Patrick Hartwig DA8 922111

COMMODIFICATION OF WATER A PROCESS OF ACCUMULATION BY DISPOSSESSION?

“Everything is now for sale, even those areas of life, such as social services and natural resources, that were once considered the common heritage of humanity.” (Marlow & Clarke,

2002, p. 2). Water, the source of all forms of life on our planet, is increasingly being added to

this outlet of privatised commons, trading off long-term sustainability and equal access for

private profits. This paper will argue that the current worldwide neoliberal climate of

deregulation, privatisation and commodification of water is in fact a process of accumulation by dispossession, and consequently, that market environmentalism is not capable of satisfying the

needs of current and future generations, while sustainably preserving the environment.

(2 714 words)

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“Ours is a small country and it hardly owns anything anymore. Our mines were privatized, the

electrification company was privatized, and the airlines, the telecommunications, the railways,

our oil and gas. The things we still own are the water and the air, and we have struggled to make

sure that the water continues to be ours."

Oscar Olivera, trade-union leader from Cochabamba, Bolivia1

This quote refers to the ongoing process of privatisation, deregulation and commodification in

various sectors across the world, all central features of the neoliberal political and economic

framework which has dominated the global development discourse in the past four decades.

Privatisation can be defined as the process of “[changing] from public to private control or

ownership” (Merriam-Webster Dictionary). In a similar vein, commodification entails a

transformation of a previously public good into an economic good. A major feature of this

process is that this new commodity now has an economic value and can be exchanged in return

for a market-determined price. In this context, a commodity is no longer seen as a shared

collective good with social and cultural attachments, but as an economic good with the feature

of private ownership. While the production, management and provision of healthcare,

education, land, food, natural resources, infrastructure and other once public goods have

progressively been privatised and commodified across the world, we are now witnessing the

commodification of water and the privatisation and deregulation of water management. This

neo-liberal trend of diverting collective resources to the hands of private and powerful

minorities – effectively supported by the World Bank and the IMF – has reached a new

extreme: where water has a price tag determined by market forces and, as Olivera states in his

quote, the only resource left to be privatised is air.

This paper will argue that the current worldwide neoliberal climate of deregulation,

privatisation and commodification of water is in fact a process of accumulation by

dispossession, and consequently, that market environmentalism is not capable of satisfying the

needs of current and future generations, while sustainably preserving the environment.

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(Assies, 2003, p. 14)

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I. TOWARDS THE COMMODIFICATION OF WATER

1. Water governance

Why are we worried about commodifying water? (Fresh)Water is vital in every element of life

on our planet. Whether it is for human consumption, food production, for small farmers to

irrigate their agricultural land, for industries or for transportation, water is the key resource. A

distinct characteristic of freshwater is its capacity to renew itself through the hydrological cycle.

However water resources are being depleted faster than they are being renewed. This problem

is becoming more and more relevant as the world’s supply of available freshwater is steadily

decreasing, both in terms of quality and quantity, primarily due to various human-induced

factors. Hence, the world is currently facing an ongoing water crisis. The rate of urbanisation,

fast-paced population growth, expanding production combined with environmental degradation

(stemming from the belief that growth is limitless and resources are infinite) and free global

trade are all features of the widely praised process of economic globalisation. And undeniably,

these features are affecting the availability of freshwater supplies. But, closely related to the

global food crisis, the ongoing water crisis is first and foremost a problem of distribution, within

and between national borders. Hence water governance is central to this discussion.

According to Karen Bakker, water governance defines the way in which water is

perceived in a society, in other words, whether it is treated as a public or an economic good, or

a natural endowment in a wider ecological and cultural setting (Braunstein, 2007). The UNDP

Water Governance Facility (2013) adds that it is also defined by the political, social, economic

and administrative systems that are in place, which directly or indirectly affect the use,

development and management of water resources and the delivery of water services at different

levels of society. One could further add that the way in which water resources are managed also

reflects the wider political economy that encompasses the relationships within and between civil

society, the private sector and the state, and increasingly so on international scale. Clearly, as

socioeconomic, cultural and political settings differ, so does the nature of water accordingly.

