Water For Sale: How Business And The Market Can Resolve The Worlds Water Crisis

How Business and the Market Can Resolve the World’s Water Crisis F R E D R I K S E G E R F E L D T Water for sale Water for sale How Business and the Market Can Resolve the World’s Water Crisis F R E D R I K S E G E R F E L D T WASHINGTON, D.C. Copyright © 2005 by the Cato Institute. All rights reserved. Originally published as Vatten till salu. Hur fo ¨ retag och marknad kan lo ¨ rldens vattenkris, copyright ©2003 Timbro, Stock¨ sa va holm. This English-language edition has been revised. Library of Congress Cataloging-in-Publication Data Segerfeldt, Fredrik. [Vatten till salu. English] Water for sale : how businesses and the market can resolve the world’s water crisis / Fredrik Segerfeldt. p. cm. Rev. translation of: Vatten till salu. Includes bibliographical references and index. ISBN 1-930865-76-7 (alk. paper) 1. Water resources development—Developing countries. 2. Water-supply—Developing countries. I. Title. HD1702.S4413 2005 333.91⬘009172⬘4—dc22 2005047027 Cover design by Jon Meyers. Printed in the United States of America. CATO INSTITUTE 1000 Massachusetts Ave., N.W. Washington, D.C. 20001 ‘‘Centuries of experience show that governments are more capable of regulating the behavior of private sector interests than they are of increasing the efficiency of bureaucrats.’’ Christopher Lingle, Korea Times, June 14, 2001 ‘‘All the water there will be, is.’’ Anonymous ‘‘Thousands have lived without love, not one without water.’’ W. H. Auden Contents Preface ix Acknowledgments 1. Introduction xi 1 2. Aqua Vitae 3. Shortage of Good Policies, Not of Water 7 13 4. Water Rights—The Solution to Many Problems 5. Markets and Conflicts 29 37 6. The Price of Water 7. The Possibilities of Privatization 43 59 8. Hazards of Privatization 9. The Poor Need Water, Not Ideology Notes References Index 79 111 119 127 137 Preface When I told friends and colleagues I was writing a book about water, and the role of markets and the private sector in water distribution in developing countries, most of them frowned and asked why. True, at first this seems to be a very technical and narrow subject. But on closer inspection, one comes to realize that there is a global drama taking place. It is not primarily about water technology; it is about more than a billion people around the world lacking access to clean and safe water, which causes 12 million deaths a year. Therefore, this became more a mission of life and death than yet another boring technical study. It is my hope that readers will find the book as important as I think the topic is. Acknowledgments I was first asked to write this book by Fredrik Erixon, chief economist at Timbro, the Swedish think tank. I had no idea when accepting the project that I was about to dive deep down into the blue. Fredrik provided me with excellent coaching throughout the project, for which I am grateful. I would also like to thank friends and colleagues for reading and commenting on the drafts. It is not possible to list all the publications I have drawn upon for this book, but the works of Roger Bate have been important as a source of inspiration. He is extensively quoted here. Thanks also to Linda Bergman and Jorge Dell’Oro, who organized an excellent program for me in Buenos Aires. The topic of this book is a very important one, and I am therefore very pleased that the book is being published in English. For this I am indebted to the Cato Institute and its director of the Project on Global Economic Liberty, Ian Va´squez. I also thank R