A New Battlefront Against Water Privatization in the Global South

Richard Girard, Polaris Institute, June 8, 2009 - Recent industry analysis shows that countries in the Global South have the best potential for future growth in bottled water sales. Market reports predict that over the next four years sales of bottle water will grow most quickly in Asia and Latin America due to 'the poor quality of potable water' in many countries. Africa is also highlighted as a having strong potential for bottled water sales due to the ‘poor quality of potable water'. In addition to limited access to clean tap water, reports mention the rising number of people with disposable incomes as a driver for growth in the industry.

This is all very positive for bottled water companies, but signals a wrong turn in the struggle to bring publicly managed municipal water service to communities and will have severe impacts on how populations view the delivery of this basic human right.

This opportunity for the bottled water industry is leading to widespread privatization of drinking water delivery in countries where access to clean tap water is limited. Bottled water sold for huge profits may bring water to people who need it, but the side effect is the commodification of this basic human right. When populations come to accept that the only way to find drinking water is buy it in a packaged form, people will come to accept that water, whether from a tap or from a bottle, is something that can be bought and sold on the open market. A system is emerging where only those who can afford it will have access to water.

The privatization of drinking water is already well under way in many urban centres in the Global South. In areas where clean tap water is either not available or not safe (or perceived to not be safe) people are already consuming packaged water supplied by for-profit producers at an alarming rate.

Beverage corporations are seeing this phenomenon as a future growth engine. In April of this year at the company’s Annual Meeting of Shareholders, Coca Cola’s CEO, Muhtar Kent (click here [1] and go to 30:00 of the webcast), repeated the company mantra that future growth will come from a combination of rapid urbanization and a growing middle class. Kent spoke of the ‘conversion’ from un-packaged beverages to packaged beverages that occurs when people attain ‘middle class’.

The natural ‘conversion’ as Kent sees it, is for people to move away from public tap water towards his company’s bottled beverages. Luckily for Kent his company has set up a global bottling system that is poised to jump on this opportunity. The other three global bottled water giants, Groupe Danone, Nestlé and PepsiCo also have the capital and existing global infrastructure to exploit the bottled water boom in the Global South.

The following examples from India, Vietnam, Nigeria and México, demonstrate how the rapid growth of bottled water sales is already forging the path towards privatization and is creating risks to health and livelihood along the way. These examples do not touch the severe impact the bottled water industry has on the environment in the Global South caused by water takings and the disposal of plastic bottles.

India

The first example is from Hyderabad (pop 8.8 million), the capital of Andrha Pradesh, where The Hindu [2] recently reported that ‘unscrupulous elements are making mega bucks out of human suffering’ by selling 20 litre cans of well water for 31 cents (the price goes up to $2.80 USD with the can included). According to The Hindu the areas where business is swiftest have major problems with public water infrastructure. Long lines at public taps and limited public water service to many homes results in a daily struggle for people to find water. Many are resorting to buying their drinking water from local vendors who package well water and sell it at hugely inflated prices.

In a country where, according to United Nations data, over 36 percent of urban dwellers survive on less than $1.25 (USD) per day purchasing packaged water is a major expense. However, without access to free and clean public drinking water, and with a convenient packaged alternative readily available, many residents will inevitably accept the option of privatized, for-profit water.

Recent industry figures from India indicate that sales of bottled water grew from $189 million (USD) in 2003 to $599 million in 2008 – a growth rate of 216 percent. With this figure projected to double in the next five years India is being touted as one of the fastest growing bottled water markets in the world. The growth of the Indian market is being attributed to people having more disposable income coupled with poor public water infrastructure.

These are the kind of market forecasts on which bottled water companies base future business plans. True to form, PepsiCo announced [3] earlier this month that it will double investments in its Indian beverage business in 2009. The company’s Indian beverage investments will now total $220 million.

Vietnam

In April, Vietnamese health inspectors discovered that close to 30 percent of bottled water producers nationwide did not meet health and safety standards. In Ho Chi Minh City, where according to the Thai News Service more than 1,000 bottled water businesses are in operation, the Health Department has already shut down five bottled water plants this year and fined 360 plants for violating food safety and hygiene standards. News reports said that test samples were tainted with disease-causing bacteria, such as Pseudomonas aeruginosa, E.Coli and Coliform.

Vietnam is another case where urban residents are ‘converting’ to packaged beverages. Industry reports see Vietnam as a place where people are gradually replacing boiled tap water with bottled water. Between 2003 and 2008, the sales of bottled water in Vietnam grew by over 80 percent to a total of $43.8 million (USD). This total is projected to climb a further 75 percent by 2013.

This trend away from public water sources is obviously being exploited by bottled water sellers. However the rapid expansion in the number of bottled water producers is putting peoples’ health at risk.

Nigeria

A recent article [4] pointed out that the informal bottled water industry has grown so quickly in Nigeria that bottled water companies now represent about 10 to 15 per cent of the total manufacturing output from the country’s small and medium enterprises (SMEs). The article blames government’s inability to provide water to Nigerians as the ‘springboard’ for the thriving water business. Industry reports echo this position and show that bottled water sales have grown by 90 percent since 2003 and are projected to grow another 43 percent by 2013.
The rapid expansion of this sector has left the regulatory body NAFDAC (National Agency for Foods Drugs Administration and Control) unable to monitor the safety of the products. A NAFDAC official was quoted saying that her agency has no record of the total number of registered water producers in the country.
The lack of quality municipal infrastructure is fuelling the privatization of Nigeria’s drinking water while the packaged water that is filling the gap in the public system remains unregulated and potentially unsafe for consumption.

México

México is the biggest consumer of bottled water per capita in the world with sales totaling a whopping $5.4 billion in 2008 (almost 3 times the 2008 sales figures for Canada). This figure is predicted to reach $7.6 billion by 2013.

Unlike many other regions in the Global South where local producers represent a large portion of sales, México’s bottled water market is dominated by the big four global water producers who fiercely compete for customers through blanket advertising. These companies are exploiting what has been called the ‘savage urbanization’ of the country’s large cities, which is characterized by poor access to water infrastructure (See this [5] article for more information). This is a major opportunity for the big four who are making large profits through the sale of their products in México.

Water delivery in the country has been widely privatized by the dismantling of publicly managed municipal water infrastructure and the reliance on packaged water as the only safe source of drinking water. The fact that most purchases of bottled water in México are in large 20 litre jugs for use at home confirms that tap water has been substituted for the privatized packaged variety.

New battlefront

The privatization of public water services in the Global South is widely viewed by public sector unions and community activists as a failed project. However international institutions under the influence of for-profit water services companies, continue to push the private management model as a solution to the challenge of providing water and sanitation in the Global South (see Public Services International [6] for more information).

Meanwhile, bottled water companies, from the big four to local entrepreneurs are already successfully privatizing the delivery of drinking water. As we have seen from the examples in this article, this is only going to deepen.

‘Unscrupulous elements’ are indeed making mega bucks out of human suffering by exploiting the inability of municipalities, governments and institutions to find the correct and most sustainable way of delivering water services that is safe and managed publicly. Meanwhile, the groundwork of privatization is being done by the bottled water industry by converting people to privately delivered packaged water sold for profit.

Many people in the Global South are entrapped between poor quality tap water and buying bottled water at great expense and risk to their health. Once people are forced to pay for their drinking water, the commodification and privatization of water becomes a deadly bygone conclusion. Because of this, bottled water is a new front in the battle against privatized water in the Global South.