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Blogs, Crisis response (stimulus and austerity measures)

World Water Day sees human right to water threatened by crisis responses

World Water Day, on March 22, is an occasion to celebrate the gift of life this natural resource represents to nature and human kind. It is also a pertinent occasion for a reflection on crisis response measures that are threatening to condemn more and more human beings to losing their access to such resource.

A frequent feature of financial crisis response measures – and even in countries that are not facing a financial crisis – has been the adoption of so-called “austerity” programs to recover fiscal health.

Enjoyment of the human right to water and sanitation can be placed at risk by these programs. Budget cuts often take the form of across-the-board increases in tariffs charged for access to water services, thus affecting the most vulnerable in a disproportionate way. Simultaneously, such cuts and their contractionary effects on the economy also often mean job losses and wage reductions for different segments of the population, thus making paid water services unaffordable to them. In other cases, governments opt for allowing some form of private participation, or the outright privatization, of provision of the services, in the expectation they will be freed from the related fiscal burdens.

Unfortunately, neither of these two measures have a good record at restoring fiscal sustainability and, in fact, often worsen it. Budget cuts, the theory goes, are supposed to lead to improved fiscal and public debt ratios by awaking the “animal spirit” of the private sector which would fill the gap left by the public withdrawal. But this prescription has been proved inaccurate so many times that it is anybody’s wonder why lending institutions continue to require them as conditionalities. A review of 133 programs in 70 countries found that the level of growth that was supposed to follow such policy prescriptions systematically undershot projections. The International Monetary Fund itself recently recognized that its recent programs in the troubled European countries had underestimated the contractionary impact their economies would suffer as a result. The spiral of compounded fiscal and debt woes that several European economies are experiencing is just the latest example of how budget cuts can initiate a vicious cycle of contraction that makes fiscal and debt burdens less, no more, bearable.

The record of private provision of services in relieving fiscal burdens is not a happy one, either. The companies taking over provision often restructure and increase tariffs, with regressive consequences for those with the lowest incomes. Yet, increased revenue may go into profits and not translate in investment to preserve and upgrade the water infrastructure. Poor regulations and poor design of contracts often mean governments have to re-enter the sector to subsidize consumption by those excluded by the private provision – a responsibility the government cannot abdicate—or to make up for the investment the private sector failed to ensure, when not both.

Another alleged benefit of privatization is the avoidance of rent-seeking behavior in public sector provision. The concept is that self-monitoring of the public provision provides opportunities for corruption by civil servants and privatization will bring transparency and accountability. Private providers will have an incentive to improve the service in order to get more customers. But rent-seeking behaviors are as likely to occur in private companies as in public ones, experience has shown. This is especially the case when the latter come in charge of operating services that are essential and provided in monopolistic or oligopolistic structures.

A frequent mistake when considering crisis response measures is that abiding by the principle of non-retrogression in the enjoyment of such rights is a luxury that only apply to good times. Quite to the contrary, the Committee on Economic, Social and Cultural Rights recently reminded governments that, while the proposed policy changes may bring some measure of retrogression, they have to meet some standards, too. First, they should be temporary, only intended for the time of crisis. Second, they should be proportionate and necessary, in the sense that any other measure, or failure to act, would be more detrimental to economic, social and cultural rights.  Third, they should be non-discriminatory, and comprise all other measures, including tax measures, to support social transfers to mitigate inequalities. Fourth, they should identify the minimum core content of rights (or a social protection floor as developed by the International Labor Organization) and ensure its protection at all times.

In an upcoming report the Human Rights Council Special Rapporteur on the human right to safe drinking water and sanitation will focus on non-retrogression and sustainability. The report will, therefore, provide occasion to address the human rights dimensions of implementing austerity measures, as they relate to the right to water and sanitation. The report will deal with questions such as: have the human rights impacts of the measures been assessed? Have budget reductions affected the water and sanitation sector? Have investments in infrastructure been reduced? Have reduction on social expenditure had an impact on the affordability of water and sanitation services?

Any individual or group can send comments to the Special Rapporteur as an input to her report, by answering the questionnaire that is posted online.

The harm to human rights that comes in the throes of austerity programs tends to be seen as an “inevitable” trade-off of measures needed to recover growth. But if a close examination of the fiscal gains of austerity programs reveals that such gains are so elusive, one should conclude that the trade-off does not really exist. An accurate determination of whether such trade-off exists is, therefore, the first thing a human rights approach calls for.

More information on the upcoming report by the Special rapporteur on the right to safe drinking water and sanitation, and questionnaire for open consultation.

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