This editorial is featured in Revolve Magazine Issue #26 (Winter 2017/18) on pages 16-22.
Writer: Remi Cerdan & Elisa Asmelash
Reimagining water governance
Despite technical solutions and international funds, universal water access is still far from being achieved. The transition from unsustainable water management practices to a better and just administration of water should go beyond the simple fiddling with management practices, and include a major renovation and reimagining of water governance.
Water is an essential resource. Sustainable Development Goal (SDG) #6: “Ensure access to water and sanitation for all” is the evidence of its growing global concern and recognition of its link with poverty by the international community. Regardless of the type of ownership, the affordable and universal access to clean and potable water is now indisputably considered a human right.
But why are there so many failures in water supply?
International donors and NGOs treated water access as a purely technical and building wells quickly became the poster child of development aid projects. Evaluations of these projects led by development aid stakeholders show a dire situation: 30-50% of water, sanitation or hygiene projects are not operational after five years and an additional 20% are only partially functional. Global financial losses related to water, sanitation and hygiene projects over the last two decades are estimated at $1.5 billion.
As a consequence, international donors have begun to intervene in the water management systems by considering water as an economic good. As such, water is a very unusual good: its supply is finite and locally specific, and because of positive externalities it implies that its supply and demand should be managed by market forces. The solution was then to open the market to private water companies which would be able to guarantee a sustainable management of resource.
The failure of water privatization
The management and ownership of water supply services began in the 17th and 18th century and has been historically dominated by the public sector. The municipalization of water utilities was widespread in most European countries and was seen as a way to overcome the systemic inefficiencies of private contractors. Similarly, in developing countries, the commitment to water supply as a public service was closely associated with the process of decolonization and of building independent states and thus controlled by the central governments.
The introduction of private companies into water supply services over the last 20 years has been subject to considerable political, social and academic debates. The global wave of water privatization began in the 1980s and was driven by two key political factors.
Firstly, the ideological change represented by the privatization of water in the UK and demonstrated that it was profitable and feasible to privatize water. Secondly, the influence and persuasiveness of international donors, especially the World Bank, to promote and support the involvement of the private sector in the management, financing and ownership of water systems in developing countries. The propaganda was so central to the World Bank’s policies that an official told an international conference in 2000 that “there is no alternative” to privatization.
So private companies started expanding at a global level in the 1990s and the early 21st century. The global share of private water operations grew at a considerable pace as corporate giants such as Suez and Nestle took over municipal water utilities in both developing and developed countries.
However, in the early 2000s the belief preached by water companies that only the private sector could efficiently manage water supply was exposed as unrealistic. The global wave of water privatization was therefore pushed back for three key reasons:
1. Fundamentally, the multinationals failed in general to make acceptable returns for their shareholders. Operations, especially in developing countries, were exposed to high-level risks, such as currency devaluations, economic crises, over-optimistic projections, and resistance to price rises. These challenges add up to make profitable investments very difficult in improvements for poor households due to their inability to pay the full cost of the water supplied, without any public subsidies.
2. The intensity and degree of public and political resistance to water privatization. The opposition group includes trade unions, environmentalists, consumer groups and citizens’ organisations as well as political groups, all sharing the common belief that water supply is a vital service, which should be public and not left at the mercy of private companies, that would only seek to profit from their monopoly of such a vital resource. In addition, evidence and suspicion of corruption of both politicians/officials as well as multinationals exacerbated and reinforced public opposition.
3. The failure of the private sector to live up to its expectations. The private companies’ inability to undertake and sustain investments in water supply infrastructures has worsened and amplified the two previous points. This failure can be seen both in developing countries, where the lack of private investment is simply because it would be bad business, as well as in developed countries, where public sector operations would be of better value.
Reimagining water governance
How do we reach fair, transparent and sustainable access to water resources? How do we make sure that human beings are not confronted with situations of extreme shortages of water?
These are key questions at the heart of the debate around transitioning from unsustainable water management practices to a better co-existence with nature and a more just administration of water. However, for this transition to be meaningful and effective, it should go beyond the simple fiddling with management practices, and include a major renovation and reimagining of water governance.
Indeed, the water crisis is not just the product of natural limitations of water supply, a lack of technology and financing, which are all important factors, but it is also the result of decades of profound failures in water governance by public and private institutions, which have long tried to place water in a market framework. Pricing is essential to operate a water system, but it must be fair in a way that higher volume, wealthier users pay more per unit and the poorest ones receive subsidized lifelines. This has hardly ever been the case, as both policy-makers and private operators have tried to make profit through users, regardless of local conditions and needs.
An alternative approach to public and private water management is represented by the commons-based solutions. This type of management is not particularly innovative as it has been applied for numerous rival goods from pasture lands in medieval England to irrigation systems in Peruvian and Bolivian Andean communities. A precise definition of such a local approach is hard to reach but it implies that the resource is not possessed by any stakeholder and that the users’ community gathers to jointly define management rules for its exploitation. Such an approach implies the direct participation and engagement of citizens in a broad range of issues such as knowing the details of how the system will be financed, how the resource will be priced, and how the watershed will be protected for present and future generations.
Not only does the commons approach suggest other ways of organising the water system than those centred on private property, but it also provides a valid and comprehensive way to confront water management challenges – leading us to a society favouring participation and cooperation as well as equitable access to common goods.
