The Ethical Dilemma of Water Privatization

Introduction

Water privatization is defined as private corporations buying or operating public water utilities. In the environment, whether companies are viewed as a private entity or individuals with responsibility to take care of the environment, privatization plays a key role in the profit-making process of a company. The decision to behave ethical to the public and providing social benefits to the publics remain a key issue for the company. That is why executives must have a good understanding with the public, framework and worth of environmental ethics. But in the public sector, maintaining good relationship and ethical behaviour in the eye of public governance can positively influence factors like customer satisfaction providing cheaper and clean water to their citizens.

This paper aims to teach executives the issues of water privatization, by referencing water privatization scandal of Bolivia that leaded to a Water war in December 1999. Our group believes that this issue provides a powerful example of how water privatization is the central issue to the issues of the environment. To strengthen and simplify our theories and concepts, our team, has devised three questions to address the dilemma of Water privatization. The questions are:

1. Is water free for the public?
2. Is water privatization ethical?
3. What happens if the public takes initiative in water resource and the benefits of water in public sector?

Water Privatization

Before we discuss the key questions, we must first look at basic details of the case. This section includes the definition and concepts about water privatization. And discusses the Bolivian water war.

Water privatization is a participation of private sector companies in provision of water services and sanitation. Water privatization in developing countries was started mainly because solution to municipal budget problems in a country’s government. Even though, water privatization promises clean water and public jobs in a company, it backfires mostly because high water rates, worse service and declining job losses.

At first, USA and European countries tried to privatize their water in their development period. But later when scientist found out industrial toxic and chemicals in the water and sewage systems after water privatization are affecting immune systems of animals and the humans.

A research done by the BlueVoice organization revealed that industrial toxins travel in water and reveals that most of the animals in the artic such as seal, whale, polar bear and even breast milk from our mothers all carry industrial toxins.

Another key toxin found in our waters is Atrazine, it is used as pesticide and a Swiss company, Syngenta was the largest producers of Atrazine in the United States. Scientist have found out that the chemical travels 600 miles by rain and it causes sperm count to reduce.(Salina,2008)

Moreover, what we use in our day to day lives such as cosmetics, bathing liquids and even the cigarettes which are thrown in the sewage system all comes back as drinking water again. So, United States and European countries decided to ban water privatization. Thus water privatization travelled to many developing countries where there is less clean water and low paid wages for their employees.

Disadvantages

There are several disadvantages to privatize water; rate increase, environmental pollution and job losses. Allowing companies to take over the system of water means water price would hike because they do that for their profitability rather than people needs. Water is a basic human need and natural resource, however, water privatization would make a society where only those who can afford water are going to get it and, those who are unable to pay for water would be without it. Water privatization would put their lives at risk.

Privatizing water has a disadvantage in terms of the environment too. As I mentioned, since corporate priorities are their profits, privatization usually undermines water quality because they are not much care about polluting natural resources less than government or NGOs. Moreover, they tend to use too much water at once, therefore water table would be depleted rapidly if companies keep using water for their business.

Finally, because of privatization, massive layoffs easily be occurred. As companies try to minimize all kinds of costs and raise profits, they try to hire people as little as possible. Unemployment makes suffer not only workers but also their families and finally would be unhappy as a nation. When dissatisfaction piles up, people may occur riots to change the situation. Also, massive layoffs lead to understaffing and eventually put water quality at risk.

Bolivia Economy

In 1982, Bolivia ended its military dictatorship, but the country did not bring economic stability. So, the Bolivian government asked the World Bank and some few foreign investors for help as the country suffered hyper inflation at an annual rate of 25 thousand percent.

Bolivia Water Problems

Bolivia was also facing a massive water shortage for its agriculture use. The third largest city in Bolivia, Cochabamba, mainly produces most of the country’s grains, poultry, fruits and vegetables. But because of increase in population and drier climate reduced the water system in the city. Some areas of the city did only receive water few hours every two days. And the farmers must shift crops requiring less irrigation.

