This is an onsite, slightly edited republication of the complete SUSTAINED - THE SDGS DECODED newsletter of November 3rd, 2021
Is humanity on the brink of global water conflicts? In December 2020, water became publicly traded on the stock market. For Pedro Arrojo Agudo, UN Special Rapporteur on the human rights to safe drinking water and sanitation, this sudden commoditisation of an essential resource has had dire negative consequences—and as a result of the privatisation, a water crisis has never seemed more imminent.
Arrojo Agudo calls the situation “a financial perversion,” given that there is, for the time being at least, sufficient water on the planet for all of us. Contrary to the prevailing wisdom that the planet is drying up, “we have enough water in the world to ensure a dignified existence for the entire population—but we need a more democratic management of it,” Arrojo Agudo tells SUSTAINED from COP26, where he is currently presenting his assessment of the situation. “Our problem is not a lack of resources, but rather excessive economic ambition, usually on the part of the richest and most powerful.” Simply, the problem is one of unequal distribution and access, not insufficient supply.
Currently, 2.2 billion people are without access to clean drinking water and 4.2 billion are lacking basic sanitation facilities. This is a critical and growing—yet avoidable—problem, highlighted this week by The Financial Times: “The world’s population is growing and so is the demand for water. Meanwhile, the supply of fresh water is being depleted by climate change and economic development,” bemoans Senior Foreign Affairs columnist Gideon Rachman.
Also in SUSTAINED today, don’t miss out on our News in Brief, where we brush up on an upcoming climate efficiency report, a responsible meat initiative, a new tunnel in town, and a breakthrough in sustainable fashion.
The Special Rapporteur Fighting Water Financialisaton
SUSTAINED: You pinpoint and deplore the “privatisation, commodification and financialisaton” of water in your report. What is the difference between these three words?
Pedro Arrojo Agudo: The three terms are closely related, but their meanings are different.
Privatisation processes in water and sanitation services usually involve the delegation of public water management and sanitation services to for-profit actors, whether private companies or public-private partnerships. They can also take the form of private ownership of water as a resource, or of the infrastructure needed to manage water and sanitation services.
The commodification of water refers to water as a resource, a scenario in which it is handled as a commodity under supply-and-demand dynamics, which set the price of market transactions between users. Although in some cases water may be privately owned, in most cases, this commodification operates from the water trading markets, namely water concessions.
Financialisaton, as a global phenomenon that dominates the economy as a whole, refers to the management of water as a financial asset, whose value is managed in the financial markets—in particular, futures markets, under speculative logic and strategies, with large banks and institutional investors as the main players. This concept is also used to express the growing influence of financial actors in the development of infrastructure for water, sanitation and hygiene services, as well as the shareholding of the private operators that manage these services, thereby imposing the speculative and financial engineering logic that predominates in this realm.
You talk about “perversions” in the current financial management of water. That is quite a strong and loaded word? What are you referring to?
PAA: The same problems that appeared when food became a commodity, at the end of the 20th century.
When speculation and shadow banking—financial negotiations unknown to the public and even to financial regulators—entered the nutrition market, a number of products in the Global South became too expensive for impoverished populations. This generated major market deregulation and famine; the main issue being that food pricing was no longer negotiated by its producers, but amongst financial institutions.
In 2008, the billions invested in food futures made the price of rice, wheat and corn skyrocket, and led to 150 million people suffering hunger and extreme poverty, according to the World Bank. A couple of months later, the housing bubble burst.
At the time, banks were, on the one hand, requesting and getting public funds to avoid bankruptcy, and on the other hand, they were investing billions in food futures. Thus, when the real estate speculation bubble burst, another bubble of basic food prices inflated. This is what happens when certain products essential to people’s lives are treated as financial assets under speculative strategies.
History is bound to repeat itself with water.
Why do you say that water commodification is a dangerous phenomenon?
PAA: Because a progressive process of private appropriation of water has been taking place. Hence, those who cannot compete in the markets are marginalised, together with the environmental needs of aquatic ecosystems, seriously affecting the human rights of the most impoverished and the sustainability of rivers and aquifers.
Traditionally, water has been considered a Common Good or a Public Good, used through licenses or concessions for agriculture, industries, and other uses. However, over recent decades, some countries such as Chile, Australia, the US and Spain have made it possible to buy and sell the right to use water as if it were a commodity.
