World Bank, WTO,
and corporate control over water
by Vandana Shiva
International Socialist Review, Aug/Sep 2001
Giant water projects have always benefited the powerful and
dispossessed the weak. Even when built by government and paid
for by public money, the beneficiaries have been construction
companies, industry, and large commercial farming interests. Donald
Worster has called this the "contrived market of the state"-the
capitalist state working to facilitate the unlimited accumulation
of private wealth.
While privatization and globalization have been accompanied
by the rhetoric of the disappearing role of the state, what we
see instead is the state increasingly intervening through policies,
rules, laws, investment, and technology in shifting control over
water from communities and the public to commercial, corporate
The policies of privatization imposed through the World Bank
and rules of trade liberalization being negotiated in the World
Trade Organization (WTO) under the General Agreement on Trade
in Services (GATS) are rules and conditionalities that create
corporate states-states that usurp resources from people for meeting
vital needs and put them in the hands of private corporations
for making profits through the privatization of essential services.
The World Bank An instrument for corporate control over water
Having created scarcity and pollution through the promotion
of nonsustainable water use, the World Bank is now transforming
the scarcity it has created into a market opportunity for water
corporations. The World Bank estimates the potential water market
at $800 billion.
Monsanto, the biotech giant, has also been planning entry
into the water business. Monsanto is seeing a new business opportunity
in water because of the emerging water crisis and the funding
available to make this vital resource available to people. As
a Monsanto strategy paper states:
First, we believe that dlsconunuities (either major policy
changes or major trendline breaks in resource quality or quantity)
are likely, particularly in the area of water and we will be well-positioned
via these businesses to profit even more significantly when these
discontinuities occur. Second, we are exploring the potential
of non-conventional financing (NGOs, World Bank, USDA, etc.) that
may lower our investment or provide local country business-building
The trend of the World Bank using its financial conditionalities
to privatize water and establish trade in water suits Monsanto
well. The World Bank has already offered to help. As the Monsanto
strategy paper states:
We are particularly enthusiastic about the potential of partnering
with the International Finance Corporation (IFC) of the World
Bank to joint venture projects in developing markets. The IFC
is eager to work with Monsanto to commercialize sustainability
opportunities and would bring both investment capital and on-the-ground
capabilities to our efforts.
Thus, the crisis of pollution and depletion of water resources
is viewed by Monsanto as a business opportunity. For Monsanto,
"sustainable development" means the conversion of an
ecological crisis into a market of scarce resources.
The business logic of sustainable development is that population
growth and economic development will apply increasing pressure
on natural resource markets. Monsanto plans to earn revenues of
$420 million and net income of $63 million by 2008 from its water
business in India and Mexico. By the year 2010, it is projected
that about 2.5 billion people in the world will lack access to
safe drinking water. At least 30 percent of the population in
China, India, Mexico, and the U.S. are expected to face severe
water stress. By the year 2025, the supply of water in India will
be 700 cubic Km per year, while the demand is expected to rise
to 1,050 units. Control over this scarce resource will of course
be a source of guaranteed profits.
The logic of privatization
The water privatization policy of the World Bank was articulated
in a 1992 paper entitled "Improving Water Resources Management."
The Bank believes that water availability at low or no cost is
uneconomic and inefficient. Even the poor should pay. As the World
When water services are reliable, the poor are willing to
pay for them, and...when service is not reliable, the poor pay
more for less, typically from street vendors. As pointed out in
the "World Development Report 1992," the poor need to
be provided with a wider range of options so they can choose the
level of water services for which they are willing to pay, thereby
giving suppliers a financial stake in meeting the needs of the
poor. Fee schedules can be structured so that consumers receive
a limited amount of water at a low cost and pay a higher fee for
This is the logic of reducing universal fundamental rights-such
as the right to water-to commerce and markets, and then "targeting"
the poor to provide access to water in a system that essentially
excludes the poor. The same logic has been applied to dismantling
of food rights in India. However, while reduction of government
expenditure was the main justification for removing food subsidies
and transforming the public distribution system (PDS) to a targeted
public distribution system (TPDS), the government expenditure
increased, food prices increased, and the consumption of the poor
declined. While thousands of people were dying of starvation,
million tons of food grain was rotting in the godowns.
Just as the economic reform policies guided by the World Bank
logic of privatization of food distribution create hunger, the
privatization of water services will create thirst and water scarcity.
The World Bank has recently initiated water sector reforms,
aimed primarily at privatization of water resources and commercialization
of water management. The privatization policy recommends commercializing
operations at all levels, private investment, substantial increase
in water prices, increase in agricultural power tariffs, and creation
of water markets.
