Volume 2, Number 53
6 September 2002

Who Will Pay for Water for the World's Poor?

Dear Friends,

Thirty years ago, at a "starvation camp" in Northern Bolivia, Robin and I watched three persons eke out their week's supply of water from a deep, muddy hole. The one at the bottom scooped up the brown water in a bucket, handed it to another clinging to the wall half way down, who handed it further to the one on solid ground. Today, as the world's population grows above six billion, one sixth (yes, a little over one billion) do not have adequate pure water.

Most of the water in the less developed world is supplied by public utilities, which keep the price low for the sustenance of the poor. Not only are their facilities outmoded, wasteful, and often unclean, but their management is frequently overstaffed and corrupt, pocketing the fees instead of applying them to improvements and replacements. As they run into the fiscal difficulties inevitable with corruption and mismanagement, the poor (and their water) are the first to suffer. With increased popular outcries, governments in the less developed world are seeking change.

Argentina, Bolivia, China, Ecuador, Panama, South Africa, and doubtless others seek the answer by contracting with multinationals from the United States (Bechtel), France (Vivendi and Suez), and Britain (Thames Water). These have sprouted many disasters. Though details differ country by country, here is a typical scenario:

  1. Without consulting the people in local communities, the central government calls for the multinationals to bid for contracts. But my experience both serving governments in less developed countries and talking with the poor in the slums has led me to believe that governments rarely consult the poor and do not know what they think.
  2. The winning company lays the pipe lines, often with loans from the World Bank, and charges prices high enough to pay the loans and profit on the investment. Sometimes the prices are less than necessary to cover costs of upgrading, since the bidder wants a foot in the door for the future.
  3. Even so, the prices are a substantial part of incomes of the poor, often 50% or more.
  4. Water users refuse to pay their bills. Protests and riots follow, with protestors sabotaging the facilities and threatening the government.
  5. The government breaks the contract, forcing the multinationals out.
  6. The government of the aggrieved multinational may take the case to the World Bank's International Center for the Settlement of Investment Disputes, where it will be submitted to conciliation or arbitration.


With public ownership inefficient and corrupt, and private ownership by multinationals too expensive, who will pay for the water for the poor — or will they go without?

Some say God gave us the water, so it should be free. Olivier Barboux of Vivendi replies, "Yes, but he forgot to lay the pipes."

Many say water is a public right; it should not be sold for profit. However, installing the purification and delivery systems requires capital. Capital goes where it earns the greatest profit. (You may say that shouldn't be, but it's the way the world works). If capital can't earn a profit on water, it goes somewhere else.

Please dwell on this conundrum for awhile before you look at my answer. Then tell me if you agree with me, or what your answer would be.

My answer:

Thirty years ago, Quakers Gilbert and Anne White — probably the foremost world authorities on water — wrote the first book ever on how poor people actually got water. They studied the same country — Kenya — where Robin (also thirty years ago) watched three people lift water from a muddy hole. Covering the whole country and not just one village, they calculated costs (in money, time, calories spent, and health).

Only this past year the study was redone, with Gilbert (now 90 years old) consulting. They found that many drawers of water, with higher incomes, were hiring others to bear it for them. Many standpipes had been built, which replaced the muddy holes, with better water (perhaps not totally pure). Still, costs remained about the same (though now paid by hired porters, not only ultimate users), and quality had declined.

Someone had invented a water-can to attach to a bicycle. This required a culture change, since previously women would seek the water because only women carry bundles on their head. Now it is men, because only men ride bicycles.

From all the above, I am led to the following semi-answer ("semi" because it is not "ultimate," only a step forward.) Here I speak only of the less developed world; water shortages in America and elsewhere are another problem, to be treated in another Letter:

  1. Water systems should be privatized, not to multinationals but to persons in local communities, such as porters and discoverers of water sources.
  2. Prices should reflect their costs , which would be far less than charged by the multinationals, for a product not quite so pure. Reason: If the price rises, both porters seek more water to sell, and users conserve. (Farmers are the greatest wasters of water all over the world).
  3. Anyone wishing to go into the water business should be allowed to do so and to charge whatever he or she wishes. Reason: Only then will more sources of water be found. People with surplus water will sell it to others in need rather than throw it into the gutter.
  4. The multinationals whose contracts were broken should be awarded judgments through any available body (usually, the International Center for the Settlement of Investment Disputes). The error lay mainly in the government not understanding how their own poor would react, but also in the multinational not investigating sufficiently. If the government cannot repay the multinational as contracted (as would often be the case), it should recognize but repudiate the debt, as it would in bankruptcy. Every party would learn a lesson.

