Water crisis in Asia: ADB’s Grand Design to Alienate People from Commons

12 May 2013 by People’s front against IFI’s


The Asian Development Bank (ADB)’s 2001 water policy [1] loudly proclaims ‘Water for All’. With these words, the Bank takes pride in sharing its regional vision for this sector. It further pledges to put its finance and ‘knowledge’ to rescue the countries in Asia-Pacific. However, it is important to note that the same ADB gave carte blanche to the controversial Dublin Principle [2], and spent close to $ 19 billion in this direction till 2010. A whopping $ 25 bn has been earmarked for the coming decade for addressing challenges of water (mis)governance in Asia-Pacific by the ADB. The Bank has distinctively made marked structural changes in the water management in Asia which seeks to introduce and set up private ownership of commons. The models prescribed by the Bank and its partners in the name of rescuing countries from water crisis was actually instrumental in gradual alienation of people and communities from their age old common resources for survival. An ambience is also created to create a continental water crisis so that Bank can take full advantage of it dictate the course.

The competition over harnessing river water has burst open a more antagonistic state of affairs. Several protests and agitation have erupted on issues pertaining to diversion of water for industrial use, pollution, allocating water to mining companies and over all alienation of farmers and fisher folk from their access to water in Asia has been the result of the Bank’s 40 years plus intervention in water governance in Asia. To escape this criticality the Bank has adopted Strategy 2020 which is once again extremely short sighted. The Bank proposes to address water crisis in major Asian countries such as China, India, Pakistan, Vietnam, Bangladesh, Nepal, Uzbekistan and Cambodia through a set of prescriptions which aim to overhaul the water sector in each government with the private sector in the leading role.

The Bank is keen to guide countries to address the water challenges through its ‘Water for All’ policy and a more recent Water Operational Plan (WOP)-2011-2020. [3] The WOP is a strategy by regional departments of the Bank directly backed by the Bank President. It acts in collusion with respective departments of different Asian governments in a bid to resolve the predicament.

Water for all: ADB Operations in Water Sector

The World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

and the Asian Development Bank (ADB) recognise that the water scarcity hits the poor disproportionately. The Bank also admits the need to take urgent water conservation measures to bridge the gap between demand and supply. Increasing access to clean water for the poor and enhancing water management has, in fact, been campaigned by the World Bank and forms the basis for ADB’s water policies. However, the very water policies of the Bank spell more damage for the poor and portend greater ruin of the world’s diminishing water resources.

The 2001 Water Policy recognises the Asia and Pacific region’s need to formulate and implement integrated, cross-sectoral approaches to water management and development. The Policy tries to classify water as a socially vital economic good. Through the marriage of economic with social in its statement, the bank clearly implies that it too looks at water as a commodity and not just a common property or put simply as commons.

This has been categorically rejected by communities and peoples’ movements. Before embarking on its water policy, the Bank intervened actively in irrigation and drainage, flood control, water supply and sanitation, hydropower, fisheries, forestry and watershed management, navigation, or multiple uses. Between 1968 and 1999, over $15 billion was invested in water sector projects. Between 1992 and 2009, the ADB invested over $16.3 billion in water sector which was about 13 percent of its total lending. This indicates the Bank’s core attention in this sector which is intended to facilitate the entry of private capital – primarily large and multinational – in this area. The total loan approvals were 59.4% for the water supply and sanitation (WSS). The other sub-sectors were 14.4% for water-based natural resource management, 13.9% for large hydropower, and 12.3% for irrigation, drainage, and flood protection. From a high of $1.3 billion in 1995, the lending dropped to $236 million in 2001, the year the policy was issued. A very small portion of the lending has gone to rural WSS (13% of total lending to WSS during 1992–2009) which indicates that commodification of rural water is difficult than its urban counterpart.

However, ADB’s lending for water projects declined from an annual average of 30 percent in the early 1980s to 16 percent in the 1990s. The trend in investments in water projects has averaged $790 million a year from 1990-2005, and ranged from $330 million in 2004 to $1.4 billion in 2005. The Water Financing Program (WFP) established in 2006 facilitated over $2.0 billion investments annually during the period 2006-2010 or a total of $10 billion by the end of 2010. The Program has now been continued until 2020 with target investments at $2.0-$2.5 billion annually or a total of over $20-25 billion by the end of 2020.