These are recipes for conversion of water into a tradeable
commodity rather than a life support base. Privatization will
aggravate the water crisis, because given the inequalities between
rich and poor, industry and agriculture, urban and rural, water
markets will take the water from the poor to the rich, from impoverished
rural areas to affluent urban enclaves. It will also lead to overexploitation
of water, because when access to water is determined by the market
and not by limits of renewability, the water cycle will be systematically
violated and the water crisis will deepen. Local community management
is a precondition for both consumption and equitable use.
Ignoring limits of water availability and the conservation
imperative, the Bank recommends a shift from a "supply-oriented"
to a "demand-oriented" approach. Demands of the economically
powerful will therefore override the needs of the poor and the
limits of nature. Partial application of this logic through World
Bank lending is not the root of the present crisis. Full implementation
of the logic of privatization will not reverse the crisis; it
will aggravate it.
The water giants
Water has become big business for global corporations that
see limitless markets in the growing scarcity and growing demand
The two major water market corporations are eyeing all the
privatization of public services for drinking water supplies and
the bottled-water market. The two biggest players in the water
industry are Vivendi Environment and Suez-Lyonnaise des Eaux.
Both are based in Paris but are spreading their empires worldwide.
The French water giants have water interests in 120 countries.
Vivendi Environment, the "environmental services"
arm of Vivendi Universal, is involved in water, waste management,
energy, and transportation businesses. Vivendi Universal is a
global media and communications company involved in TV, film,
publishing, music, Internet, telecom, and, of course, water. On
June 20, 2000, it merged with Seagram Co. Ltd. and Canal Plas
SA. On January 27, 2000, Vivendi was awarded a contract valued
at 43 million euros for the wastewater treatment plant of the
city of Berne.
Vivendi also has a 50-50 joint venture company with SAUR called
CTSE in the Czech Republic. Total net sales are expected to be
200 million euros. Vivendi's subsidiary Onyx bought Waste Management
Inc. hazardous waste operations in Mexico for $47 million. Vivendi
has also bought waste services in Hong Kong and Brazil from Waste
Management for $136 million.
Thames Water, Biwater, and United Utilities are United Kingdom
(UK) water companies active in Asia, South Africa, and the Americas.
Thames, however, was bought up for more than $6 billion by RWE,
a large diversified electric utility that has moved into water.
Biwater was established in 1968. The name "Biwater"
(or "two waters") was aimed to reflect the company's
involvement in both dirty and clean water.
In the 1970s, Biwater entered water contracts in Indonesia,
Hong Kong, Iraq, Kenya, and Melawi. In 1986, Biwater got the contract
for Malaysia's rural water supply. And in 1989, it entered water
markets in the UK during the privatization of water services.
In the 1940s, it entered Mexico and the Philippines. In 1992,
it acquired the German company IBO GmbH. In 1993, it acquired
Megadex of Poland. In 2000, it launched a joint venture company
named Cascal with NV Nuon ENW of Holland. Through Cascal, it has
concessions in the UK, Chile, the Philippines, Kazakhstan, Mexico,
and South Africa.
The Spanish Company Aquas de Barcelona is active in Latin
America. General Electric is also working with the World Bank
to create an investment fund to privatize power and water worldwide.
Enron, the energy company, has also started to bid for water contracts
in Bulgaria, Rio de Janeiro, Berlin, and Panama. Enron's water
company is Azurix, which estimates that $600 billion will be spent
on worldwide water and waste water infrastructure over the next
decade, and the "water industry" will have total annual
revenues of approximately $400 billion. However, Azurix has not
been able to compete with Vivendi and Suez-Lyonnaise. Enron is
buying back the company, preparatory to dismantling it.
The privatization of water services is the first step in privatization
of water. The U.S. water market, estimated at $90 billion, is
the largest in the world. Vivendi is investing heavily to control
it. In March 1999, it purchased U.S. Filter Corporation for more
than $6 billion and formed the largest water corporation in North
America, with projected revenues of $12 billion.
Privatization of water services leads to increases in water
prices. In France, customer fees increased by 150 percent as a
result of privatization, but water quality deteriorated. A French
government report revealed that more than 5.2 million citizens
received "bacterially unacceptable" water. In England,
water rates increased by 450 percent, profits of water companies
increased by 692 percent, and salaries of CEOs increased 708 percent.
