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GOQ5tj7 UPDATE WATER "New Economy of Water" Report Plumbs Water Privatization, Globalization The headlong rush toward private markets. has failed to address some of the most important issues and concerns about water. By Dr. Peter H. Gleick, President Old approaches to addressing water problems - build- ing large-scale dams, pipelines, and irrigation systems - have brought great benefits to hundreds of millions of people, but they have also had great costs. One of the costs: Billions of people still struggle with- out access to the most basic water services - safe drink- ing water and adequate sanitation services. New voices have begun to be heard in the water de- bate, and new ideas - good and bad - considered. Among the most powerful and controversial of these new ideas is that water should be considered an "eco- nomic good," subject to the rules and power of markets, prices, multina- tional corporations, and international trading regimes. In the last decade, this idea has been put into practice in dozens of ways, in hundreds of places, affecting millions of people. Prices have been set for water pre- viously provided for free. Private com- panies have been invited to take over the management, operation, and sometimes even the ownership of previously public wa- ter systems. Commercial trade in bottled water has boomed. International development agencies that used to work with governments to improve water services are now pushing privatization efforts. Proposals have been floated to transfer large quantities of fresh water across international borders and even across oceans. These ideas and trends have generated enormous con- troversy; but far more heat than light. Many unanswered questions remain about the true implications and conse- quences of treating water as an economic good and whether these new approaches can effectively and equi- tably serve human and environmental needs. C?ntroversy is building about protecting ecosystem qualIty and access to water. Debate is growing about how - and even whether - to price and sell a resource as fundamental and vital as water. Concern has been raised about how fresh water should be defined and treated by sweeping new international trade agreements. Violent protests have broken out over efforts to give private mul- tinational corporations control over local water resources. In order to address these issues, the Pacific Institute is releasing a comprehensive analysis of this "new economy" of water ("The New Economy of Water" by Peter H. Gleick, Gary Wolff, Elizabeth Chalecki, Rachel Reyes). It discusses the globalization, privatization, and commodification of water; defmes terms; reviews cases and examples; and offers principles and standards to guide policy-makers in the future. There is little doubt that the headlong rush toward pri- vate markets has failed to address some of the most im- portant issues and concerns about water, In particular, water has vital social, cultural, and ecological roles to play that cannot be protected by purely market forces. In addition , certain management goals and so- cial values require direct and strong government support and protection. Some of the consequences of privatization may be irreversible, hence they deserve special scrutiny and control. As a result, the report concludes that any efforts to privatize or commodify water must be evaluated far more carefully than they have been and accompanied by guar- antees to respect certain principles and support specific social objectives. Among these are the need to provide for basic human and ecosystem water requirements, permit equitable ac- cess to water for poor populations, include affected par- ties in decision making, and increase reliance on water- use efficiency and productivity improvements. Op~nness, transparency, and strong public regulatory oversIght are fundamental requirements in any efforts to shift the public responsibility for providing clean water to private entities. These principles are defmed and sum- marized in this paper. The paper will be available for free from our website. Hard copies of the report can be ordered for $20 from the Institute.