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)
2
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
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Braunstein, J., 2007. Trading the rain: Should the world's fresh water resources be an
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Available at: http://www.merriam-webster.com/
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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