Following the dynamics of globalisation, we have been witnessing a global convergence of

societies at different levels – political, economic, social and even cultural to a certain extent –

and the once polysemantic nature of water is gradually being narrowed down to one definition:

a commodity.

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2. Restructuring the economies – Restructuring water governance

Prior to the international debt-crisis in the developing world and the oil-shocks in the 1970’s,

the national governments in most developing countries played a central role in water resource

management and other public goods and services. Swyngedouw called this a period of ‘Fordist-

Keynesian State-led social and economic policy’, in which the developmental state sought “to

generate and/or support economic growth, while, on the other hand, assuring a relative social

peace by means of re-distributive policies” (2005, p. 85). But following the depressed situation

of many developing economies in the 1970’s (such as uncontrollable inflation, extremely high

debts, negative trade balances and public deficits) and the increasing number of HIPC (Highly

Indebted Poor Countries), western governments and the WB/IMF reviewed their existing

policies and came to the conclusion that the problems lied in the inherent economic structures

of the aid-receiving economies (which were seen as too statist) and thus needed long-term

economic policy reforms, known as Structural Adjustment Programmes (SAP) which in short

involved:

“achieving and preserving macroeconomic stability; promoting openness to trade and

capital flows; and limiting government intervention to areas of genuine market failure to

the provision of the necessary social and economic infrastructure” (Ouattara, 1997, p.

7).

3. The argument behind commodification: Free-Market environmentalism

The urge for improved global water governance stems from the current global water crisis which

is not being sufficiently addressed. The political, economic, environmental and social impacts

are becoming more intense and the current rate of depletion of freshwater resources suggests

that between one-third and two-thirds of humanity could face severe water shortages the coming

decade (Marlow & Clarke, 2002). Like many other goods and services previously managed and

provided by the government, the water sector was long criticised for being subject to

government failure, inefficient, wasteful and an obstacle to environmental protection.

Prominent environment specialist Martin Jaffe explains that: “Commodifying our water

resources is probably the cheapest and most efficient way to manage them while also protecting

the long-term sustainability of our shared values.” (2002, p. 8).

This idea stems from classical economic theory suggesting that by commodifying water,

and consequently assigning an economic value, market forces will allow us to overcome

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problems relating to the overuse of public goods. The theory of the Tragedy of the Commons2

has been a widely used argument for justifying the privatisation of the commons (Harvey, 2011).

On the demand side, by asserting a price to water, consumers are supposedly more wary of

their excessive water consumption which forces them to “internalise relative resource scarcity”

(Jaffe, 2002, p. 8) and thus must adjust their consumption to more environment-sensitive levels.

On the supply side, by introducing private property rights and profit-maximising (or cost-

minimising) strategies, private corporations have a stronger incentive to be well-managed and

efficient, which can lead to better quality of water at lower prices due to greater competition.

Referring to the privatisation of water supply in England and Wales in 1989, Karen Bakker calls

this model ‘market-environmentalism’ which she understands as “the introduction of market

institutions to natural resource management as a means of reconciling goals of efficiency and

environmental conservation” (2005, p. 542).

II. THE ARGUMENT AGAINST COMMODIFICATION OF WATER:

A PROCESS OF ACCUMULATION BY DISPOSSESSION

1. Accumulation by Dispossession

Marx referred to primitive accumulation as the starting point of the capitalist mode of

production. In order for capital to expand, some initial form of appropriation has to take place

and is consequently to be followed by expanded reproduction of capital accumulation. As

accumulation (or profitability) reaches maturity after a certain point in one sector, the quest for

endless capitalistic growth results in the inevitable need to expand into non-capitalist sectors

(Roberts, 2008). David Harvey, a prominent Marxist geographer, elaborates on Marx’s

conceptualisation of primitive accumulation by arguing that rather than it being an initial stage, it

is a continuous process which he describes as a process of Accumulation by Dispossession

(Harvey, 2003). Like its name suggests, it is a process which involves capital accumulation

however Harvey makes it clear that this accumulation for some entails dispossession for others.

His definition includes:

“Commodification and privatization of land […]; the conversion of various forms of

property rights (common, collective, state, etc.) into exclusive private property rights; the

suppression of rights to the commons; […] the suppression of alternative (indigenous)

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Introduced by Garett Hardin (1968)

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forms of production and consumption; colonial, neo-colonial, and imperial processes of

appropriation of assets (including natural resources […]” (ibid., p. 145).

