Who Owns the Water?

Of all the world’s natural resources, few are as fundamental as water. Yet, according to Years of Fresh Water, a 2004 Quaker United Nations Office reference guide, more than a billion people around the world do not have access to safe drinking water.

It’s a growing crisis. Watchdog groups predict that the demand for water will exceed availability in little more than two decades. Water is such a hot commodity that it is even traded on Wall Street. The Christian Science Monitor reports that water company stocks have consistently beat market averages. According to its staff writer Guy Halverson, "The high price of water stocks is partly the result of drought conditions," and partly because "a number of U.S. water utilities have been gobbled up through mergers and consolidations, with major European firms also coming to the U.S. to buy water systems."

In poor, indebted countries, the World Bank, the International Monetary Fund (which lends money to governments in financial distress) and other financial institutions are pressuring governments to sell off their water companies. The theory behind privatization is that water will be managed more efficiently under the discipline of prices set by profit-minded firms. But critics of privatization say that under "free market democracy," the poor will have access to only as much water as they can afford.

In Nicaragua, one of the poorest countries in the Western Hemisphere, water is at the heart of a struggle to determine whether the people or private enterprise will control this precious commodity. Of the country’s 5,000,000 people, 3,000,000 are living in poverty, and about a third have no access to clean drinking water. The issue centers on conditions placed by the IMF on access to loans needed to keep the economy afloat. The IMF requires that the country raise water rates and hand over the administration of publicly owned water companies to private firms. Privatization, in theory, will lead to a reduction in the deficit, improved administration of the national budget, better macroeconomic stability, and increased attraction for foreign investment.

The IMF touts private enterprise as the "motor of efficiency, growth, and macroeconomic stability," but there is increasing concern over damage that policies of privatization might do to social equity, public health, the environment, and the very survival of the poor. There is mounting evidence that such takeovers lack transparency, foster corruption, substitute private monopolies for public ones, and, in fact, fail to achieve the social benefits they promise.

In Nicaragua, the Inter-American Development Bank has conditioned loans on the privatization of water in four cities. The IMF has ordered the government to raise rates, threatening to put potable water out of reach of poor people.

American Friends Service Committee and Quaker Peace and Social Witness (London) recently commissioned prominent Nicaraguan economist Nestor Avendaño to provide economic and technical analysis with which to scrutinize efforts to privatize water in Nicaragua. The report, entitled The Process of Water Privatization in Nicaragua, was released in January. It concluded that water privatization will not only have a negative effect on the poor, but also holds the real possibility of leading to instability and violent conflict at the community level.

Nestor Avendaño, who holds a PhD in Econometrics from Yale, has worked for five different Nicaraguan governments and on various World Bank and IMF-related projects. He writes: "Given the opinion of civil society about the issue of water privatization, the act of privatizing water is a social crime. . . .Water is a good, a natural resource, a public resource for the survival of the human population and should not be administered for profit but rather in the social interest."

In Nicaragua, not only are poor people being cut off from access to water, but landowners are in danger of being cut off from their own water. In Jinotega Department (province), the IMF has ordered the government to sell a government-owned hydroelectric facility. Despite interest on the part of multinational corporations such as Enron to go through with the sale, consumers’ organizations were able to persuade the government to put the sale on hold until issues such as ownership of the water in the lake formed by the dam and the surrounding watershed can be resolved. The land around the lake is used by indigenous Nicaraguans with land titles going back to the time of the Spaniards. Doubts about post-sale use of the lake water for farming, fishing, and transportation led to a halt to the sale, pending clarification of Nicaragua’s water laws. Now, the Nicaraguan National Assembly is considering a proposed water law, one version of which would require landowners to get permission from the private water company before digging a well on their own land. The National Network in Defense of Consumers, on the other side, has put forward an alternate proposal that is based on the idea that water is a human right.

Nestor Avendaño’s report is being used by the network and other civil society groups to defend their position on both technical and ethical grounds. They point out that private enterprise tries to recover its investment in the shortest possible time, with the most expedient way being to raise water rates and let market forces rule. The end result is that many poor people are cut off from water resources.

Since its publication, the report has been discussed among leaders in both Nicaragua and Washington, D.C. On March 18, 2004, Nestor Avendaño presented his findings in a public forum in Managua, Nicaragua, called The Process of Water Privatization in Nicaragua and the Voices of Civil Society. His report was followed by a panel presentation by representatives of three large Nicaraguan civil society networks that are building coalitions to prevent water privatization and other detrimental IMF mandates from taking effect in their country: National Network in Defense of Consumers, Grupo Pro Agricultura Ecological, and the Coordinadora Civil. Cosponsored by AFSC, Centro de Estudios Internacionales (CEI), and National University of Nicaragua, the forum was attended by around 300 people, including five members of the Nicaraguan Congress.

In May 2004, a press conference concerning water privatization was held at the Nicaraguan National Assembly, convened by Nicaragua congressman and former comptroller Augustine Jarquin. Following this event, Nestor Avendaño and two representatives from the Coordinadora Civil traveled to Washington, D.C., where they held several meetings and events with representatives of the World Bank, the IMF, and the Inter-American Development Bank. At these meetings, the Nicaraguan representatives began the long and arduous task of pressuring the international organizations to revise their demands. All three financial institutions plan to continue communicating with the Coordinadora Civil, which hopes to promote transparency in the formulation of public policies related to IMF and World Bank activities.

In July, AFSC brought Ruth Selma Herrera, coordinator of the Network in Defense of Consumers, to speak about the Nicaraguan water issue at the Boston Social Forum—an event that brought grassroots activists and national leaders together to discuss peace and social justice issues. Developed in association with the Water Allies Network, the panel reached hundreds of participants at the event. This network is also working in the United States to strengthen the ability of local communities to assure a reliable supply of affordable, safe water outside the control of multinational corporations. The Water Allies and the Nicaraguans are part of a growing international movement of people who say, "Our water is not for sale."

No one should be forced to choose between necessities such as water, food, and education. In addition to work in Nicaragua, AFSC is working to help promote responsible stewardship of scarce resources including water in Cambodia, Vietnam, Haiti, war-torn Iraq, and elsewhere.

AFSC will also continue to take a hard, thorough look at the impact of global trade rules on the ability of local governments to safeguard their water supplies and to protect future access to safe, clean, and affordable water.

For more information, see Nester Avendaño’s report, in Spanish, online at http://www.afsc.org/latinamerica/PDF/nestoragua.pdf; and "The Nicaraguan Struggle for Water Sovereignty," by me, at http://webarchive.afsc.org/newengland/nh/waterarticle.pdf.

Arnie Alpert

Arnie Alpert is American Friends Service Committee's New Hampshire program coordinator. He is active in the Water Allies Network and has led delegations to Nicaragua for the past three years.