Reverse Robin Hood: Water Privatisation in South Africa

Originally in Report on Positivity: Water is essential to life – this cannot be contested. Knowing this, we are left with a pressing question: how to best collect, purify, and deliver water to peoples and sectors in need.In this short article, I will be looking at the case of South Africa, a country that has gone through recent water privatisation, in order to understand the strengths and weaknesses of supply versus demand-side water management, commercialisation of delivery, marginal-cost-based recovery of delivery, decommodification movements, and environmental versus wealth arguments. Lastly, I will relate the South African experience with the international situation.

Push or Pull?

There are two ways of handling a situation of water scarcity: increase supply or decrease demand. Currently, in great part thanks to the high-pressured insistence of the International Monetary Fund (IMF) and the World Bank, the one solution that is given any serious consideration is supply-side water management. The Lesotho Highlands Water Project (LHWP) is a case in point. The small country of Lesotho, South Africa’s neighbour, received a major World Bank loan, equivalent to 20% of its GDP, in order to construct dams that would supply water to a thirsty South Africa. The first phase of the project is said to cost US$4 billion (Bond 2003:64-65).

The LHWP has negatively affected 20,000 indigenous people, who have lost homes, farm land, and many have been forced to relocate. The project has submerged arable land that is already scarce in a mountainous country in which only 9% of the land is suitable for farming. The dramatic environmental change and the redirection of water caused by the construction of dams seriously endanger wildlife and ecosystems in affected regions (Bond 2003:65).

Meanwhile, sound estimates place the loss of water due to leaky pipes at roughly 40% (Bond 2003:66). Improved irrigation techniques and appropriate crop choices would reduce South Africa’s water demand by about 25%. The country’s mining and industry soaks up a further 25%. Only a little over 1% of the water is consumed by black South African households (Bond Dec 2002:31).

If the issue of wasted water was addressed, there would be no need for the economically, socially, and environmentally costly construction of dams. In the case of resource consumption, such as water, it is logical to carefully control unnecessary demand before throwing money at the problem. This is especially true for a developing country that must rely on expensive debts for its major capital expenditures. Sadly, the cost of the unnecessary LHWP is disproportionately downloaded on the lowest income citizens. This brings us to the next topic, methods of delivery.

Commerce of Delivery

56% of South Africa’s population is below the poverty level, a full quarter of which does not have access to running water (Pauw 2004). Meanwhile, about half of people in the developing world suffer from illness caused by contaminated water or food (Gleick 1999:2). By this, we realise that the delivery method of clean water and availability of sanitation is of great importance to developing countries.

South Africa, again under pressure from international finance, has become a testing ground for commodified water and privatised delivery. Full marginal-cost recovery, “namely the break-even cost of supplying an additional unit of the water to the customer (Bond Dec 2002:25),” has become all the rage. In 1996, full marginal-cost recovery became an official state policy, the application of which repeatedly and dramatically increased water tariffs to levels unaffordable to many citizens. In Ngwelezane township, boasting a population of 1.5 million, 79% of the people do not have access to clean water. Between 1994 and 2002, 10 million South Africans have had their water cut off, 2 million of which have been evicted from their homes - a policy used to punish non-payment (Pauw 2004).

The disconnection of water supplies due to non-payment has forced many low-income South Africans to rely on contaminated water from local ponds, rivers, and lakes. This condition, spawned by unaffordability, resulted in a cholera epidemic that struck over 200,000 people, more than 200 of which have died (Bond May 2002:23).

The IMF and World Bank did not attempt to calculate the benefits of state-sponsored investments in public services, such as the benefits to public health derived from universal access to clean water and sanitation (Bond 2003:23).

Considering the accumulated cost and suffering to low-income South Africans to date, people were not going to take it sitting down. Social movements throughout the country rose up to demand a right to water.

Water Rights & Commodity Markets

In 1994, South Africa’s Reconstruction and Development Program promised a minimum of 60 litres per person per day. This would be a ‘life-line’ that would allow even the unemployed to survive. By the turn of the century, most rural black people are deprived of even this minimum, making the commitment hollow and uninforced (Bond 2003:43). The trouble is that water has been commodified, and with the implementation of full marginal-cost recovery, it is difficult to imagine that the poor would be able to pay for what the cost curve demands. This is why many locals have been demanding the decommodification of water and the actualisation of a minimum delivery necessary for life.

One viable idea, applied in some other countries and for other resources, is cross-subsidisation. If this were used in the case of South Africa’s water, there could be a free ‘life-line’ of water that would be subsidised by the country’s most extreme water consumers. This would also help account for the environmental cost of overconsumption while nurturing a culture of conservation. Such a move would end the human suffering resulting from lack of water; curb water-related diseases and costs thereof; potentially cut demand and thus save money used in expensive supply-side capital expenditures.

Binary Appeal

So far, both poverty and the environment have reared their heads. At times, it is believed a tension exists between the two, as industrial expansion (and wealth that is derived from it) harm the environment, while environmental policy may restrict unfettered economic expansion. In the case of water, however, no conflict exists between the two agendas. As we have already witnessed, the environmentally harmful dams have been cause to mass displacements, loss of arable land, loss of property, and have demanded massive loans from international financial institutions. The LHWP’s final costs are born by the ratepayers (Bond Dec 2002:11), who are often forced to pay as much as 30% of their wages in water bills (Pauw 2004).

Steep rates force many South Africans to pick between water and education, or water and food. In the end, it is low-income people who are cornered by the economic and environmental costs of commodified water. It is also they who suffer from declining health as a result of a lack of water and proper sanitation. Knowing this in the case of South Africa, is the same true in other parts of the world?

Global Crisis

So far, privatisation of water has been concentrated in the poorest regions of the world. This is in part due to conditions attached to IMF and World Bank loans to developing nations, as well as the intervention of other international financial institutions (Marsden 2004). The question of demand versus supply-side resource management is the same everywhere. Most countries, rich or poor, are faced with decaying infrastructures through which up to half of all water is lost due to leakage. Dams, meanwhile, have similar environmental impacts the world over. The drying up of rivers and the flooding of plains has consequences on the lives of peoples and animals in the zone of influence.

Over a billion people in the developing world do not have access to safe drinking water while almost three billion people do not have proper sanitation, thus exposing them to a greater risk of water-related diseases (Gleick 1999:2). The application of full marginal-cost recovery in support of commodification fundamentally ignores the human right to water, and it dismisses possibilities for the public good.

Sources

Bond, Patrick. Against Global Apartheid. Zed Books Ltd. 2003.

Bond, Patrick. Fanon’s Warning. Merlin Press. May 2002.

Bond, Patick. Unsustainable South Africa: Environment, Development and Social Protest. London: Merlin Press. Dec 2002.

Gleick, Peter. The Human Right to Water. Pacific Institute for Studies in Development, Environment, and Security. April 1999.

Marsden, Bill. Cholera and the Age of Water Barons. April 2004. The Center for Public Integrity. 5 April 2004

Pauw, Jacques. Metered to Death: How a Water Experiment Caused Riots and a Cholera Epidemic. April 2004. The Center for Public Integrity. 5 April 2004