How can I leave the poor people of the world with less than pure water? That grieves me, but I do not know who, otherwise, will pay for it, and I believe that the people — and only they — will improve their supplies, purification, and management if local, private innovators are not prevented from doing so.

Well, what do you think?

Your friend,

Jack Powelson

Readers' Comments

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I like it!

— Geoffrey Williams, attender at New York Fifteenth Street Meeting.

Your "answer" is probably the best that could be implemented in the shortest possible time with the least possible "opening" for totally crippling and self-defeating corruption. Critics will of course point out the obvious, that it has the potential for putting a vital resource in the hands of the local Bully-Boys ... but also the solution to the local Bully-Boy problem may just be more manageable to the local communitites and the national governments than the problems of nationwide water distrinution.

I was in East Africa for eight years 30 years ago, and was familiar with the (very simple but extremely effective) efforts of the scandinavian aid organisations (SIDA, among others) to implement simple water supply programs to remote villages, amongst other aid provisions. What remains true world-wide, in places of primitive or no infrastructure (water, electricity, roads, education, health, etc etc) is that simple (easily understood and maintained) is the only truly workable way of providing for communities' basic needs, and is only effective with involvement from the local community. This includes the physical input (everyone contributing to hefting the barge and toting the bale) as well as the planning and sharing of the eventual rewards.

— K.J. Persson, Church of England, Hampshire, UK.

In your remedy section (with which unsurprisingly I agree) you do not mention property rights. This is quite tricky — you don't want to create a common pool situation, where everyone has the right to withdraw, leading (at least if there are large numbers of people) to excessive (wasteful) withdrawal and excessive (wasteful) investment in capacity to withdraw.

— Stephen Williams, Bethesda (MD) Friends Meeting.

This sounds like a reasonable solution. It should also sit well with the anti-globalization people.

— Virginia Flagg, San Diego (CA) Friends Meeting.

Your solution makes sense unless and until one or a few providers form a monopoly or oligopoly. Then some government regulation may be needed. But that will only work if by that time the government has learned how to regulate.

— Vici Oshiro, Minneapolis (MN) Friends Meeting.

Clear property rights are essential to clean water because the utility that lays the infrastructure to bring that water to the individual customer must, in the end, know who to send the water bill to. Without that capacity, clean water will continue to be scarce in the Third World. And without clear and strong property rights (something we in the
West take for granted) Third World societies will continue to fail to use international aid effectively and chase international capital away to safer locations.

— Chuck Rostkowski, Salt Lake City (UT) Friends Meeting.

You might address situations in which the water quality for the poor has decreased because of some other users, such as industrial firms. In those cases, it seems the industries should pay to restore the water to its original quality. But what if they are no longer in business? Or what if the water quality was damaged by actions of past employees/owners? And what if the water is damaged by some global behaviors that have contributed to things like acid rain or other pollutions?

— Merlyn Holmes, Boulder (CO).

I agree 100% with your recommendation that waterworks be privatised into the
hands of local entrepreneurs, as opposed to multinational corporations. I think this could be in fact a more generally applicable solution, one that develops a self-reliant, learning culture among formerly dependent peoples. Governments seem to be privatising a lot of stuff into the hands of multinationals in sweetheart deals, like the nuclear power stations here in Ontario, whose "profits" were privatised while the liability insurance, waste disposal and decommissioning costs remained in government hands. Protesters clamour for re-nationalisation, which is no better and often worse. Could this be the "third way" that Blair was talking about?

— Paul Connor, Toronto, Canada

Interestingly enough, most of the water in the developed world is supplied by public utilities, which subsidize the costs and keep the price low. The result? Water in the U.S. is the cheapest commodity, as Dr. Paul Barten put it, "water is cheaper than dirt" on both a volume and weight basis. The result? Incredibly waste. You just have to look at sprinklers on lawns in the desert of Phoenix, spraying crystal-clear drinking water out into the air to see that something is wrong. Although most people in the U.S. have more than enough drinking water (in fact, they probably each use enough to provide for entire villages), that could easily change. The only way I can see to avoid future water shortages here, is to ensure that the price paid for water pays for ALL of the costs of
that water.

— Brian Holt Hawthorne, friend of Friends, Amherst (MA).

