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It's all for Sale
The Control of Global Resources
By James Ridgeway Duke University Press
ISBN: 0-8223-3374-0
Chapter One
Fresh Water
Clean drinking water is the one commodity we cannot do without. Yet it is also, perhaps, the commodity that we most take for granted. Like the air we breathe, it can appear not to be a commodity at all, but rather a free, limitless, natural phenomenon. The amount of the earth's water totals 330 million cubic miles, but only a smidgen of this vast supply, 2.6 percent, is fresh water, mostly from rainfall. Households and municipalities consume 10 percent of this water, and industry 20 to 25 percent. Irrigation accounts for around 65 to 70 percent.
From the early twentieth century on, clean drinking water has been provided by local government, and in the United States sometimes through massive projects such as the numerous Colorado River diversion schemes that have been financed by state and federal governments. But that is not the way it has always been. In the early part of the nation's history, private companies supplied water. The mid-nineteenth century saw the development of modern sanitation practices, spurred by concerns for public health. In the early twentieth century, towns and cities in the United States wrested control of drinking water from private companies and made it a function of municipal government.
But industrialization and especially development of modern agriculture have taken atoll on the American water supply. Today municipal water supplies are frequently polluted with heavy metals, pesticides, and other toxic substances. People unwilling to trust governments to guarantee the safety of the water supply are turning back to the days of privately supplied drinking water, in the form of bottled water. At the same time, cities and towns sometimes contract out with a private company to manage their water supplies. The consumer pays indirectly through taxes or in certain cases directly to the company.
Around the world water consumption is growing rapidly, and is expected to double every twenty years, a rate that is more than twice that of human population growth. More than one billion people cannot obtain fresh drinking water; projections suggest that at the quarter-century mark the demand for water will have outstripped overall supply.
An analysis of the world's water supply issued in October 2000 by the World Resources Institute states that overall the system is so degraded that "its ability to support human, plant and animal life is greatly in peril." Four out of every ten people live in river basins which already are experiencing water scarcity. "By 2025, at least 3.5 billion people or nearly 50 percent of the world's population will face water scarcity." In addition "more than 20 percent of the world's known 10,000 freshwater fish species have become extinct, been threatened or endangered in recent decades." The report points out that dams, canals, and other types of diversions have been built on 60 percent of the world's largest 227 rivers. These have contributed to the degradation of the world's freshwater systems, as have pollution, overexploitation, the introduction of nonnative species, and habitat destruction. The introduction of nonnative fish in Europe, North America, and Australia and New Zealand, for example, has ended up destroying many species of native fish. "In North America, alone, 27 species and 13 subspecies of native fish became extinct in the last century largely due to the introduction of non-native fish." Polluted water continues to be a major cause of illness in the developing world.
The most dangerous cases of pollution and overexploitation of the water supply are invisible because they take place underground. About 97 percent of the earth's liquid fresh water is stored in underground aquifers. Some of these aquifers are enormous. The Ogallala aquifer in the United States, for example, touches eight midwestern states and covers 453,000 square kilometers. Aquifers have been increasingly tapped as water sources as populations and croplands have grown. Today they are the source of drinking water for 1.2 to 2 billion people.
Asia draws one-third of its water from groundwater; Europe, 75 percent; Latin America, 29 percent; and the United States, 51 percent. One aquifer underlying eastern China provides water for 160 million people. Some of the world's largest cities-including Djakarta, Lima, and Mexico City-depend entirely on underground aquifers for water. In rural areas groundwater is often the only water source. In the United States it supplies 99 percent of the rural population.
Among the most striking examples of groundwater abuse occurs in Bangladesh. Over 35 million Bangladeshis are drinking water contaminated with arsenic, and anywhere from 1 to 5 million are expected to die from that often slow-acting but deadly poison. The World Health Organization calls it the "largest mass poisoning of a population in history." Bangladesh is the eighth most populous nation in the world, with 135 million people living in an area the size of the state of Wisconsin. In the last two decades of the twentieth century, government and international groups such as UNICEF sought to persuade people to stop drinking pond water and tap into underground aquifers with wells.
DEPENDENT ON IRRIGATION, today's agriculture is draining groundwater supplies around the world. India is the third largest grain producer in the world and leads in total irrigated acreage. More than half of India's agricultural land gets water from underground aquifers, and the number of wells that draw groundwater increased from 3,000 in 1950 to 6 million in 1990.
