Water as a commercial commodity

Length: 732 words

How do you evaluate the growing expectations and the changing role of companies in the arena of water management? Discuss the potential and the limits of what corporations can ultimately achieve in the business of water.

Given the abysmal record of private companies in managing water resources and their equitable distribution, the public has a sceptical view of privatization. International controversies over water privatization are shaping the debate across the world. In a world of six billion people, of which a sixth don’t have access to safe, drinkable and cost-effective water, privatization looms as the great big threat to what prospects they have for fulfilling this basic need. As the failure of privatization in Bolivia, India, Argentina, Ecuador, Panama, South Africa and Philippines suggest, privatization is not sure shot method for optimal utility and usage of limited water resources. To many commentators, these instances of failure of privatization epitomize what is inherently flawed in the concept of privatization. (Megginson, 2005) But since the public uprisings in these countries,

“the cooperative-run water system that replaced MNCs is in shambles, possessing neither the capital to install or overhaul the infrastructure nor the experience to run a public utility. To analyze

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the situation, one must know the state of affairs before the private company arrived. What was the condition of the infrastructure? Was it decayed and neglected? Did everyone in the community receive water before the company came in? And what exactly did the company do? Did it build, repair, or replace the infrastructure; deliver water to people; charge people for water delivered; respond to the demands of local politicians to divert resources to their pet projects?” (Glennon, 2005)

All these questions need to be answered in great detail in order to ascertain if the MNC has done more harm or more good. It is also unwise for critics to generalize and equate privatization with all that is deficient with capitalism, for there exits several varieties and arrangements for privatization. A limited, often uncontroversial form of privatization involves “a local government contracting with a private water company to operate the municipal water system or the wastewater treatment system. Municipalities regularly request bids from the private sector to design, construct, operate, and maintain public facilities.” (Glennon, 2005) On the other hand, there are more controversial forms of privatization which involve “selling or transferring the assets-the pumping plants, treatment facilities, headquarters buildings, and distribution systems-of the municipal water system to a private company. Often this exchange is the quid pro quo for the company agreeing to infuse the system with a major dose of new capital.” (Glennon, 2005) It would be socially more responsible for businesses, or they limit their involvement in handling water resources for specialized contracted services. In other words, government agencies should always have ownership over water. Hence, MNCs can temper their market expansion policies to offering technological services to government agencies and municipalities. If private companies get involved either in the supply side or the demand side of the equation, the results have inevitably been disastrous for local communities. In conclusion, the words of physicist and environmental activist Vandana Shiva resonate with their relevance. She passionately articulates

“a vision of economic development that is locally rooted and built on sustainable ecological foundations that guarantees democratic control over food and water supplies. In other words, transnational corporations should not be allowed to control public goods, such as water, in different parts of the world and exclude the local population from accessing locally available water resources. She is highly critical of privatization and commodification of public goods, such as water and basic foods, through international patents because it excludes the poor, creates new enclosures, and further deprives the marginalized.” (Sitaraman, 2008)


Glennon, R. (2005). Water Scarcity, Marketing, and Privatization. Texas Law Review, 83(7), 1873+.
Guislain, P. (1997). The Privatization Challenge: A Strategic, Legal, and Institutional Analysis of International Experience(World Bank Regional and Sectoral Studies). Washington, DC: World Bank.
Hale, S. I. (2006). Water Privatization in the Philippines: The Need to Implement the Human Right to Water. Pacific Rim Law & Policy Journal, 15(3), 765+.
Luoma, J. (2005, June). THE WATER THIEVES: Privatization of Global Water Services Benefits Only Business. CCPA Monitor, 12(2), 32+.
Megginson, W. L. (Ed.). (2005). The Financial Economics of Privatization. New York: Oxford University Press. Retrieved from http://www.questia.comPrivatization: A Global Perspective. New York: Routledge.
Sitaraman, S. (2008). Privatization, Efficiency, Gender, Development, and Inequality-Transnational Conflicts over Access to Water and Sanitation. Human Rights & Human Welfare, 8, 91.

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