When Wallis and I visited San Carlos, Mexico, all the houses we went to had piped running water, but it wasn't drinkable. Instead, everyone also had water coolers, and trucks would deliver bottled drinking water everywhere. I imagine this is a step between the third world situation thee envisions and what we have here in the US (although a lot closer to what we have than to what they would have). But the point is, their system works, even though it is different from ours.

I just wonder what is currently stopping thy solution from being implemented? Perhaps charitable organizations need to donate more bicycles that can carry water jugs (or provide capital through microlending)?

— Larry Powelson, Seattle WA.

Note: Larry is my son. He uses plain speech because that is the custom in our family. — Jack

Your "semi-answer" to the problem of clean water for the poor is "semi-right." We need to privatize — or at least marketize — some aspects of water distribution. But there are hazards in privatizing everything, and your laudable desire to keep the multinationals out of the business is probably not feasible without the direct involvement of governments in the actual business of distributing water.

— Bill Ashworth, South Mountain Meeting, Ashland (OR).

You say: "Most of the water in the less developed world is supplied by public utilities, which keep the price low for the sustenance of the poor." This describes California as well. Rather than let the price of water increase to the point where people self-ration, people are encouraged to save water. And yet there is plenty of water in California for agriculture, to the point where they can grow rice in the desert.

— Russ Nelson, St. Lawrence Valley (NY) Friends Meeting.

O Lord. I had hoped Gilbert and Anne had fixed this.

— Faith Williams, Bethesda (MD) Friends Meeting.

I wonder if it makes sense for us (in the first world) to agree to fund / engineer / construct purification and distribution systems? This would be in areas that need it the most and might have a significant time lag before local individuals could afford such. This would, by neccessity be grants, not loans (we already pay for direct aid, though not enough). Should we hand over these systems not to government or private concerns, but to user co-operatives? These might run much like rural electric co-operatives--sort of a private business owned by its users.

— Rick Brooks, Green Country Friends Meeting Tulsa (OK).

The right answer, but you are too kind to the World Bank. The World Bank is not your normal lender, it will not lend unless it has satisfied itself that the project is technically, financially, administratively and politically viable. Often the project is prepared for the Government by consultants approved by the World Bank. If the wrong technology is chosen, (or the project is financially un-viable) this reflects on the Bank. Legally the Government has full responsibility, but morally the Bank is at least equally responsible. In successful projects (and they exist) the Bank does not hesitate to acknowledge its responsibility. In unsuccessful projects it should take a (large) hit. Water is but one illustration of the general principle that the Bank, and other aid agencies, seldom design their projects to take advantage of the great strength of the poor, namely an almost unlimited supply of very cheap labor.

— Will Candler, Annapolis (MD). Friends Meeting.

I agree. Let locals in poverty areas try to solve their own water problems with help from developed nations in the form of technical advice only when asked for. Thanks again for your letters. Keep it up!

— Lorna Knowlton, Boulder (CO).

As always, a great column. As to your "semi-answer" for getting water to the poor, your first point is that water should be privatized, but not to multinationals, but your third point states that anyone who wants to provide water should be allowed to. Why not let multinational firms compete for business? I realize this may lead to several pipe lines serving the same town, but whoever could provide acceptable water at lowest cost would eventually take over, and possibly use the extra pipes. If it is true that multinational companies cannot provide water at the lowest cost, another company would have the market and the multinational couldn't compete.

— Beth Stevenson, Stillwater (OK) Friends Meeting.

Note: Gilbert White tells me that some multinationals are providing water in the Third World at reasonable cost to the peasants. — Jack


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Publisher and Editorial Board

Publisher: Russ Nelson, St. Lawrence Valley (NY) Friends Meeting

Editorial Board:

  • Roger Conant, Mount Toby Meeting, Leverett (MA).
  • Carol Conzelman, Boulder (CO).
  • Ann Dixon, Boulder (CO) Friends Meeting.
  • Virginia Flagg, San Diego (CA) Friends Meeting.
  • Merlyn Holmes, Unitarian, Boulder, Colorado.
  • Janet Minshall, Anneewakee Creek Friends Worship Group, Douglasvillle (GA).
  • Jack Powelson, Boulder (CO) Meeting of Friends, Principal Editor
  • J.D. von Pischke, a Friend from Reston, VA.
  • Geoffrey Williams, Attender at New York Fifteenth Street Meeting.

Members of the Editorial Board receive Letters several days in advance for their criticisms, but they do not necessarily endorse the contents of any of them.

Copyright © 2002 by John P. Powelson. All rights reserved. Permission is hereby granted for non-commercial reproduction.

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