Agriculture is also a leading cause of water pollution, affecting both underground sources as well as rivers, lakes, and other bodies of surface water. Nitrogen fertilizers, such an important component of the 1960s Green Revolution that introduced hybrid crops and newly developed pesticides and fertilizers, are a major cause of water pollution. As it turns out, less than half the nitrogen in these fertilizers is profitably used by crops, and much of the rest flows into underground water. The U.S. National Research Council estimates that "in the United States between a third and a half of nitrogen fertilizer applied to plants is wasted," because so much of it is just spread over the ground, and little reaches the actual plant.
Ever since publication of Rachel Carson's 1962 book, Silent Spring, there has been a campaign to regulate pesticides. But it has made little progress. More than forty years after she sounded the alarm, there still are no safety standards for many pesticides. Standards exist for only thirty-three chemical compounds. In March 2002 the U.S. Geological Survey reported that 22 different antibiotics, as well as other prescription drugs, veterinary drugs, hormones, steroids, and fire retardants, have been found in 48 percent of 139 streams in 30 states. Traces of antibiotics used in animal agriculture were discovered downstream from various farm operations. In recent years public organizations have raised alarms because of increased use of antibiotics in animals to promote growth. Enormous quantities of feces from livestock farming also drain into the water system.
In addition, there is, of course, urban sewage. Nitrates drain from lawns and golf-course fertilizers and leak from landfills. These nitrates not only contaminate drinking water, but also destroy aquatic life, in part by spurring the growth of algae that covers the water and cuts off the oxygen supply.
Petroleum and various chemical additives called Volatile Organic Compounds (VOCS) dribbling from old underground storage tanks are the most common form of groundwater contamination. In 1993 the EPA estimated there were some 100,000 tanks, many of them two or three decades old. To get rid of chemical residues that they knew were dangerous, companies for decades simply poured them into the water and into the earth-down drains, into septic tanks, into deep wells-or buried them. In the United States there are thousands of Superfund sites, where pollutants have been buried and are leaking into the surrounding groundwater. Groundwater in parts of the developing world, which sometimes depends on it as a sole source of drinking water, is widely being poisoned as chemical use continues to grow dramatically. World Watch reports, "In India, for example, the Central Pollution Control Board surveyed 22 major industrial zones and found that groundwater in every one of them was unfit for drinking." The Aral Sea is a stark example of how a large body of water simply gets used up.
The earth now faces the volatile confluence of two major trends: a continuing, exponential growth in population, especially in the developing world, and a reduction in the supplies of clean, fresh water. As the demand for water increases and supply wanes, international companies sensing a profitable opportunity have jumped into the water business.
In the developing countries, where access to clean water is hard to come by, the World Bank has encouraged water privatization, but often at full cost, without any subsidy or support. This means that the governments of these nations must stretch their already strained budgets, or else pass on the high costs of this life-sustaining commodity to sometimes desperately poor consumers. This policy, along with the trade liberalization policies of the North American Free Trade Association and the World Trade Organization, provides an underpinning for private corporations anxious to make money from the provisioning of water.
Bechtel Enterprises of San Francisco, part of the Bechtel Group, contracted to manage the water system of Cochabamba, Bolivia, after the World Bank told Bolivia to privatize. The company pushed up the price of water, but the city rebelled. The military was called in. After four months of struggle, Bechtel quit the city, and the World Bank gave up its privatization program. The company is now under contract to help San Francisco upgrade its water system. Monsanto, the St. Louis-based agribusiness firm, also sees profits in water. At the beginning of the twenty-first century it was in the water business in Mexico and India. Water supplies in Mexico City already were in dire straits.
In the United States, Lee County, Florida, took back control of its water system following an audit that showed that the private company contracted to run the system was not maintaining equipment properly, and the county's utility director estimated privatization had cost the citizens an extra $8 million. In Atlanta, the scene of the nation's largest water-privatization program, an audit in 2001 indicated that the private company was lagging in maintenance while at the same time asking the city for more money.
ESTIMATES OF THE world market for water range anywhere from $300 to $800 billion annually, with 300 to 500 million people already getting their water from private corporations. This trend is by no means limited to the developing world. Most water systems in Great Britain were privatized under Margaret Thatcher's Conservative government, and more than three-quarters of the French draw water from private sources, including two French-based companies, Vivendi Universal and Suez. Maude Barlow and Tony Clarke write in Blue Gold that these two firms accounted for 70 percent of the existing water market at the end of the twentieth century. "Suez operates in 130 countries and Vivendi in well over 90. While Vivendi is the larger of the two water giants, posting bigger annual sales than its rival mainly because of its diverse operations and large customer base in France, Suez serves far more people (approximately 100 million) around the world. Of the 30 water contracts awarded by big cities since the mid-1990s, 20 went to Suez."