ADB’s Water Operational Plan 2011-2020 identifies priority actions that ADB should immediately embark on. However, the basis of this priority sector is one-sided. While connecting Water–Food–Energy Nexus, the bank argued that ‘unconstrained use of free or low priced energy has led to indiscipline in irrigated agriculture’ with ‘farmers depleting groundwater aquifers unabated’. Ignoring the Thermal Power Plant which consumes 80 per cent of water, the Bank gives a critical view of the farmer’s use of water.

The Plan has developed a range of operational interventions as ‘the water- food-energy security nexus, coupled with climate change impacts, can help to drive the design of transformational water agendas across the region’. Two of the urgent challenges to be addressed in the Integrated Water Resource Management (IWRM) [4] process are (i) flood and drought mitigation (as part of disaster risk management); and (ii) the water-food- energy security nexus.

i) Flood and Drought Mitigation, and Other Water-Related Disasters

The Plan suggests large-scale storage facilities, community-level storage facilities together with rainwater harvesting, ground water management as the mitigation strategy for uncertain impacts of climate change. Community-based, disaster risk-reduction strategies will provide resilience in vulnerable communities—it will also reduce damage, limit loss of lives, and minimize livelihood impacts.

ii) Water-Food-Energy Security Nexus

For the Bank, the water, food, and energy security intersects at all river basins. It prescribes that ‘adjustments in policies for food self-sufficiency and reliance on hydropower and bio fuels as sources of renewable energy will have major consequences for the IWRM process in river basins’ [5]. “Growing more food with less water” [6] will increasingly be a priority by changing policies and technology in agriculture. Private sector and farmer participation must increase substantially. “More crop per drop” [7] can be achieved through the introduction of new technologies, e.g., drip and sprinkler irrigation in place of surface techniques, or through transformation of irrigation systems and on-farm management.

According to the Plan on agriculture, the Bank will adhere to those projects that demonstrate a clear program of substantially improving efficiency in the use of water and enhancing productivity. However, the formulation of public policy, according to the Bank, is required to allocate and rationally manage water use across the food, energy, industrial, and municipal spectrum. With the earlier arguments of ‘causes and effects’, the Bank is striving to alienate traditional farmers and their traditional crop pattern in Asia.

The Plan is clearly pointing towards construction of large hydropower. However, the Bank has been cautiously treading since 2001 as compared to the World Bank which aggressively continues investing in at least in 67 large hydropower projects worth $8.7 billion - half of which are in Asia - with ease. Many of the Bank staffs were not satisfied with the ‘clause 32’ of Water for All policy [8] which warned the Bank to cautiously move ahead with large water infrastructure. However, this new Plan gives impetus to the Bank to go ahead with large hydropower in coming days.

To address the water allocation in guise of development, respective countries with the support of ADB have already initiated to formulate and implement IWRM across the 25 rivers and more in Asia. The IWRM approach has been flawed in terms of peoples’ control, information sharing, minimising water for agricultural needs, and a strong bias towards industries, failure in common water sharing within region to promote good partnership and neighbourhood.

It is worth to compare the water policies of the World Bank Group and ADB as both are major player in managing water in the Asia. The major areas of differences in 1993 Word Bank Water Policy and 2001 Water Policy are: a) ADB has increased focus on negotiated and manufacturing consent (ii) ADB promotes a gradual phase-out of subsidies while the World Bank support targeted and means-tested subsidies; (iii) ADB lacks an explicit policy for small water supply providers and sanitation in contrast to the World Bank; and (iv) for large water projects, ADB has a cautionary approach. Also, ADB’s water policy recognises the importance of regional cooperation in water resource management.

The ADB has clustered its investment in water sector into three sub programs since 2006 as follows: rural water (water supply and sanitation, irrigation and drainage, and multiple uses of water in rural communities); urban water (water supply, sanitation, and wastewater management in cities) and river basin (IWRM, infrastructure, hydropower, flood management, watersheds and wetlands). Under the Water for Asian Cities program [9], launched in 2003, ADB and UN-Habitat have been financing to improve water supply and sanitation services to the urban areas in Asia. The first phase of the partnership, from 2003–2006, exceeded its grant financing target of $5 million each, and in 2007, ADB and UN-Habitat agreed to double the amount for future.

Perspective of ADB Water Policy and its Implementation

The primary concerns were embedded in the concepts of ‘economic good’, ‘full cost recovery principle’ and ‘cut off subsidies’, private sector participation, tradable water rights and IWRM, which are the fundamentals of ADB’s ‘Water for All’ policy.

