Rapid Transition: Turning the tide of water privatization – the rise of the new municipal movement

People around the world are reclaiming their access to water as a basic human right, by seizing control of their water supplies from private companies. This matters because one of the biggest impacts of climate breakdown is to put stress on the water cycle. In a world increasingly prone to drought and flood, guaranteeing access to safe water supplies, especially for the most vulnerable, becomes an even greater challenge. The new municipal movement is putting people more in control of managing transitions.

Climate change is creating a ‘time bomb’ for the world’s supplies of fresh groundwater relied on by billions of people for survival, according to new evidence. That could mean those who are already vulnerable becoming more so, if they lack meaningful control over access to clean water.

But, between 2000 and 2015, there were 235 cases of water ‘remunicipalisation’– the process by which a city, region or national government terminates or refuses to renew water concessions, leases or management contracts with private companies, in order to bring water back under public control. As a result of this rapidly spreading trend of remunicipalisation, 100 million people across 37 countries now benefit from water as a public good, rather than a private commodity.

The upswing in remunicipalisation in the last two decades is a response to the failure of multinational corporations to deliver safe, reliable and affordable water to communities around the world. The 1990s saw a wave of privatisations, sponsored by national governments and multilateral development banks in developed and developing countries alike. In countries like Uruguay and South Africa, this wave of privatisations had devastating consequences – which extreme price hikes resulting in poor people losing all access to water. In response to the crises, these countries enshrined the right to water as a human right in their constitutions. In the industrialised world, in cities like Paris and Atlanta, private companies made huge profits whilst failing to invest in infrastructure and simultaneously increasing the costs to water consumers. France, the country which has the longest history with privatisation and home to two of the world’s largest water corporations, has seen the biggest wave of remunicipalisations – with 94 cities taking back control of their water supply since 2010.

By making water a human right and public good, rather than a vehicle of profit, water services have dramatically improved and costs to people have declined in cities across the world. This rapid transition to reclaim the right to water is a promising example of the power of people and the public sector to take on neoliberal forces of privatisation, and to improve the provision of basic services for all.

Wider relevance

The growing trend of remunicipalisation of water is interesting because it contradicts the oft repeated claim that private sector performance will always be superior to public provision. Since the 1990s, international financial institutions have been pushing countries, regions and municipalities to cede control of their water to multilateral corporations, on the basis that they would be more efficient and provide a higher quality service. At the World Water Forum hosted at the Hague in 2000, senior World Bank officials claimed that “there is no alternative” to privatisation, and as the banks supported the expansion of privatised water services – through concessions, leases and public-private partnerships – across the developing world, it seemed that they were right.

However, the growing opposition and domino effect of remunicipalisation since 2010, means that even the banks have had to recognise that their drive to privatize has only resulted in poorer service, higher fees, and in some cases, breaches of fundamental human rights. The World Bank admitted in 2015 that the failure rate of water and sewerage privatisations the Bank backed had reached 34%. The IFC also noted in 2013 that 28% of its water investments in the last 20 years had failed or were in difficulty, and that close to 40% of the complaints it received were in relation to water – even though water projects made up a relatively small proportion of the projects the IFC funds. In 2015 the IFC announced it had no new water concession projects in Africa and was working on fewer in developing countries in general.

What is also fascinating about the escalating number of remunicipalisation cases, is that they have usually gone hand in hand with significant improvements in the quality of provision. As the profit motive has been eliminated, public providers have been able to focus on enhanced access and improved service. In 2010, the first year of operations of Eau de Paris, the municipal utility realized efficiency savings of 35 million Euros, which allowed for an 8% decrease in tariffs for residents. Eau de Paris also increased its contribution to the city’s housing solidarity fund by 325,000 Euro, and paid a water solidarity allocation to 44,000 poor households in the city. Similarly, in Buenos Aires, following the remunicipalisation from French water multinational Suez in 2006, the new public water company AySA invested millions in improving infrastructure and expanded service to 700,000 water users. Improvements in quality, service and costs are the knock-on effects of treating water as a basic human right, rather than as a need that can be satisfied by private corporations in exchange for profit.

Context and background

Before the 1990s, in most countries the provision of water services was handled by public institutions – with the notable exception of France and a few cities in ex-French colonies. In Paris, contracts for water supply were divided between the two French multinational companies Suez and Veolia, in a 25-year lease in place from 1984. For decades, these companies made huge profits whilst over-charging Parisians for a sub-standard service. An audit in the year 2000 found that the prices the companies charged were 25-30% higher than the economically justifiable costs.

