Full cost pricing, the poor, or both?

by David Zetland
reposted with permission from Aguanomics

Full cost pricing, the poor, or both?On 19 April in Berlin, I joined a debate in favor of the following proposition:

Is cost recovery pricing the best way to ensure the poor have access to good water services?

I was seconded by Dr William Muhairwe, Managing Director of the NWSC Uganda.
Arguing against full cost pricing were Wenonah Hauter (Executive Director of Food and Water Watch) and Anil Naidoo (Blue Planet Project Organizer for the Council of Canadians). Wenonah and Anil are colleagues of Maude Barlow.*

The conference used the provocative URL of “water meets money,” and that name alone was enough to attract 15-20 anti-corporate greed protestors (there were about 450 attendees at the conference).** Their attendance was particularly ironic, since it was corporate money that upgraded Berlin’s water system over the past ten years (at lower cost than was expected of the previous, public-only management).

We won the debate. That was not such a surprise with a crowd that has fought to get adequate money for water services. What I thought interesting was the way that Wenonah and Anil chose to argue their position.

Rather than pay attention to the ongoing failures of water service, governance and political leadership in places where the poor lack water service, they claimed that corporations should pay more taxes. Although it sounded like they were presenting talking points instead of responding to the position that William and I presented, I guess that they were thinking that this pot of money combined with the UN-backed human right to water would deliver services. But their argument was weak on several levels:

  1. They failed to address governance failures.
  2. They failed to acknowledge successes of full cost pricing in places like Uganda (and many others).
  3. They failed to consider how higher tax revenues on corporations (should they even be collected!) would somehow get to water providers, and THEN support water services to the poor.

I concentrated on two points:

  1. Subsidies to the poor (via income transfers or even some for free, pay for more water prices) are not incompatible with full cost pricing within a water utility.
  2. Subsides from the central government (or aid agencies) are unstable and come with strings attached. Given the problems that governments face (from the US to India), it seems folly to link water services to political games that would rank water way down the list of priorities.***

My partner, William, presented even stronger points. He spoke from experience of delivering water to the largest cities in Uganda. Compared to him, Anil sounded way more “let’s sing kumbaya, guys” than realistic.

But don’t believe me, listen to the whole debate here [MP3 backup]. The first few minutes of my statement were not recorded. Here are my notes [pdf]; I didn’t use them all.

Wenonah also made some funny claims about my previous ideas (she totally misunderstood all-in-auctions and called me a Stalinist for my idea of pricing water per person). Here’s her take on the debate, which includes the classic line “…is it any surprise that we lost 75% to 25%? Anyway, Anil and I knew we won the debate on the merits and ethics of our arguments.” Sounds like something that Gaddafi, Mugabe or Mubarak would say (as defenders of Their People).