Inconvenient truth – privatising water is expensive
Water is our most precious natural resource. With only three percent of the world’s water existing as fresh water, nearly every continent is feeling the effects of the global water crisis as the world’s fresh-water resources are running out.
Not long ago a remark like this would most probably have elicited little reaction and most likely have been laughed off as another typical doomsday prediction.
But not anymore.
Water a critical commodity
Today it would be difficult to find a person willing to argue against the view that water has become a critical commodity without which mankind cannot survive.
The world’s fresh-water resources are running out fast and, although varied, the reasons are not difficult to identify.
Global warming, climate change, droughts, pollution and, most importantly, the world’s growing population are exerting unprecedented pressure on all the fresh-water resources around the globe.
Tension between states over access to fresh water is on the increase. The diversion of water and the building of dams in rivers that feed more that one country have become controversial issues. Confrontation looms between Jordan and Syria and India and China while Pakistan is not happy with India for diverting too much water from rivers running off the Himalayas.
In Africa a number of countries are in dispute with Egypt and Sudan while trying to peacefully negotiate the future use of the water of the Nile.
In Southern Africa talks are underway to guarantee that the water of the Zambezi is not lost to those countries that hold that their survival is linked to uninterrupted access to the river.
In recent months Botswana has approached both Lesotho and South Africa to secure a safe water supply for its future needs. Survival is paramount and not even the fact that South Africa is a water-scarce country prevented Botswana from register its need to discuss sharing the water of the Gariep (Orange) River.
Approximately a year ago an investor website that identifies and advises clients on potential high-yield shares singled out investing in or buying shares in farm land as an opportunity second to none.
With the global food shortages experienced in 2008 and rocketing food prices the recommendation made a lot of sense.
Many responded and today governments, international companies, financial institutions, and individual investors are competing for available arable land, mostly in Africa.
The interest is so huge that it is said that the second “scramble for Africa” is underway.
A few weeks ago the same website wrote about “water as the business opportunity of a lifetime”.
An increased participation by the private sector in the water industry is imminent and it might prove to be the proverbial watershed.
It is estimated that globally private investment in the water industry is set to double in the next five years with the private sector becoming a major service provider.
Nobody can question the right of any participating entrepreneur to profit from involvement in the water industry.
In many countries, including South Africa, there are those who will be prepared to pay more if uninterrupted clean water can be guaranteed. People are already paying exorbitant prices for bottled water although it is sometimes of doubtful quality.
Sourcing, treating, storing and providing water to industry and millions of people and households is highly technical, specialised, and expensive while the demand is relentless.
It is not only in South Africa where the authorities find it financially challenging to meet the growing demand for water. It is a global challenge.
In Melbourne, Australia, a desalination plant planned to make the city drought-proof will cost US$24 billion and the city of Denver in the US recently forked out $650 million for a water treatment facility.
New opportunities and challenges
The United Nations expects the demand for fresh water to outstrip supply by more than 30% by 2040 and, when demand overtakes or begins to challenge supply, it is to be expected that interest will be aroused.
The growing demand for a dwindling commodity that was always considered to be in bountiful supply creates more than just socio-economic and political challenges.
The involvement of the private sector is not only unavoidable it is greatly needed. It will however pose a new set of challenges.
One of the most challenging is going to be to calibrate and manage from any government’s perspective the dichotomy between profit and social responsibility.
Without guidelines and strict price control water can become a seriously expensive commodity out of reach of large segments of society.
Water is essential to life.
It is imperative that water stays affordable to all. Access to water is after all a basic human right. The UN General Assembly voted unanimously in July this year to affirm it as such.
Water is not like other commodities — it is not something people can substitute or choose to forgo. With other commodities there is a choice. With energy, or food, customers have options: they can switch from oil to natural gas, or eat more chicken and less beef. But there is no substitute for water.
An attorney who specialises in water cautions that water has been a public resource under public domain for more than 2,000 years and to concede it to private entities seems to be morally wrong and dangerous.
This view is perhaps over the top but the message is clear.
With shrinking fresh-water reserves it is inevitable that the consumer will have to pay more for one of life’s essentials and facts and figures indicate that any form of privatised water guarantees an increase in water tariffs.
Hopefully this inconvenient truth that water is to become a scarce, strategic and expensive commodity will force consumers, large and small, to use it more sparingly.