Bolivian Water War

San Francisco-based company Bechtel was the main shareholder of the municipal drinking water and sewer services (SEMAPA). By signing this contract, the government conceded to the World Bank and IMF’s pressure to privatize. It is a 450 million USD scheme to pipe waters from group of rivers. The scheme requires boring ok 19km tunnel through the mountains. It promised, expanded access to water by many previously unserved communities. But when the company took over local wells and informal pumps as well as the public system infrastructure, the public had to pay high water bills. The water bill raised up over 35% on average and some places by twice.

“They want us to pay now for improved water supplies and services which won't even begin for another two years” says a resident. In January 2000, protestors blocked roads in Cochabamba for several days. Over 100 protestors and 30 police officers required medical treatment because of the intense riot. The city was clouded with tear gas and smoke from protestors fires.

In 2005, giant Suez Company picked up a lucrative concession to provide water to the El Alto area of the Bolivian capital La Paz. In 2005, however, residents of El Alto also took to the streets to protest high water rates, forcing the government to cancel the Suez contract.

Suez in South Africa

Another example related to Water Privatization was in South Africa. Suez Company, which was originated from France has been a involved in many water privatization cases. In South Africa, Suez has introduced a prepaid water system to a lot of cities in the country. The prepaid water system requires a person to pay monthly and receive a key which enable the person to use the water system’s pipe.

The average price of using the water system is approximately 1 USD. But most of the citizens, who are poor, could not afford to pay because of high price and high inflation in the country. And this system did not affect the wealthy household. The Suez Company raised an issue stating that they are trying to promote the “paying behaviour” to the country so that they can get used to this behaviour for future aspects.

Possible Consequences

In most parts of the world people use to pay for water which comes from the government pipeline, but they do not notice the increase in water rate. In Singapore, a citizen should pay around monthly 200 USD to 300 USD. Citizens do not realize the high payment because they got used to paying. This behaviour is common in middle and high-class families, but it is not affordable to the poor communities.

The price of petrol in japan is 160 yen and the price of 1 litre water is 140 yen. The ratio of these prices is close to each other. This is an alarming issue for both the people and the government. The possible consequence of Water Privatization is high contamination of water. As private companies have the right to use the public water, they also might spill the chemical

Bolivia after Water Privatization have seen an increasing rate in death. One out of five children lose their lives before the age of five. People are worried to drink water from the rivers in Bolivia. Another possible consequence would be a protest and a riot on the streets where people might be tired of the high-water rates. As this example of Bolivia, shows that people wanted to change their way of living and started to protest.

Is Water Free for the Public

Necessity

Water can be said to be indispensable in our lives. Looking at various aspects of our lives, it is obvious. All the vegetables, meat and other foods that we eat every day are things that have been brought up with the benefit of water, and the water transportation of necessary supplies for the formation of society has not changed from the past. In the past, big rivers were flowing around the land where the huge civilization such as the Indus civilization and the Yellow river Civilization flourished, and people have used their great advantage to live a life. Even just looking at these things, it turns out that the fact that water has a big influence on our lives is unquestionable.

Water Problem in Bolivia

Considering the water problem in Bolivia on the premise of the contents above. Bolivia is undoubtedly a society supported by water, just as same to other societies. Bolivia is a developing country with a population of 10 million, and it can be said that its national strength is not as huge as other super nations. Under such circumstances, it is extremely right that the government seek financial assistance from the IMF, the World Bank, etc. What the IMF and the World Bank called for Bolivia in return for assistance is the privatization of water supply projects. As we can understand from the case of Japanese society, it is not definitely wrong of prioritizing governmental business to the public sector under those conditions.

Suggestions

However in Bolivia’s case, there were few different points compared to other societies. The first is that the target of privatization was water supply not like posting service and it was actually an American water supply company that took over the municipal water supplier. If the American waterworks company provides water for reasonable price for Bolivian citizens, there was no problem. But in Bolivia's water problems, eventually, the exceptional water fee set by this company was the trigger of a subsequent tragedy. Looking at the series of water warfare that occurred in Bolivia, water is considered to be free according to its social character. As mentioned above, water is the source of human life and should be indispensable for the prosperity of society. If you commercialized water as a resource for business, then it is possible that even worse cases can occur.