In the context of persistent droughts and frequent forest fires, like those in California, what can happen if water becomes a speculative asset?
PAA: Disasters are certainly looming. Speculation is the logic of expectation: it is a gamble, but with very strong players who know when to get in, and when to get out of the game because the bubble is about to burst. It is casino economics, and those in charge have no regard for the suffering of the real world or the sustainability of the ecosystems on which we depend. They only focus on fulfilling expectations from the financial muscle they wield, in order to make huge profits in a short time.
Where are we heading if we don’t stop the trend you’re describing in your study?
PAA: A good lesson from the pandemic is that a rich society cannot avoid global crises. Nowadays, problems end up concerning everyone in one way or another. In Western society, consequences could take the form of mass migration, lack of security, or pandemics. The world is finally beginning to understand that a holistic approach is essential for problem solving.
Speculating on products or services that are essential to people’s lives and dignity—such as food, housing, or water—can have and is having very serious consequences for the economy as a whole, and particularly for the human rights of the most impoverished, as well as for environmental sustainability.
Could the world eventually run out of drinking water?
PAA: Not really. We live on the blue planet. There is a lot of sea water that can be processed and used; and even the freshwater from rivers, lakes and aquifers is more than enough to ensure a dignified life for the entire population, if we promote democratic governance of water as a public good and protect the sustainability of our aquatic ecosystems.
Water is not scarce, although without a doubt we are building scarcity from unsustainable economic growth models, which deplete the planet's resources. For this reason, our problem, more than a lack of resources, is one of democratic governance and excessive ambition, usually on the part of the richest and most powerful. And these unsustainability issues deepen when the casino economy is allowed to rule.
What could help solve the ongoing water crisis?
PAA: ‘Water banks’, meaning the possibility for states to recover water rights before droughts or the wildfires occur, for instance. Note that this is not a speculative market form; it is an economic compensation process that enables recovery rights and preparedness for future risks. The institutions behind these transactions allow control, transparency, and public participation. In other words, democratic governance where water is controlled as a public good.
Progressive [water] rates, with increasing costs based on consumption blocks, could be another economic tool that encourages good use of water, while guaranteeing very cheap rates for basic uses.
But above all, [we need] strategies for adaptation to climate change, based on good hydrological, territorial, and urban planning, in the face of climate change and the risks of drought and flooding.
What is your role in this crisis?
PAA: I am explaining to governments that cutting water for impoverished people is violating human rights—and that it is already happening, in fact. A colossal 2.2 billion people don’t have access to safe drinking water because they are poor, and the state is not taking them into account. These individuals are not thirsty; they are impoverished and live close to polluted water sources. Equally shocking, a total of 4.2 billion lack basic sanitation. These issues are the results of governance and sustainability mismanagement.
Sustained News in Brief
And the world’s worst climate companies are…
A new report by The Climate Policy Footprint 2021 to be published tomorrow highlights the world’s most detrimental climate management systems. In anticipation of COP26, the report turns the spotlight on a list of hazardous companies—as well as those that are dedicated to a move away from fossil fuels.
Sustainable fashion meets tech
A new traceability system will soon allow consumers to track the sustainability value of high-end clothing. Burberry, Mulberry, Giorgio Armani and Stella McCartney will include QR codes on their items, telling shoppers when and how the piece was made, the origin of the materials, as well as care and repair options. Prices of these luxury items will, however, remain the same…
A new tunnel in town
The future “Route des Nations”, linking the Grand-Saconnex highway roundabout to Geneva’s international neighbourhood has just been completed. The new tunnel is designed to carry 20,000 vehicles per day and discharge the Ferney road on the French border. The new passage is set to open mid-2023, with a new tram line, as well as access for cyclists and pedestrians.
Meat WBCSD’s new initiative
Responsible meat is the World Business Council for Sustainable Development’s (WBSCD) latest jam. With 14 member companies, including IKEA and Bayer, the Responsible Meat Initiative (ReMI) aims to accelerate the shift towards more sustainable production and consumption of animal flesh. “Better defining responsible meat and mobilizing consumers is a crucial enabler of more productive, regenerative and resilient food systems,” said Peter Bakker, WBCSD President and CEO.
Today's Sustained: Sarah Zeines
Edited by: Dan Wheeler