These features of capitalist accumulation/appropriation are highly central to our discussion

about water governance notably in terms of privatisation and commodification. While we

defined privatisation in the introduction, Swyngedouw offers a more contextual definition:

“Privatization is a process through which activities, resources, and the like, which had not

been formally privately owned, managed or organized are taken away from whoever or

whatever owned them before and transferred to a new property configuration that is based

on some form of ‘private’ ownership or control. Privatization, therefore, is nothing else

than a legally and institutionally condoned, if not encouraged, form of theft.” (2005, p. 82)

In line with Harvey’s arguments, this ongoing form of theft, backed by the Bretton Woods

institutions, is embedded in the neoliberal political economic framework which dominates

global politics and the international development discourse. Privatisation – and thus

commodification – of water is not only legitimised, it is rendered desirable (ibid.). In a similar

vein, while water is physically scarce in major parts of the world, Roberts (2008) argues that

water scarcity is also a discursive construction that suits capitalist expansion because the ideology

is precisely based on scarcity. In other words, the scarcer water becomes, the greater the

margins for the corporations.

2. Social and environmental impacts of commodification

Market environmentalism, the dominating water governance framework might present itself as

coherent (for some) in theory, but like most economic theory marked by unrealistic

assumptions, it rarely holds in reality and the losers from market failure always appear to be the

same ones. The case of water commodification is no different. Water, elementary to human

existence and once perceived as a natural endowment available for all, is now a commodity

available at market-determined prices (or by water companies) for ‘water consumers’.

Swyngedouw (2005) clarifies that the state is an active agent in the process of privatisation and

commodification of water management and is responsible for maintaining what he calls the

Stalinism of the market. However, for many developing countries, the governments have had

little or no choice but to privatise several sectors as a condition for receiving aid. When faced by

transnational water, energy and bottling corporations such as Suez, Saur, Veolia Water, and

Coca-Cola (etc.) that have larger revenues than several countries’ GDP and are strongly backed

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by the World Bank, national governments have a hard time being able to stand up against their

lobbies.

What are the social implications of corporatising water governance? With the prevailing

rhetoric of privatisation and commodification in a globalised world, water is treated like any

other tradable good, subject to the same international trade regulations (i.e. none) set by the

WTO and NAFTA. The price of water is consequently subject to international market

fluctuations, financial speculations and other exogenous factors. Water commodification is not

only an economic process. Economic reductionism masks the capitalist discursive character of

commodification which distorts the cultural values and identities of water, and any form of

indigenous interpretations, so that it can be removed from its ecological and cultural context

and hence objectified as an economic good (Bakker, 2005). Commodification has generally

been accompanied by “higher costumer rates, dramatic corporate profits, corruption and

bribery, lower water quality standards, and overuse of the resource for profit” (Barlow, 2001, p.

3) and cutoffs for those who no longer can afford it (Marlow & Clarke, 2002). People who had

limited access to water before privatisation are thus likely to be even worse off.

What are the environmental implications? Physical interventions such as dams,

canalisation and diversions alter the environment and can cause environmental degradation. For

instance in 2004, local officials had to shut down a $16m Coca-Cola bottling factory in Kerala

due to the degradation of water quantity and quality which subsequently had negative effects on

the local farmers and villagers. As companies’ profits depend on increased water consumption,

the scarcity-argument loses its validity because profits come first to long-term sustainability and

equal access. Of course, they can increase prices rather than quantity sold, but only up to a

certain point beyond which the socio-political impacts become extreme. For instance in the case

of Ghana, water tariffs went up as much as 300% in 2001 (Christian Aid, 2002) and

Cochabamba, Bolivia in 2000. Furthermore, the profits are more likely to be invested in

exports and diversions rather than water conservation and expanding distribution in

disconnected (mainly rural) areas (Barlow, 2001). Eventually, water is sold to those who can

afford it rather than distributed (or subsidized) to those who need it, which further accentuates

inequality. As governments deregulate their environmental laws, handing out private property

rights to corporations in order to stay competitive in a globalised world by attracting FDI (ibid.),

the environmental protection argument behind market-environmentalism ends up contradicting

itself.

