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Turning a Life Source into a Commodity

Most Canadians take for granted an assured supply of safe drinking water. We turn on a tap and use what we need, without worrying about cost or quality.

In a country blessed with a generous share of the worlds fresh water supply, we recognize the central role water has played in shaping our history, our economy, our health and our identity. And we dont see water as a commodity to be sold or traded like barley.

Yet that is exactly what is happening in an increasing number of countries around the world. And there are growing pressures within Canada to privatize control of our municipal water services and treat our water resources as an export commodity.

As federal and provincial governments have reduced transfers to municipalities and local governments have strained to balance their books, public spending on basic infrastructure has been severely rationed. As a result, there is a looming backlog of capital projects required to upgrade and expand water and wastewater services. Over the next 15 years, the Canadian Waste and Wastewater Association estimates that $27 billion will be required to renew water treatment and distribution; $61 billion to upgrade sewers and wastewater treatment.

This represents a huge liability for municipalities struggling to fund downloaded services on a limited property tax base. And it is an opening for corporations anxious to control the operation of municipal water services.

At this time, there are relatively few municipal water supplies in Canada that are privately operated. But the experience of other countries underlines the risk.

Since the privatization of water services in Britain during the Thatcher government, prices skyrocketed by up to 450 per cent, averaging an increase of 67 per cent. Thousands of people, unable to pay their bill, had their water service cut. As a result, dysentery increased six-fold, leading the British Medical Association to condemn privatization because of the related health risks.

Shifting collective costs to individuals can have unexpected results. While the companies are hugely profitable and executive incomes soar, no effort has been spared in maximizing revenues. In one instance, a water company began billing a rural resident who was serviced by a well. The company argued that the rain falling on the residents property was making its way into the storm drainage system and therefore the resident should pay a fee.

In France, companies have been prosecuted for providing polluted water thats unfit to drink. A French government report revealed more than 5.2 million citizens received “bacterially unacceptable” water. Corruption is also rampant, with water-related bribery schemes resulting in convictions of municipal officials and water company board members under investigation.

French cities with private water charge 30 per cent more than cities with public water. In Germany, the Czech Republic and France, municipalities guarantee payments to companies if consumption or prices are not sufficient to ensure a profit.

These same French and British companies are vying with American firms to control Canadas water services. One of the largest, Suez Lyonnaise des Eaux, had 1997 sales of $56 billion with more than 60 water subsidiaries in 39 countries. Dominated by a few massive corporations operating on a global scale, the water industry meets each year in a Water Summit to discuss how to overcome political obstacles to the privatization of water.

Water companies would prefer to own and operate water services outright. But in the face of strong public opposition in Canada to corporate control of water services, they have most often had to settle for three to five year operating agreements.

Increasingly, however, corporations are promoting “public private partnerships” in which they would finance and operate water systems for 20 to 35 years. And in some instances, they have offered to pay fat up-front payments for the opportunity to run the system. Starved of transfer payments and strapped for cash, some municipalities are attracted by this pitch.

Moncton, for example, has entered into a 20-year agreement that will see the citys water filtration plant maintained and operated privately. US Filter will build the plant and sell it to the city upon completion in exchange for a guarantee that it will have exclusive rights to sell Moncton its drinking water. The company has sought status as a municipality for tax purposes, arguing that it should be exempt from GST!

Proposals to privatize drinking water in several cities have been beaten back by a public clearly opposed. In Montreal, plans to privatize have been stalled by the province after a groundswell of community protest. Edmontons plans to privatize its water company were postponed until after recent municipal elections. Private ownership of Winnipegs water was discussed in 1998 but no decision has been taken.

Meanwhile in Vancouver, private operation of the Seymour Water Filtration Project has been recommended and a tender is imminent.

In Ontario, the provincial government has pursued a strategy propelling the privatization of local water services. In 1997, it passed Bill 107, transferring ownership of water and sewage facilities servicing 200 municipalities from the province to local governments. These facilities continue to be operated by the Ontario Clean Water Agency (OCWA) but the funding burden has now been shifted to the municipalities. Then in 1998, the provincial Office of Privatization invited proposals from the private sector for the future of OCWA. Of the five options under consideration, four involve a degree of privatization.

The water multinationals know that big bucks are required to upgrade wastewater treatment. And they know that the public is more concerned about the water that enters their homes than the water that flows from them. So they have used wastewater treatment as a point of entry, with the eventual goal being ownership and delivery of all water services.

