6 May 2009

Food and Water Watch FAIL (x3)

After we exchanged views in the comments of Aquadoc's review of Blue Gold, Nancy of Food and Water Watch (FWW) sent me some FWW reports to support her opinion.

Before I take them apart, let me make it perfectly clear that I agree with FWW on the basic goal, i.e., we ALL want and "deserve" clean, high-quality food and water.

The trouble is that we disagree on the means to that end. Our main difference is obvious to anyone reading the FWW mission:
We challenge the corporate control and abuse of our food and water resources...we advocate policies that guarantee safe, wholesome food produced in a humane and sustainable manner and public, rather than private, control of water resources...
Although we all have examples of corporate abuse of food (e.g., lobbying on nutrition labeling or soda in schools) and examples of unsustainable private use of water (e.g., bad privatization deals), we ALSO have just as many -- and probably more -- examples of bad PUBLIC management of food (e.g., the Farm Bill) and water (read this blog :).

Thus, my major beef with FWW is that they see a gray world in black and white.

Anyway, let's take a look at these lovely reports. For the sake of time (mine and yours), I will merely point out the howlers in each report.

In Aqua America: Strategies of a Water Profiteer, FWW says:
As Aqua America expands, its customers shoulder rapidly increasing water rates, which bring in heaps of money for the company: $602.5 million in revenue and $95 million in pure profit in 2007. Meanwhile, many households are seeing their water bills grow out of their budget, placing extra hardship on families already toiling to keep up with skyrocketing housing costs.


Although public utilities have made considerable strides to address the infrastructure crisis, they still need help. Congress must take action and create a federal trust fund for public drinking water and clean water utilities. Citizens need — and overwhelmingly support by a 6-to-1 margin — a national trust fund for clean and safe water. Federal assistance will help ensure that safe, clean and affordable water is available for generations to come.
The first paragraph is a lovely exercise in hyperbole. "heaps of money," "pure profit," and "grow out of their budget" mask these alternative explanations. Let us try, respectively, "revenue," "profit" (of 16%, far less than evil Microsoft, which has a 28% profit margin) and "more." What does "grow out of their budget" mean anyway? Does that mean more? Whatever. For one thing, I am NOT worried about $50-$100/month water bills when mortgage payments far exceed $1,000!

In the second paragraph, we see FWW's biggest error -- the assumption that a "federal trust fund" is some sort of free money. A "trust fund" has to be funded out of tax revenues. It also means moving money from some communities to other communities (think NYC to Podunk). Is there something inherently good or fair about a transfer of $$ from one location to another? Not in my mind wrt water. Water is a LOCAL issue, and I see no justification (except OPM) for supporting a "trust fund." Further, the survey question [pdf] ("would you rather see spending increased for water projects or entitlement programs?") was hardly unbiased. Finally, it's hardly true that a trust fund will "ensure safe, clean and affordable water..." I'd prefer to ensure such a result through better oversight of local monopolies (aka BOTH public and private companies). The "report" should be widely cited -- as an example of biased hyperbole.

In The Future of American Water: The Story of RWE and the Politics of Privatization, FWW says:
American Water has engaged in a pattern of political and legal maneuvering — most notably in Lexington, Ky., where the corporation worked to defeat a local effort to return the city’s water system to public ownership... Felton, Stockton and Montara, Calif., as well as several other cities and towns, have successfully pried their water systems from its stranglehold.
First, why wouldn't a company fight a political effort to revoke its contract ("defeat a local effort"). Second, how does a "stranglehold" exist when water rates, water quality, etc. are regulated by local bureaucrats? FWW's major "point" is this:
Should a resource so essential to life be controlled by multinational, for-profit corporations, or safeguarded by the public with strong local oversight and accountability measures?
I question the use of "or" in that sentence. By setting up the question as either/or, FWW draws a false distinction and distorts the facts. Some people would call this agit/prop. I will too.

Finally, Costly Returns: How Corporations Could Profit from Inflating the Already High Cost of Repairing the Nation’s Crumbling Water and Sewer Infrastructure makes this shocking point:
The corporate water barons are salivating at the prospect of profiting from the drinking water and wastewater infrastructure crisis facing the United States. Already, U.S. cities endure 250,000 to 300,000 water main breaks, lose one-fifth of their water through leaks and suffer 1.2 trillion gallons of wastewater spills each year [1] ...Absent a needed increase in federal assistance, consumers and communities across the nation will see their bills continue to climb as utilities make necessary repairs and upgrades [2] ... thanks to some fancy finance and accounting, private utilities tie higher earnings to increased costs. Corporations have a financial incentive to oppose conservation [3], protection of drinking water sources and other policies and programs that would save money and help offset the economic burden on communities across the nation [4]. Wasted water drives up a company’s revenue, which flows from people’s water bills [5].
Here are point-by-point rebuttals:
  1. Those spills are taking place under the watch of public agencies. If they are "starved" of funds, it's because they are not charging their customers the full cost of service, which is poor management.
  2. Yes, I think that customers DO need to pay for the services they receive. Federal funds merely use Peter's tax payments for Paul's water system (OPM!). That's neither fair nor efficient.
  3. If private companies have no incentive to ask customers to conserve water, it's because PUCs do not allow decoupling. Note that PUBLIC water providers ALSO have an incentive to promote water USE among customers.
  4. I do not see how a private corporation has any different incentive to protect water quality. Quality violations and fines are bad for both public and private water managers. (In fact, private companies often take over small water systems that cannot meet quality requirements -- with positive results!)
  5. Yes, there is a positive relationship between the amount of money paid in water bills and company revenue. In fact, there's a 100 percent positive correlation, by my calculations. /sarcasm
Bottom Line: Don't bother to read anything from FWW. All you need to know is "two legs good, four legs better" "public = life, private = death!" I am sad to see so many good people blinded by ideological rhetoric. By dismissing ALL private/capitalistic options for water management, they lower their effectiveness, damage their reputation, and harm those they seek to help. (I am actually quite angry when organizations like FWW block private ventures to improve water provision in developing countries. By doing so, they really ARE killing babies!)


noah_hall said...

