for a heavyweight in Sicily’s Cosa Nostra crime group.

In 2010, UN Resolution 64/292 explicitly recognized the human right to clean water and sanitation, acknowledging that they are essential to the realization of all human rights. The numbers are staggering. The UN claims that 783 million people had no access to clean water in 2012.

But according to Asit Biswas, a former member of the World Commission on Water, the real figures are probably much higher.  “Look at South Asia alone. Some 1.7 billion people live in this region. I challenge anyone to show me a single city or village where people have access to clean water. My guess is that some 2.3 billion people are now without access to clean water”,  Biswas told The European.

So is the world fast running out of clean water, or is it all a question of better water management? And if so what could it look like? This three-part blog series by Julian Claudi will focus on several proposed and partly tried and tested methods and techniques for improving the situation.

We start off by taking a closer look at virtual water trading and real water trading. What’s the deal with these concepts? They’re not really new terms and a lot has been said and done about them for several years. But could they become tools for a solution?

The Virtual Water conceptreveals how much water it takes to produce any product. It refers to the “hidden” water use embedded in products and helps us realize how much water is needed to produce the goods we use and the food we eat. For instance, for one cup of coffee about 140 liters of water is needed. That includes the water used in growing, producing, packaging and shipping the beans that went into that cup of coffee. Read more: http://bit.ly/12RrrcT

Virtual water trade refers to the flow of water if food or other commodities are traded from one place to another. That means there is a virtual flow of water from producing and exporting countries to countries that consume and import those commodities.

A new study by the EU commission has shown that agricultural products are by far the largest drain on water resources.  It says that the consumption water footprint of the average EU citizen is 4,815 litres per day, 40 percent of which is the result of imports from other countries, mainly cocoa, coffee and cotton. Comparing imports and exports showed that the EU28 is a net importer of ‘virtual’ water.

John Anthony Allen, a British geographer is widely credited with creating and popularizing the idea of “virtual water” with his book, Virtual Water: Tackling the Threat to our Planet’s Most Precious Resources.  “Our ignorance is immense,”  Allen has said. “Most of us don’t have the slightest idea about the sheer volumes of water involved in our daily lives.” He was awarded the the Stockholm Water Prize in 2008 for his contributions.

So would it make sense to use virtual water calculations for a global trading system? Opinions are divided. Much like the criticism surrounding carbon emission trading between industrialized nations and developing ones,  critics of the virtual water trade concept argue that several aspects carry negative consequences for the poorest countries like rising dependency on external water resources or the possibility given by trade to “exploit” water resources in other parts of the world.

A paper written for Germany’s Helmholtz Center for Environment Research  says global interlinkages of water resources induced by trade can worsen gaps between nations.

“Feelings of unfairness arise due to the fact that those countries which are endowed with the most abundant water resources and thus are able to supply virtual water to the arid countries of the South (the Big Five), belong to the group of wealthy industrial countries, which are able to influence agricultural trade in many ways. On the one hand, high levels of protection in the form of tariffs and quotas, especially of the European Union, the USA and Japan, are criticised for being a major constraint for ‘the development of the virtual water market’”.

In contrast, hydrologist Ignacio Rodriguez-Iturbe, professor of civil and environmental engineering at Princeton University, sees the virtual water system as a water saving solution, concluding “that in most scenarios the total amount of virtual water trade will decrease by 2030, but the amount of water saved as a result of the trade will increase.“

The whole virtual water phenomenon has also led to a debate on water trading markets, which some say have the potential to revolutionize the way water is managed.

Yet, the US-based Institute for Agriculture and Trade Policy (IATP) says in the study “Water Governance in the 21st Century: Lessons from Water Trading in the U.S. and Australia” that allocation of water should not be based on commodification and economic efficiency alone.

“The national water sector reforms underway in many countries should consider the hidden costs of existing market based approaches, and should be premised on the notion of water as a commons, available first and foremost for public purposes (including the realization of right to water and right to food).”

Finally, one thing most experts seem to agree on is that the virtual water concept does raise awareness about the daily water consumption in the western world. 

But at the same time it appears that as long as the concept of virtual water is inextricably linked with the current prevalent global economic trade system, there is always the risk of an ineffectiveness of the system causing unjust financial advantages and a distraction from the search for other solutions.

Some experts such as Maude Barlow, co-founder of the Blue Planet Project, which works internationally for the human right to water, warn of water’s close links to the international trading system.

“We’ve got to stop thinking that the water wars of the future will be on a battlefield somewhere, they’re going to be on the grain markets, the stock markets and grain trading as part of the international trading system. It is about the water that has been pulled into this profit-making mostly food production and it’s very dangerous,” Barlow said.

It’s a revolutionary project – Germany plans to meet 80 percent of its electricity needs with wind, sun and other renewable energy sources by 2050. In June 2013, Global Ideas hosted a high-level panel to debate Germany’s “Energiewende” (energy transition) – the country’s biggest infrastructure project since 1945. The debate was part of Deutsche Welle’s “Global Media Forum” in Bonn.

We asked our high-profile panel guests – Is Germany’s green revolution a role model for other countries or could it turn into a  nightmare for German citizens with costs exploding? Global Ideas’ Kerstin Schnatz has more.