Four other firms follow close behind these two leaders: Bouygues SAUR, RWE-Thames Water, Bechtel-United Utilities, and Enron-Azurix. These large corporations are transnational conglomerates with a sprawl of interests ranging from construction to entertainment. Most importantly, because they own natural gas production and pipelines as well as electricity, they are well positioned to become wide-reaching utility holding companies. Because of deregulation in the United States, major oil companies, which also produce most of the world's natural gas, have gone into the pipeline business, and now are positioning themselves to expand these utility holdings into water and even handling wastewater. This is of considerable significance because, with the coming water shortage, countries and private companies increasingly are looking at the prospect of hauling water from faraway areas (i.e., Canada and Alaska to the lower forty-eight states) by supertanker or huge bobbing plastic water bottles towed by a tugboat, and by pipelines. (One Canadian company made a deal to transport water from Sitka, Alaska, to China, where, taking advantage of cheap labor, it will be turned into bottled water.) These water pipelines would lie close by existing gas and oil pipelines.
The remaining, much smaller, companies specialize only in providing water. Three British firms got a boost when Thatcher privatized water: Severn Trent, Anglian Water, and the Kelda Group. There is also an American company, the American Water Works Company, which was purchased in 2003 by the German conglomerate RWE. With some 50 million American customers, it is the largest private water company operating in the United States. Also, "in 1999, Vivendi purchased U.S. Filter Corp. for $6 billion in cash. The same year, Suez-which built the Suez Canal in the 1860s-paid $1 billion for United Water Resources and bought two major U.S. water treatment chemical producers, Nalco and Calgon, for $4.5 billion."
The United States may indeed be "the biggest, most underexploited water market on Earth, ... with estimated annual revenues of $90 billion. About 86 percent of the municipal water in the United States is delivered by public utilities, while only 13 percent is delivered by private companies. But water companies are swiftly expanding their foothold in the United States through operations and maintenance contracts for water delivery and wastewater treatment services, or by assuming temporary or permanent ownership of water utilities."
In 2002 legislation was proposed in the U.S. Senate (the Water Investment Act of 2002) to require municipalities seeking federal aid for their water infrastructure to "consider" privatization as a means of cutting costs.
IN THE INDUSTRIALIZED world those citizens who can afford to do so have already abandoned municipal water supplies as a source of drinking water, and instead get their water in bottles. As an alternative to tap water, bottled water is purchased in large jugs for water coolers, in smaller jugs or bottles, or in single-serving containers as a beverage in competition with such products as coffee, tea, and soft drinks.
Bottled water is regulated in the United States by the federal Food and Drug Administration, which sets standards. By definition, bottled water is sealed in a sanitary container; it cannot contain sweeteners or chemical additives (other than flavors, extracts, or essences, which must not exceed 1 percent of the final product) and must be calorie free and sodium free (or very low in sodium); and it may contain natural or added carbonation.
There are basically three types of bottled water. The biggest-selling category is water from a specific natural spring, such as Poland Springs and Evian. Some of it, like Coca-Cola's Dannon, comes from natural springs in different locations, and some of it, like another Coca-Cola product, Dasani, is "manufactured" water-municipal water which has undergone an elaborate purification process. Sparkling water-mineral water with natural or added fizz-is a fast-growing, prestige segment of the market, dominated by Perrier and Pellegrino. Its poor relation, seltzer-carbonated municipal water-has also grown in popularity.
When the bottled-water phenomenon began in the 1980s, it was perceived as a stylish, prestigious product, but since then, health concerns have outstripped image as a motivation for purchase (though few people over sixty buy bottled water). Prices have been reduced, and domestic brands now outsell foreign brands. By the end of the twentieth century, bottled water had become the single fastest-growing segment of the beverage industry in the United States, growing at a rate of 9 percent a year.
Individual bottles are the fastest growing part of the business. The largest chunks of the U.S. market lie on the Pacific Coast, with 21 percent, and in the Southwest, with 16 percent. Nationally, annual per-capita consumption stands at 12 gallons.
The market is so large that Pepsi and Coca-Cola have jumped into the business. The entrance of the large beverage firms with elaborate distribution systems makes it difficult for the smaller companies to compete. The business has become concentrated, with a handful of international companies accounting for 65 percent of the market, which in 1998 had total revenues of nearly $4 billion, almost double its level in 1990. Perrier alone accounts for one-quarter of the entire bottled-water market.
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Excerpted from It's all for Sale by James Ridgeway Excerpted by permission.
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