Meanwhile, the number of customers who have been disconnected
from water services as a result of the price hikes has increased
by 50 percent. Dysentery increased six-fold, and the British Medical
Association had to condemn water privatization because of its
In Argentina, the state-run water company, Obras Samitarias
de la Naceon, was sold to Aguas Argentinas, a subsidiary of Suez-Lyonnaise
des Eaux. The IFC, an arm of the World Bank, provided a $172.5
million loan to Aguas Argentinas in 1994. A subsidiary of the
French company got a 30-year rural water contract. It doubled
the rates, but failed to provide dean water. The company was forced
to pull out because people refused to pay their bills.
The great thirst
In the maquiladora zone of Mexico, drinking water is so scarce
that babies and children drink Coca-Cola and Pepsi. Water scarcity
is clearly a source of corporate profits. Coca-Cola's products
sell in 195 counties, generating revenues of $ 16 billion. As
an annual report of Coca-Cola says:
All of us in the Coca-Cola family wake up each morning knowing
that every single one of the world's 5.6 billion people will get
thirsty that day. If we make it impossible for these 5.6 billion
people to escape Coca-Cola, then we assure our future success
for many years to come. Doing anything else is not an option.
Companies like Coke are fully aware, however, that water is
the real thirst quencher, and, with other corporations, they are
jumping into the bottled-water business. Coca-Cola has its international
label, Bon Aqua (the American version is called "Dasani"),
and Pepsi has its Aquafina line. Coke predicts that its water
line will surpass its soft drink line. In India, Coke's water
line is Kinley. When Coke used a doctor to advertise its bottled
water, the government was forced to take action. It decided to
classify bottled water as "food" under the aegis of
the Prevention of Food Adulteration Act. An earlier government
notification does not allow medical professionals to endorse food
production. Coke was forced to discontinue its ad campaign promoting
Besides Coke and Pepsi, there are well-known brands such as
Perrier, Evian, Naya, Poland Spring, Clearly Canadian, Purely
Alaskan. There are thousands of smaller bottlers. In March 1999,
the Natural Resource Defense Council studied 103 brands of bottled
water to find that bottled water is no safer than tap water. One-third
of the brands contained arsenic and E. coli; one-fourth contained
merely bottle tap water. In India, a study on bottled water published
in the January/February 1998 issue of the Ahmedabad-based Consumer
Education and Research Centre magazine Insight said that of the
13 known brands, only three conformed to all the specifications.
None of the brands were free of bacteria, though some brands claimed
to be "germ free" and 100 percent bacteria free.
Water wars in Bolivia: Corporations vs. citizens
In the semi-desert region of Cochabamba, Bolivia, water is
scarce and precious. In 1999, the World Bank recommended privatization
of Cochabamba's municipal water supply company, SEMAPA, through
a concession to a private consortium, Aguas del Tunari, which
involved International Water, a subsidiary of Bechtel. A law was
passed called the Drinking Water and Sanitation Law in October
1999 that withdrew subsidies from basic services and allowed privatization.
The private water company doubled water rates. In a city where
minimum wage is less than $100 a month, water costs increased
to $20 a month, nearly the cost of feeding a family of five for
half a month. The water price-hike, which was the source of Bechtel's
profits, was thus based on depriving already poor children of
food, clothing, education, and health care.
In January 2000, a citizen alliance, "La Coordinara,"
was formed. The alliance shut down the city for four days. The
government promised to reverse the price hike, but never did.
La Coordinara organized a peaceful march in February, in a "symbolic
taking of the city of Cochabamba" to demand the following:
repeal of the Drinking Water and Sanitation Law, annulment of
ordinances that allowed the privatization, annulment of the contract,
participation of citizens in drafting a Water Resource Law. The
protests were repressed violently.
The citizens' protests were directly against the logic of
privatization of water. La Coordinara's fundamental critique of
the concession was based on the negation of the community's property
rights to water resources, traditional rights ("usos y costumbres"),
and the rights and obligations of water corporations, committees,
The Cochabamba citizens' movement slogans were "Water
is God's gift and not merchandise" and "Water is life."
By reclaiming water from corporations and the market, the citizens
of Bolivia have shown that privatization is not inevitable and
that people and their democratic will can prevent corporate takeover
of our vital water resources.
Vandana Shiva is the director of the Research Foundation on
Science, Technology, and Ecology, and the author of several books,
including Stolen Harvest: The Hijacking of the Global Food Supply
(South End Press). In 1993, Shiva won the 'Alternative Nobel Prize
" (the Right Livelihood Award). Before becoming an activist,
Shiva was one of India's leading physicists.