Despite the obvious flaws, the French privatized model was replicated throughout the Global South during a wave of privatisations in the 1990s.  These privatizations, often led by the two French water giants, were promoted by the World Bank and other international institutions in order to support the development of more market orientated economies in the Global South. All too often, however, the outcomes for the urban poor in many developing countries were disastrous.

In 1997 the Bolivian Government signed up to a World Bank loan to improve water provision in its main cities, that had privatisation of those systems as a condition. In 1999, the government handed over Cochabamba’s water supply to the US corporation Bechtel, with no public consultation. The cost of water tripled and the company even introduced a charge for collecting rain water. A year after Bechtel’s take-over, over half the residents had no access to clean water. In post-Apartheid South Africa, following the advice of the IMF and various donor governments, the government cut subsidies to municipalities and city councils, and incentivised privatisation of basic services. The French multinational Suez took over water provision in Cape Town in 1994. Two years later, the charges for water and refuse removal had increased by 600%. When people were unable to cover the increased fees, their water services were cut off. Shortly after Suez took over water services in Johannesburg, an outbreak of cholera took hold in the township of Alexandra.

In Argentina, through a similar process, Suez and Veolia carved up the water contracts in the 1990s. In 1993 Buenos Aires granted a 30-year concession to a subsidiary of Suez. The profits of the company soared, whilst residents saw an 88% increase in their water bills. Suez also failed to make sufficient investments to improve access or service provision, and, following the Argentinian debt crisis of 2002, the company sued the government for its financial losses.

In Uruguay, despite a similar pattern or poor service and price hikes making water unavailable to the poor, the Uruguayan government signed a letter of intent with International Monetary Fund in 2002, in which the country committed to extending the privatisation of its water services. It was the reaction of the Uruguayan people in rallying against this letter of intent that marked the beginning of a powerful movement of grass-roots actors around the world fighting for access to water as a fundamental right.

Enabling factors

The failure of private water companies to provide affordable and reliable water provision has been the key catalyst for the remunicipalisation movement. In Paris, the overpriced and poor service, along with the financial irregularities uncovered by auditors, ultimately led to the Mayor’s decision not to renew the city’s contracts with Suez and Veolia when they expired in 2010. After Paris took the leap in re-establishing a public water utility, dozens of other French cities followed suit. In fact, 40% of the cases of municipalisation cases that have taken place globally since 2000 have been French cities – 94 cities in total.

This fact is evidence of another contributing factor to municipalisation – its domino effect. Remunicipalised water operators from Paris and Grenoble were key allies in supporting other local authorities in France and beyond to take back control of their water services. In the last decade, the spread of such ‘Public-Public Partnerships’ (PUPs) in the water sector has been growing, through which cities have been able to learn from each other’s experiences, building further momentum for change.

An additional, and crucial, factor in regaining public control of water provision has been civil society leadership and broad-based public campaigns. In South Africa, for example, the Coalition Against Water Privatisation, brought together a coalition of social movements and progressive NGOs, which mobilised and organised poor communities to oppose privatization and lobbied the government for reforms.

In Uruguay, a similarly broad-based coalition of actors came together under the Commission for the Defence of Water and Life (CNDAV) following the signing of the IMF letter of intent to expand water privatisation. CNDAV successfully campaigned to achieve the 283,000 votes they needed to request a plebiscite on an amendment to the Uruguayan constitution, which stated “Water is a natural resource for life. Access to drinking water and the sewage system constitute a fundamental human right”. Despite a strong counter lobby from the multinational corporations and development banks, the amendment was won with 64% of the votes.

In Bolivia, the reversal of water privatisation was achieved through the mass mobilisation of people. The Cochabamba Water War, as it came to be known, saw hundreds of thousands of protesters marching on the streets against the Government and the World Bank sponsored Bechtel contract[vii]. Violent clashes with police resulted in the death of one student protester, shortly after which Bechtel withdrew from the country, and sued Bolivia for damages. The Bolivian Government was forced to revoke the Water Privatisation law and a decade later, under the Government of Evo Morales (who had been involved in the protests) access to water was enshrined as a human right in the Bolivian Constitution.

Scope and evidence

  • Globally, the cases of remunicipalisation of water services have increased from two cases in two countries in 2000 to 235 cases in 37 countries by 2015.
  • Remunicipalisations of water provision has affected over 100 million people since 2000.
  • The number of cases of remunicipalisations doubled in the 2010-2015 period compared with 2000-2010.
  •  Remunicipalisations have taken place in the industrialised world and Global South alike, however, cases are more concentrated in high-income countries, with 184 remunicipalisations compared to 51 in low- and middle-income countries. The great majority have taken place in two countries: France (94 cases) and the US (58 cases).

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