The country with the longest coastline pumps raw sewage freely into the sea. This problem is particularly pronounced on the Atlantic coast, where 194 communities pump more than 250 million cubic meters of raw sewage into the ocean daily. During years of rising interest rates and falling grants, local municipalities delayed needed treatment projects. Now taking action, municipalities such as Halifax and St. Johns face steep costs.

As more costs are forced onto the property tax base, municipalities are tempted to give up control over environmental protection, sacrifice jobs and expose themselves to higher costs, all in the name of short-term savings.

For example, in Hamilton-Wentworth, operation of the regions wastewater facility has been contracted to Philip Services Corporation. As is typical in private operations, maintenance and staffing have been cut in order to maximize profit. Also typical when private corporations run water systems, the public sector was left to pick up the cost when 180 million litres of sewage backed up into homes and businesses.

In Toronto, an American consulting firm, EMA, has been conducting a pilot project to reduce costs at the Highland Creek treatment plant. The firm has recommended a dramatic cut in the quality of wastewater that the City dumps into Lake Ontario as a prerequisite to cutting jobs. Staff has already been cut from 140 to 102 and the consultants want to reduce that number to 68. But to achieve that goal, they want to reduce the Citys water quality standards to match the minimum set by the province. As it stands, if there is a system failure, the discharge from the plant still meets the provinces requirements. But if the Citys standards are cut to the minimum, any failure would mean water flowing into the lake would be seriously contaminated. And as maintenance is cut, the risk of failure increases.

As people increasingly realize what goes down the drain today comes out the tap tomorrow, local governments have grown more wary of false partnerships. Several municipalities have cancelled projects as it became clear the public would lose control, while retaining the risk, of ventures repeatedly questioned by auditors-general of provinces in which they exist.

In Ontarios Halton Region, a $550 million plan to privatize the operation of an expanded system was cancelled. York Region and Thunder Bay have similarly shelved privatization plans. Sarnia has delayed privatization of wastewater treatment over concerns of cost and accountability while a plan to privatize in Lethbridge was cancelled after public opposition.

As water consumption doubles every 20 years, severe water shortages are growing. More than a billion people live without access to clean water, leading the World Bank to predict that disputes over water will be the most likely cause of war in the next century.

Canada has 20 per cent of the worlds fresh water. But increasing levels of pollution and the need to protect aquatic ecosystems argues against any notion that we have a “surplus” for export. Adequate supplies of clean water for people in water-scarce regions can only be assured by promoting conservation and protecting local water resources. Importing water is not an economically or environmentally sustainable strategy for dealing with water scarcity.

But sensing that there are huge profits to be made, several companies are developing plans to export water in bulk. And in the absence of federal legislation prohibiting bulk exports, a precedent could soon be set that would permanently remove public control of our water resources.

In 1998, Ontario granted a permit to the Nova Group to take 10 million litres a day from Lake Superior for export. No environmental study was conducted. Nor were the Canadian or American governments consulted about the possible impact on the headwaters of the St. Lawrence Seaway. Nova withdrew its application after an appeal was launched.

At the same time, the McCurdy Group has applied for a permit to export water from Gisborne Lake in Newfoundland. More than 20 million cubic metres annually would be piped to tankers or bottled for export. Given high levels of unemployment, the promise of jobs has its appeal. But there is strong opposition on environmental grounds and a determination to break the historic dependence on resource extraction.

In September 1998, a Liberal MP revived discussion of the GRAND Canal project. Based on the premise that fresh water flowing into an ocean is wasted, this scheme would dam James Bay, creating a new freshwater lake. Water would then be diverted into the Great Lakes to allow for export to the United States. The environmental impact of such a project could be catastrophic.

At various times, entrepreneurs have similarly proposed the diversion of British Columbias rivers to the United States. For that reason, the provincial government in BC has a clear policy banning water exports. But a California company is now suing the BC government, claiming that its ban on water exports violates NAFTA.

Should any of these proposals be realized, the floodgates now holding back Canadas water resources would be opened wide. And once the water had begun to flow, trade and investment agreements such as NAFTA or a multilateral agreement to be negotiated at the World Trade Organization would make it impossible for future governments to stem the tide.

While abundant today, fresh water may be scarce tomorrow. To protect our water services and our water resources, it is vital that control remain in public hands.