Privatisation, financialisation and neoliberalisation of water

Following on from my discussions with Sarah Hendry in Dundee, I’ve been exploring the idea of privatisation of water resources, and how this is playing out in the UK and around the world.

In London, I met with Dr Kate Bayliss, who has worked extensively on the issues surrounding the privatisation of water utilities, particularly in sub-Saharan African countries. Water has a dual nature: it is a human right, whilst also often being a commercial input, for the production of crops as well as industrial uses. Kate’s work highlights the challenge of retaining a focus on social justice and equity, when water utilities are privatised and operate under commercial principles. She has also recently engaged with the issue of financialization of water, when water utilities and water services are treated as financial products. She told me about a new trend in financial markets: water-related exchange traded funds. Water is an essential service, and exists in a highly specific local context – but these new financial instruments extend the process of commodification into financialization, further separating water from its context.

I went on to met with Dr Jessica Budds of the University of East Anglia. Jessica has been a critic of Chile’s water markets for many years, and one of her most recent papers examines the political ecology of water, and in particular, the relationship of water to power structures in Chile. Her historical analysis of the privatisation and creation of water markets in Chile demonstrates the link between not only the ideology of the powerful, but the way in which the privatisation of water strengthened their position. She also introduced me to the concept of the neoliberalization of nature. The tools that we use to manage our natural environment shape the discourse that we use to describe and engage with it – so the commodification of water can extend the neoliberal ideology to our relationship with nature. 

Jessica gave me a lot of new ideas to get my head around, and a new perspective from which to engage with the way that environmental water management in the context of a water market is changing the way that we perceive of and engage with the natural environment. Of course, political ecology always asks us 'what is the natural environment?', so I'm trying to disentangle the layers around that concept. In many ways, it's not really possible to separate the environment from humanity, as we define the environment as a social construct, as well as physically shaping it through our actions (even where and when we lived in it much more harmoniously than we do now).

Catchment management and conservation covenants

The UK is doing some very interesting things with their catchment management program. After my meeting with Chris Spray in Dundee, I was keen to hear more, so I met with Laurence Smith, head of the Centre for Development, Environment and Policy, at SOAS, University of London, who’s been exploring the response of farmers to NGOs seeking to arrange payment for ecosystem services, and in particular, what sort of legal arrangements they’d be willing to enter into and what sort of payments they would require. This work is feeding directly into the catchment management activities of the West Country Rivers Trust, as well as helping to inform the development of new legal instruments that enable the protection of changed land management practices in perpetuity, in the form of conservation covenants. We have similar legal instruments in Australia, but the current state of property law in the UK requires some substantial legal changes to make these instruments available. 

Laurence also shared some valuable insights into the way that farmers often prefer to work with a non-government organization, rather than the environmental regulator. This tendency is similar to what I’ve observed in the USA, and highlights the importance of separate decision-making roles. When one agency is responsible for regulating activities, it’s very hard for that agency to also explore other opportunities, as people can be unwilling to have open, frank discussions with an agency that has enforcement powers.

One of the fascinating aspects of the catchment management approach being piloted by the UK is that they are actively encouraging a diverse range of local agencies to take a lead role (called the catchment ‘host’ organisation) in the development of catchment management plans. Organizations interested in this role can ‘bid’ for the opportunity to host the plan development. This is a policy that creates space for non-government organizations to get involved, and really encourages the involvement of NGOs in catchment management. I’ll be really interested to see the results of the next round of catchment management planning, and see how the NGOs facilitate (or not!) the development of plans that the local community can embrace. 

Water reform in the UK: abstraction licences on unregulated rivers

London welcomed me with all its traditional charms: it rained. All day. Unceasingly. Coming from south-eastern Australia, I wasn’t entirely sure that such a thing could actually happen, so it had all the delights of novelty.

Fortunately, because as nice as my raincoat is, it’s not really a fashion piece, London then remembered that it was having the warmest, sunniest summer since 2006, and the rest of the week was glorious – golden, warm and lots of other words not usually associated with south-east England.

England and Wales are currently pursuing a range of water resource management reforms. I was lucky enough to meet with Henry Leveson-Gower, Head of Future Water Resource Management Project in DEFRA’s Water Availability and Quality Programme. He and his team are exploring policy options to facilitate water trading, and have been examining ways to unbundle water abstraction licences in England. This is quite similar to the water reform in Australia, where water licences have been separated into a permanent right (in Victorian parlance, a water share), a temporary right (a water allocation), a water use licence (which specifies where and how water can be used, and is attached to the land on which the water will be used) and a delivery share. However, in Australia, we’ve really only been successful at unbundling water licences on regulated systems, where water is held in large storages and called out for use. In England, they are attempting to do this for unregulated river systems, where the water licence gives you the right to extract a share of the available flow. This makes unbundling more complicated, as the location on the river is much more important in determining what the share of that flow will be, and the capacity to determine physical allocations of water (temporary rights) depends on predicting the flows in the river at a given period. I’m going to be very interested to see how they solve some of these problems, and whether any of those solutions might be transferable to Australia’s unregulated systems.

One of the components of the policy reform is using smart water metering technology, so that water meters provide water use data in real time to water managers, and access to water can be linked to real-time stream flow data. Australia has also been exploring the use of such smart meters in some rural catchments, and there’s a real opportunity to share some of these lessons with the UK. For example, in Victoria, Melbourne Water, in partnership with the Victorian State Government, have been piloting the use of smart meters in several of their rural catchments. I’m hoping that we can encourage policy makers everywhere to get better at sharing and learning from these sorts of projects.

Interestingly, there are some environmental charities (such as RSPB) who are purchasing land to restore and protect wetlands. In some cases, this includes a licence to extract water from the river to recreate flooding in the wetland. These environmental groups will also be able to trade their water under the new arrangements, and it will be interesting to see whether more environmental organizations enter this space and become environmental water managers in the UK.