Does a sane and beneficial ADB policy exist for all? No. Several ADB funded projects in the areas of irrigation, flood control, watershed management, water supply and sanitation, and water management has shown that they are beneficial to a certain section of the society. These are large companies and their local agents who seek a fortune in water- trade. On the other hand, for a large section of people it has meant ecological destruction (damaging the environment and the ecosystem), displacement (loss of livelihood, loss of access to water and displacement from communities), non-achievement of project objectives (unfinished, damaged and costly infrastructure), and disregard for public benefit as ADB continues to impose a top-down planning approach that discounts people’s alternatives. Water policy of the Bank is fundamentally and structurally erroneous that facilitates big capital in the ‘field’ of water.

ADB Water Policy aims to promote poverty reduction and claims to have a pro-poor approach. However, its strategies and practices are inconsistent to what it espouses, and these inconsistencies led to negative impacts on the poor. ADB’s notion of water as an economic good is a departure from the long-held belief of water as a right and as a common. This reflects ADB’s market-oriented paradigm in the water sector where, for instance, the problem of allocation is to be resolved by rates and prices. Draining a large part of the income of the classes at the bottom, privatisation of water utilities and costlier water tariffs ultimately block access by the poor. In reality, privatisation overheads drive away the deprived from the piped water system and giving them no option but relying on substitute sources, which are potentially unhygienic. Execution of cost recovery, and market depended mechanisms for water distribution would in addition jeopardize food sovereignty. For example, paddy cultivation consumes more water than other cash crops or industrial use. It also generates the smallest revenue amongst others. If water allocation follows the ADB’s principle that “water must be utilized by those who render the most economic advantage”, then paddy cultivation – a main Asian method of domestic food cultivation and an enduring symbol of food sovereignty – is being seriously threatened. [10]

The IWRM aims to turn the functional values of water into scopes for investment largely for big capital and their local beneficiaries. This has a potential to create not only water and sanitation poverty but also to create large-scale livelihood insecurity that can induce greater vulnerability to billions of communities across the world. As Patrick Bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. notes “As we have seen, in a setting as unequal as South Africa - with 45% unemployment and, alongside Brazil and Guatemala, the world’s highest income disparities - the neoliberal policies adopted during the 1990s pushed even essential state services such as water beyond most households’ ability to pay. Some of these policies were adopted before political liberation from apartheid in 1994, but many were the result of influence on Nelson Mandela’s ANC by the World Bank, US AID and other global and local neoliberals during the late 1990s”. [11] The situation would not be different in India or other Asian countries where disparity is steadily. Even the ADB acknowledges that “Inequality widened in 11 of the 28 economies with comparable data, including the three most populous countries and drivers of the region’s rapid growth—the PRC, India, and Indonesia. From the early 1990s to the late 2000s, the Gini coefficient—a common measure of inequality— worsened from 32 to 43 in the PRC, from 33 to 37 in India, and from 29 to 39 in Indonesia. Treating developing Asia as a single unit, its Gini coefficient went from 39 to 46 in that period.” [12]

Privatization in the Asian region

ADB’s loans

The elements of full cost recovery and elimination of subsidies will only heighten social inequalities, and deprive the poor and other marginalised groups of good quality water. As ADB stated in its policy, consumers are expected to meet the full operation and maintenance costs of water facilities and service provision in urban and rural water supply and sanitation systems. While subsidies can be considered, this will be on a case-to-case basis. All of these will lead to water rate increases, and consequently, prevent the poor from connecting to ADB-funded water utilities. Even after 2006 review of the policy there have been many instances where communities are suffering from ADB funded projects.

Integrated Water Resource Management (IWRM): ADB’s Flawed Approach

One of the visions and objectives of Bank’s Water Policy is to guide Asian countries to formulate and implement integrated water resource management (IWRM). The IWRM principles comprises efficient water use, equitable access, balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. between competing uses, use of appropriate environmentally sound technology and collaboration between various government agencies and representatives of all ‘stakeholder groups’. The First world water conference under the aegis of UN in 1977 known as Mar del Plata Water Conference [13] officially recognised and recommended IWRM to be pursued by the government to address the various demands of water by its Mar del Plata Action Plan. The need for an IWRM approach to water management was strengthened during 1992 International Conference on Water and Environment in Dublin (ICWE, 1992), and the 1992 UN Conference on Environment and Development (UNCED, 1992) in Rio de Janeiro, World Summit on Sustainable Development (2002) and all World Water Forums from Marrakesh to Istanbul.