I totally agree. As you say, sure
corporations do some shitty things to water resources, but they probably couldn't do the harm that Bureau of Rec, Army COE, and local water districts with subsidized use rates have already done if they tried. They couldn't afford to give water away as gov't does.

Keep up the great work.

Aquadoc said...

Hey, David.

Great post. I Twittered you!

Anonymous said...

I find it fascinating the topic of water today evokes near immediate polarizing positions and this blog appears to elicit similar feelings. I have come to realize that all broad brush pronouncements have an inherent incorrectness, as there are always the exceptions. Based solely on the track record of most (not all), but especially the multinational giant water purveyors like Suez, Vivendi, RWE and Thames to state that at best their record is spotty is to be exceedingly generous. They most often ride in on the heels of the International Monetary Fund (IMF), The World Bank (WB) and the World Trade Organization (WTO) and with draconian sanctions provide water, at prices and quality solely determined by them and answerable to no one. Understandably I will be chastened for not pointing out they are answerable to the IFM, WB & WTO, who I would point out are joined at the hip along with the multinational water purveyors. At the moment I find myself in that camp of individuals who are unwilling to automatically trust for-profit water purveyors are not single mindedly positioning themselves to own and control all the water on planet earth. I will certainly admit I can not provide proof of a type satisfactory to most people. I therefore understand such an admission can quite easily place me in the category of a kook.

I admit I find it difficult to place – water – in the same economic category as General Motors, Intel, Microsoft or even ExxonMobil and see – water – solely as a commodity for sale to the highest bidder. I choose to see – water – as ... everyone has the right to clean & accessible water, adequate for the health & well being of the individual & family, and no one shall be deprived of such access or quality of water due to individual economic circumstances ... such a belief alters appreciably the potential economic commodity value of water in any for-profit business endeavor.


Paul F. Miller
striving to promote sustainable awareness


BLOG SITE ADDRESS ... http://waterman99.wordpress.com/2009

... everyone has the right to clean & accessible water, adequate for the health & well being of the individual & family, and no one shall be deprived of such access or quality of water due to individual economic circumstances ...

Matt said...

If we live in such a gray world why is there only one way to distribute water?

Philip said...

I love the way in her world turning a profit is ipso facto evil. Just to take one area where profit seeking trumps collective ownership: people who want to make a profit are concerned about waste and fraud; prices, too!. A State owned monopoly can make noises in this direction, but has no real reason to care.
Because of the natural monopoly of utility provision, no water provider is going to be as independent a business as, say, a newspaper that serves a community. It is really just the capital structure we are talking about, and in most cases private finance can do more with less.

Gayle Leonard said...

Inspired post inspires new catchphrase for our lexicons: Takes the Z: a spectacular polemic defeat. As in, "Whoa, Food and Water Watch sure took the Z in that debate."

David Zetland said...

Thanks for the comments, everyone.

@Paul -- keep reading this blog. You will find that I support your view ("some for free, pay for more"). As for your IMF/WB/WTO conspiracy theory, I have to disagree. These multilateral orgs have ZERO power over water resources. Private companies also have ZERO power. Since their only threat is to withdraw, and leave water provision (a local phenomena) to the locals, they can do nothing but provide good service or exit.

@Matt -- what's the one way?

Matt said...


First off, great post and I love the topic. I may not agree completely, but it's a good discussion.

What I'm hearing from you is that a for-profit model is the one, or best way to distribute water. I guess I wonder if for-profit companies is the best way to manage water everywhere. I agree that a for-profit model works well to control demand in say the U.S. or most of Europe. At the same time, I'm reluctant to say that is the best model for everyone. Perhaps other countries would not respond as well to a capitalistic model. Perhaps I'm swayed after seeing "Flow: For the Love of Water," but if a for-profit has the intention to make a profit and not just provide water, then problems can exist.



Alex Basilevsky said...


I agree with your basic point that rabid anti-corporation rhetoric is nonsense. The possibility of abuse exists in any organization, public or private.

I was a little concerned however with the following statement you made, "For one thing, I am NOT worried about $50-$100/month water bills when mortgage payments far exceed $1,000!" I think this is probably a little glib. There are plenty of people in the United States for whom a $50-$100/month water bill would constitute a financial hardship, and the cost of a mortgage doesn't strike me as a valid point of comparison.

I happen to think that commoditizing water makes a lot of sense. But, I see a strong argument to be made that water for personal use (as opposed to industrial or agricultural use) should be a right, and remain under public control. That may require a greater tax burden, but with a necessity like water I am willing to pay a little more to ensure everyone gets enough.

I also disagree with your statement, "water is a LOCAL issue..." I understand the context of your statement, but I believe that while water may once have been a local issue, it isn't anymore. One need only look at some southwestern states that must import an enormous proportion of their water from out of state, or from water sources that cross state lines (i.e. the Colorado River) to see this in action.

David Zetland said...

@Matt -- for-profit is not the only way; non-profit is fine. I am critical of FWW for being anti-private.

@Alex -- good points.
1) I compared the water and mortgage bill b/c FWW did.

2) On personal use, I am all for SOME for free, but people should PAY if they want more.

3) Water management MUST start at the local level, and it should be integrated with other places that share the same watershed. But I am still in favor of starting in the middle and working your way out. I am NOT in favor of HUGE water districts, since they tend to be inflexible/make mistakes...

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