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One could further argue that water commodification undermines democracy, on two

levels. Firstly, the process of commodification itself has usually been undertaken independently

by governments (whether it is by will or forced by IMF/WB) without any prior referendums or

other forms of democratic participation. Secondly, water governance is depoliticised in the

sense that regulatory and decision-making bodies are displaced from political platforms where

there is room for democratic voice, to closed executive boardrooms of transnational

corporations who satisfy shareholders rather than citizens (Swyngedouw, 2005).

CONCLUSION: COMMODIFICATION OF WATER – AN ETHICAL ISSUE

In the past four decades, water has gone from being a public good managed and provided to

citizens by the state (or communes) on the basis of social equity and equal access, to an

economic good managed and sold to customers by private corporations on the basis of profit-

maximisation and free-market exchange. The market-environmentalist rhetoric presents itself as

a strong neoliberal instrument which threatens not only the environment but also undermines

social justice, democracy and exacerbates inequality and poverty. It has been argued that these

negative consequences are inherent to the capitalist mode of production, as a process of

accumulation by dispossession. Considering the importance of water for human existence,

water commodification becomes not only a political, economic and social issue, but ultimately

an ethical issue.

While previous public management and provision of water may have been inefficient

and in certain cases environmentally harmful, the solution needn’t necessarily be forfeiting to

market-fundamentalist ideologies. Investments in better management, technology, human

capital and water governance in general could’ve improved state-provided water distribution.

But as we mentioned, most of these countries being dependent on bilateral and multilateral

loans, had little choice on how to run their own independent development strategies. The UN

has suggested a middle-ground between both opposite views which, “on the one hand is

economically rational and on the other takes into account human rights, culture and the

environment” (Braunstein, 2007, p. 280). The idea is that governments are nationally and

internationally responsible for managing, pricing and delivering water (ibid.). In short, the UN is

arguing for stronger regulations in water governing bodies and better cooperation between

countries, however water is still considered a commodity. Whether this is feasible and will lead

to a more water-just world is yet to be seen.

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References Assies, W., 2003. David versus Goliath in Cochabamba: Water Rights, Neoliberalism, and the

Revival of Social Protests in Bolivia. Latin American Perspectives, 30(3), pp. 14-36.

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England and Wales. Annals of the Association of American Geographers, 95(3), pp. 542-565.

Barlow, M., 2001. Water as Commodity - The Wrong Prescription. Food First/Institute for

Food and Development Policy, 7(3).

Braunstein, J., 2007. Trading the rain: Should the world's fresh water resources be an

internatinoally traded commodity?. Integrated Water Resources Management and Security in

the Middle East, pp. 269-284.

Christian Aid, 2002. Water Privatization in Ghana.

Hardin, G., 1968. Tragedy of the Commons. Science, 162(3859), pp. 1243-1248.

Harvey, D., 2003. The New Imperialism. (Clarendon Lectures in Geography and

Environmental Studies) ed. s.l.:Oxford University Press.

Harvey, D., 2011. The Future of the Commons. Radical History Review, Issue 109.

Jaffe, M., 2002. Should water be managed as a commodity?. Point: counterpoint, p. 8.

Marlow, M. & Clarke, T., 2002. Who Owns Water?. The Nation.

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Available at: http://www.merriam-webster.com/

Ouattara, A., 1997. The Challenges of Globalization for Africa. Harare, IMF.

Roberts, A., 2008. Privatizing Social Reproduction: The Primitive Accumulation of Water in an

Era of Neoliberalism. Antipode, 40(4), pp. 525-560.

Swyngedouw, E., 2005. Dispossessing H2O: The contested terrain of water privatization.

Capitalism Nature Socialism, March.16(1).

UNDP-WGF, 2013. What is Water Governance. [Online]

Available at: www.watergovernance.org/whatiswatergovernance

Cartoon on cover page:

Enrico Bertuccioli, 07 Sep 2011. Water Privatization. [Online]

Available at: http://www.cartoonmovement.com/cartoon/3314

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APPENDIX 1: (Bakker, 2005, p. 547)