While ADB accepts the set of principles defined by Global Water Partnership (GWP), it focuses on river basins as the fundamental unit for managing a country’s water resources. According to ADB if basins are managed well, successful integration of uses and users is possible on many levels. The ADB prescribes that government must sets the resource management agenda (policies, strategies, plans, etc.) and users implement that agenda. The Bank emphasizes at the beginning of implementation of IWRM must start with establishment of river basin organizations (RBOs) followed by improved coordination among authorities and prepare basin plans.

However in several countries the IWRM put forward by the Bank has not been in principle applied or followed. The IWRM should not be considered at all as a concept rather it’s a process to achieve the desired goals. To allow the government sets the agenda is in itself flawed. From Indonesia to India, the Bank is hand in glove with government facilitating the private sector take over or mining industries to take out water from sources which has been the only source of survival of farmers as well as ecology.

In Indonesia, under IWRM, the Bank and government roped two private water operators in Jakarta (i.e., Palyja and Aetra) for water use from the rivers, but not for distribution. Lack of transparency on this project, according to several CSOs representing communities including farmers and fisher folks, indicates that the industry will get a major share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of the water, alienating its prior users such as farmers.

Farmers in Odisha (India) proposed a water management and governance system of water resources by the people themselves instead of the one being pushed by the government of Odisha under a technical assistance (TA) from ADB. The proposed plan was preferably supporting industries demand and requirement from rivers than the farmers. The TA report which hastily put forward by the State government was out rightly rejected by several farmers and farmer representing groups. With strong oppositions from farmers and CSOs, the government resorted to postpone the release of the IWRM plan as well as deferred to establish River Basin Organsitaions (RBOs) till further comprehensive discussions.

Earlier as well, the IWRM has not been implemented properly in the case of Khulna Jessore Drainage Rehabilitation Project in Bangladesh by the Bank. The lack of public consultation and unwilling to accept traditional approach of water management has resulted in submergence of many settlements, government buildings and schools, among others even after 6 years of project was completed in Bangladesh.

While the Bank is seriously looking at the set back of IWRM through its Water Operational Framework, its approach on IWRM with the respective government has to be more transparent and accountable. The successful implementation of IWRM depends on several procedural factors such as: 1) the process from the beginning has to be transparent and accountable, 2) detail assessment of the water resources has to be on public domain, 3) public participation is mandatory with priority be given to historical users, settling of water rights, 4) formation of river parliaments or river assembly than RBOs, 5) Industry or Corporate as customer of water not users, 6) planning and design of water management plan and strategies by water users with government as guardian and finally implementation and maintenance by water users and government.

Conclusion:

A decade has passed, but the Bank is not interested to locate the roots of the problem about its water management and human well being in Asia. Therefore, the Bank’s intentions about ‘development in Asia’ is questionable with reference to its water intervention among many others. The Bank is keen to dismantle the traditional water management and its continued guidance on agribusiness, and improved fertiliser use and so on is a direct threat. The likes of Wal-Mart are trying to piggy-back on the Bank’s power to restructure water and agriculture in Asia. The Bank should be immediately barred from bringing market-driven approach to the doorstep of the green field. Dam rush also has to be checked immediately. Solving droughts by diverting water from storage is a disastrous solution. The solution to address drought will be a bigger problem given the erratic precipitation nowadays. The impacts are enormous to people, livelihood and environment. On the pretext of building a community-owned storage system, the Bank is in full swing to go for several big dam structures. Bank has been implementing methods which gradually but strongly undermines the concept of ‘water is life.’ or water as ‘common heritage’. The scarcity at the heart of the global water crisis is rooted in power, poverty and inequality — not physical availability. The question of resistance by the affected sections and the society at large in the face of global environmental challenge will decide the balance of forces in the days to come.



Footnotes

[2A 1992 declaration that emphasis on the economic value of water rather than water as a universal right.

[5Water Operational Plan 2011-12, ADB, October 2011

[10World Bank and ADB’s Role in Privatizing Water in Asia, P. Raja Siregar /KAU- Indonesia

[11When Commodification Annuls the Human Right to Water, Patrick Bond, Director, Centre for Civil Society and Professor, School of Development Studies, University of KwaZulu-Natal, Durban, South Africa

[12Asian development outlook 2012, Confronting rising inequality in Asia, Mandaluyong City, Philippines: Asian Development Bank, 2012.

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