Water

Water is an integral part of most development activities, from health and sanitation, to the location of human settlements, agricultural production, nutrition, and the maintenance of ecological balance. It may be difficult to accept the idea in many countries where water has been considered as a “free commodity” for generations that it can be an economic good with distribution costs that have to be paid if the service is to remain sustainable. It is reported that over the past few decades the amount of water available has been reduced from 12,500 to 7,500 cubit meters per person, while consumption has doubled. One and a half billion people are said to be without clean water, and half of the world’s population is without adequate water purification devices, the situation of which is believed to be linked to 80 per cent of all diseases reported in poor countries. In many parts of the world throughout history, access to water has been and remains a potential source of conflict, but it can also be a catalyst for regional cooperation and development.

Quality of life and working capacity are severely threatened by the lack of an adequate supply of safe drinking water and proper sanitation. A major challenge facing the water sector is how to provide access to safe and sustainable drinking water to the 1 billion people who currently lack it. The problem is acute in many developing and transition economies. Inevitable population growth has far surpassed water supplies creating an urgent need to address the impending crisis. It becomes an even greater challenge in the future when in 2025, approximately two thirds of the worlds’ population might live in countries with moderate to severe water shortages.

During its 29th Session in Geneva (11-29 November 2002), the United Nations Committee on Economic, Social and Cultural Rights (ECOSOC) declared the right to water (pdf, 267k). In its findings, the Committee determined that: “The human right to water entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water.” They also declared that water was necessary for securing work and attaining an adequate standard of living, particularly since it was one of the most fundamental elements of survival.

In some instances the public sector is not able to meet the needs of its people, often requiring outside intervention. This has led to the involvement of the private sector, which often do not act in the public’s interest as they seek a profitable return. The major difference between water operations and electricity in the private sector is that the service provision model is often used in water delivery. This is when the government maintains ownership of the assets, but contracts out for service and management. Therefore little capital investment by the private sector goes into infrastructure. However, to meet future needs, new infrastructure must be built and old systems upgraded. This requires large amounts of capital and technology, which has traditionally been rendered possible in other areas through private investment. Today, water service delivery in the form of public-private partnerships (PPPs) is often promoted to combine the relative efficiency of the private sector with service on the interest of the public at large.

A general assumption that private sector performs more efficiently than the public sector has been crucial for justifying the promotion of PPPs. However, more recent studies on public and private sector efficiency in water service, covering both developing and developed countries, have been released by some international and regional lending institutions, such as the IMF, the World Bank and the Asian Development Bank. Surprisingly, these studies show that there is no consistent conclusion to be drawn from the evidences gathered and that there is “no systematic significant difference between public and private operators in terms of efficiency or other performance measures.” One of the conclusions of these studies is that a change of ownership from public to private is not necessarily a solution for an under-performing service(David Hall and Emanuele Lobina, 2005: The relative efficiency of public and private sector water, PSIRU, Business School, University of Greenwich, U.K.)

Workforce reduction in the water sector has not been as severe as the numbers in electricity, but nonetheless the tendency of cutting labour costs to enhance profits will continue in the future. Employment reductions through mergers and acquisitions will also remain an issue. Social dialogue can play a major role in alleviating negative consequences to workers resulting from restructuring and can also improve productivity in the remaining workforce.