Energy transition challenges

Professor Claudia Kemfert from The German Institute for Economic Research (DIW) stressed, that despite 42 percent of all investments in renewable energies coming from citizens rather than big companies,  the energy revolution is still under real threat. The German government provided the wrong incentives for a real green revolution favoring fossil fuels, such as coal, she said. “ We had thought that CO2 prices would solve the problem – but the fact is they don’t,“ Kemfert said, saying that explained why coal power still dominates Germany’s energy mix.

Kemfert, who was recently appointed shadow environment minister in the state of Hesse, warned that Germany had to be weaned off its reliance on coal. “Investments into coal power plants are still too cheap. But when new coal power plants are built today, we will be tied to them for the next 40-60 years until they are paid off,“ Kemfert said.

She admitted that fossil fuels are still needed for the transition phase, but she hopes to see more gas rather than coal as it is less polluting. Though solar power already provides 60 percent of Germany’s electricity needs on a sunny day, gas is still needed for cloudy and windless days, Kemfert said.

‘Dash for gas’

But British environmental journalist Fiona Harvey from the Guardian newspaper did not agree with Kemfert. “Gas is not a low carbon fuel,” the London-based expert on climate change issues said. Harvey warned that Britain’s “dash for gas” may turn into a big problem in the future when gas prices, which tumbled temporarily due to new extraction methods such as shell gas, rise.

According to Harvey, Britain needs an energy transition that increases the percentage of renewable energies from a current 5 percent of the overall energy mix. In Germany, renewables account for over 25 percent.  “Only one fuel to rely on is not a good idea,“ Harvey warned, making the case for a green revolution where neither sun nor wind cost anything at all. She said she hoped Germany becomes a role model proving to other countries that a green revolution is possible.

New coal power plants

Moderator Michaela Küfner’s question about whether Germany was intentionally headed for coal was anwered with an emphatic ‘no’ by Franzjosef Schafhausen, who represented the German federal ministry for the environment, nature conservation and nuclear safety.

Schafhausen admitted that new coal power plants are being built in some places – such as the 1.100 Megawatt MW plant Datteln IV in North Rhine-Westphalia. But at the same time, he stressed that Germany’s energy transition policy meant that “no company is prepared to make new investments in coal at the moment.”

Schafhausen who chairs the ministry’s department for the energy transition would like to see the carbon trading system reactivated, hoping to put a higher price on CO2 and thus making coal even less attractive for big companies.

Fighting climate change has spawned a massive industry with vast sums of money sloshing around relatively new and untested channels. That has opened the door to bribery and corruption.  Our reporter Franziska Badenschier has more.

Transparency International’s anti-corruption hotline in its Kenya office recently received a disturbing call. The caller claimed that someone was planning to build a private crematorium on a piece of public land on the coast and clear mangroves in the area. Judy Ndichu and her colleagues at the “Advocacy and Legal Advisory Center” at Transparency International in Nairobi were alarmed.

“For one, mangrove forests are a fragile ecosystem and on the other hand, they form a barrier to protect the mainland since most coastal areas in Kenya are threatened by rising sea levels. In addition, this is a protected forest area,” Judy Ndichu said. She was speaking at a recent event organized by the Forum for International Cooperation for Sustainable Development (f.ize) in Berlin.

The call prompted Ndichu and her colleagues to dig deeper into the issue. “We found that a million Kenyan shillings (around 8,800 Euros) had changed hands in the form of bribes so that the case wouldn’t get out in the public sphere,” Ndichu, who works for the “Climate Finance Integrity Program” at Transparency International, said. Ndichu’s team handed over the case to the National Environment Management Authority and Kenya’s Ethics and Anti-corruption Commission. “Finally, the project was stripped of its license,” Ndichu said. It may sound like a small victory against corruption in the environment and climate sector. But for Judy Ndichu, that’s better than not reporting it at all.

The case is by no means an exception in the booming sector that has emerged to fight climate change. The issue was the focus of the “Global Corruption Report  in 2011. “The efforts to rein in climate change and react to it will come with a huge price tag,” the report said. When huge sums of money flow through new and untested financial markets and mechanisms, there is always a risk of corruption, it said. Estimates suggest that $700 billion will be invested by 2020 in measures to reduce greenhouse gas emissions and slow the pace of climate change. And each year, at least $250 billion in public funds will flow through channels that are “new, relatively uncoordinated and untested,” the report said, adding the situation was certainly vulnerable to bribery and corruption.

That’s why the African Central Bank, the United Nations Environment Program, the World Bank and other international institutes have long grappled with the best way to spur honest people to report about corruption and abuse in the fight against climate change. “In Kenya, for instance, these multilateral institutions have set up their own complaint cells,” a member of Transparency International in Berlin said.

But that could lead to problems too. A potential whistleblower in Kenya could be forgiven for being confused about which office to approach with a complaint. Besides, how do you ensure that the whistleblower is protected so that he’s not hounded later by those he exposes? Transparency International’s answer to that is setting up a central hotline.

“The anti-corruption helpline. Call 0800-720-721 or text 3129 for FREE assistance on CORRUPTION-related cases.” That’s what it says on stickers plastered, for instance, on taxis in Kenya. Since the end of last year, Kenyans can anonymously call the number to complain about corruption and bribery in any sector whether climate, health or education.

So what’s the watchdog’s verdict six months on? “We get an average of 64 calls each month and around five of those relate to climate issues,” July Ndichu said. The land grabbing case on the coast was one of them. Judy Ndichu hopes the hotline will prompt further calls and shed light on shady deals and corruption in the country.