Dependency Theory

In the field of international relations and economics, there is a term 'dependent theory'. The “dependency theory contains some characteristics of relation between dominant states or global corporation with dependent nation. One of the characteristics of this theory explains that it can be assumed that external factors such as global corporation or international commodity market have significant economic role in dependent country (Vincent, 1996, p. 2). This relation between a country and one corporation could go worse than we expected. If this system is unintentionally installed between US water supplier and Bolivia government and society, the US water supplier can manipulate Bolivian government as they wish by cutting water supply to Bolivia society. What even worse than this case is the US water supplier cooperate with IMF or World Bank again, and they rearrange Bolivian governmental system as they wish to benefit them.

In such circumstances, adjustment of the power balance in the international community will not work, so such things should be avoided at all costs. So, the water in Bolivia should be free, and that water generally should not to be controlled by someone or some specific factor.

Is Water Privatization Ethical

Opinion

So far we have considered the dangers of privatization of water from an international relations point of view, but let us question the ethics of privatization of water supply projects here. In response to this question, from a conclusion, in a personal opinion, privatization of water supply projects is not ethical. That is because water is a central being in the source of human activity as mentioned on the first question.

Maslow’s Self

Maslow 's self - actualization theory express the fact that water is the necessary element of humanity. Figure 1 is a hierarchical structure diagram of needs created based on Maslow's Hierarchy of needs. In this theory human desire is largely divided into five stages, becoming secondary as the stage goes up. As you can see from this figure, the self-esteem and friendship relationships are located at around the top of the hierarchy structure, and on the contrary, water is applicable to the lowest layer 'desire for physiology'. As you can see clearly from this figure water is an indispensable desire for human beings to live. Considering it to think, privatization of the water supply project is considered to contains danger when viewed from an ethical aspect.

Unethical Purchasing Behaviour

Originally, the water is to be distributed equally to humanity as the source of life activities, but once privatization of water services is carried out, its original nature is lost, and it would become a commodity of business. If the water has become one of the products of the business, it is likely to happen that there might be people who cannot afford to buy water because of poor, but they cannot get enough financial support to buy water because the buying water is regarded as natural purchasing behavior same to buying like clothes or snacks. Then it would be hard for poor to get sufficient water supply and also difficult to satisfactory the 'physiological needs', and eventually it will be impossible to sustain life.

Although this flow is indirect, it can be considered that the company took away essential resource for living from poor for their benefit. To say exaggeratedly, it is similar to 'slaughter'. From this idea, it can be said that the privatization of water supply is not ethical because it is a dangerous system that can intentionally influence the life of an individual.

What happens if the public takes initiative in water resource and the benefits of water in public sector

So, what happens if citizens have ownership of water on the contrary? The answer to this question can be thought from both social and environmental aspects. Considering from the social aspect, since clean water can easily reach the citizen's hands, therefore the population will rapidly increase, and development would be accelerated because people who used to drink contaminated water and suffered from illness will no longer have to face the danger of life. On the other hand, however, looking at the situation from the environmental point of view, the water resources will continue to decline as population increases, and moreover, the impact on the comprehensive environment would be much bigger. To prevent this situation, innovative solutions to water resources and other environmental problems will be needed immediately.

Conclusion

In conclusion, the Bolivian water war a good example to present our ideas. The issue had a lot of unethical practices and poor contribution to the environment. Water is a necessity for our own needs and it is beautiful gift given by our planet. So why do we need to put a price on it or why should we need to pay for water?

Water deserves to both poor and the rich. And by a price label and contemning water, we lost our basic our fundamental value as a human which is - “Integrity”. Our group hopes that Water Privatization stops and also the purchasing power on water would also affect the future, free resource must not be labelled with a price.