[pullquote]Why are there so many failures in water supply?[/pullquote]
The management of water resources as well as other natural resources through the commons approach is not by itself a winning one. Many economists and researchers have criticized this type of organization. The most famous one is Garett Hardin in his 1968 article “The Tragedy of the Commons”, in which he stated that free access to a resource triggers its over exploitation, as each individual seeks to get the most of it for a personal gain. The resource should be either nationalized or privatized to guarantee its conservation. However, critics of this theory have emerged since its publication fuelled by the failure of nationalized and privatized resource throughout the world. In particular, the political scientist Elinor Ostrom has worked on many examples of commons management analysing the key success factors of this type of organization. For her work, she was awarded with the Nobel Prize of Economics in 2009, becoming the first and only woman to gain such recognition. In her analysis, she highlighted eight critical factors in the success of the commons management of a resource by its users:
- The community of users of the resource has clear boundaries.
- The governing rules of the resource use match local needs and knowledge.
- The users of the resource can participate in the decision-making process and modify the rules of its use.
- A monitoring system is implemented and monitors are part of the users or accountable to them.
- Violations are punished through a gradual system of sanctions.
- Arising conflicts and issues are dealt with low cost means accessible to the community.
- The rule-making rights of the community of users is recognised by higher authorities.
- In the case of large user communities, the governance is organised in several layers from the local use to the entire system.
The set of factors developed by Ostrom covers the full management system from decision-making process to sanctions and interfaces with other entities and organizations. It is based on a ‘down to earth approach’ that focuses on the actual enforcement of the rules rather than on a theoretical point of view. Finally, it does not deny the occurrence of conflicts between users but stresses the need for a comprehensive and collectively made set of conflict solving processes and sanctions.
The work of Ostrom was carried out on several cases of natural resources management from pastures to fish resources but it has been applied to irrigation and clean water services highlighting the fact that a water management based on the commons approach is viable.
The example of peri urban Kinshasa
The case of the city of Kinshasa is interesting from many points of view. Firstly, water is not scarce in this region thanks to abundant rainfalls and adequate geologic situation. However, despite this, the rate of households connected to the grid is still low, around 49.2% in 2013, which proves that water availability is not the real issue behind water access problems. Secondly, Kinshasa is the perfect example of the sprawling cities of the developing world that are the main driver behind the skyrocketing urbanization rate in these countries (more than 50% worldwide).
Water management is split between the REGIDESO for urban areas and the National Rural Hydraulic Service for rural areas. In 2009, the REGIDESO was turned into a commercial company fully owned by the state, based on the advice of the World Bank. Since then, no progress has been made in terms of water access, as the share of households connected to the network in the city centre of Kinshasa slightly dropped from 50.2% in 2010 to 49.2% in 2013. The service provided by REGISDESO has suffered major problems of deterioration and frequent supply disruptions and only 30% of the customers are equipped with meters (not necessarily operational), which makes water management and cost recovery very difficult. As a result, only 52% of the water volume produced by REGIDESO in Kinshasa is ultimately billed to the customer, with a rate that has not changed in the last 15 years.
The situation in peri-urban areas is even worse, as only 10% of the households are connected and among them less than 10% are equipped with meters. As a consequence, people rely on cart dealers and thus end up spending a higher share of their income for water than households in urban areas. In order to improve the situation, several engineers from the National Rural Hydraulic Service created a local organization, ADIR, to promote the creation of community based networks. This model, named ASUREP, was imported from the DRC provinces to the outskirts of Kinshasa in 2007. Since then numbers have grown. There are now 37 networks (more than 500 000 people) operated by ASUREPs. The ASUREPs are organized around a General Assembly led by a Board and a Management Unit with proper rules in place. (e.g. Board members cannot be related to Management Unit people, members have limitations in their mandates etc.). Tariff setting is determined by each ASUREP and prices are slightly higher than those of REGIDESO. However, ASUREPs’ tariffs allow a full cost recovery for water management and a better-quality service which explains that only 13% of the water volume produced is not billed (compared to almost 50% for the REGIDESO). ASUREPs have also created a common federation to represent them and to exchange experiences.
[pullquote]How do we reach fair, transparent and sustainable access to water resources?[/pullquote]
Some points are of course to be improved in the ASUREP management. For instance, ADIR is still heavily involved for decision-making process and monitoring, the interface with Congolese national authority is still to be precisely defined and the capacity of ASUREPs to finance the necessary investment to upgrade the water network is not yet established. However, the ASUREP structure applied in the context of peri-urban Kinshasa is still quite young (10 years) and their results are much better than the existing water management public entity.
If carefully implemented, community-based organizations following the commons based approach has been proved to create a local, democratic and effective management of the water resource. They also help to empower communities by allowing them to collectively decide the rules and principles depending on the local context, rather than a top-down approach led by national entities, the private sector or international donors.
Revelle Group is a consulting company working in developing countries and emerging economies in three key sectors: energy & climate change, environment and sustainable economic & social development. Revelle works with governments and international organisations to help create visions, develop roadmaps and implement strategies that tackle today’s main global challenges for a more sustainable world. Revelle strongly advocates for developing a flourishing private sector that realises the sustainable energy potential of these countries.