Trade Policy Note Final-rev08 - Development

Annex 5A: Environmental Services
The provision of environmental services is crucial to the achievement of MDG 7
which includes targets to halve the proportion of people without sustainable access to
safe water and basic sanitation and to significantly improve the lives of at least 100
million slum dwellers by 2015. Governments are faced with the challenge of
obtaining investment to upgrade and modernize water and sanitation services, while
ensuring access to the poorer segments of the population.
It is estimated that 1.1 billion people lack access to safe drinking water, while 2.6
billion people lack adequate sanitation. 138 Almost half the people in the developing
world have one or more diseases or infections associated with inadequate water
supply and sanitation, of which 1.8 million die every year from diarrhoeal diseases.
Inadequate water supply and sanitation are the main cause of child mortality, which
MDG 4 aims at reducing by two-thirds. MDG 4 targets 10 and 11 aim at reducing by
half the number of people without sustainable access to safe drinking water, and to
achieve significant improvement in the lives of 100 million slum dwellers.
Huge amounts of investment are required to achieve this goal, The investment
requirements to meet the world’s water needs are estimated at up to $180 billion
annually and it is widely believed that such resources, and associated technology, are
available mainly from the private sector. Given the large investments required in
water projects and the long period of return on such investment, investors give
priority to effective control. This can be facilitated by trade commitments on
environmental services under GATS and other trade agreements. The WTO Doha
Declaration singled out environmental goods and services as priorities for
liberalization. Plurilateral requests have sought full commercial presence for waste
water and other environmental services (water for human consumption is not covered
by these requests).
The privatization of infrastructure services, however, has taken place in the context of
a tense debate about the appropriate roles for the private sector in this area, and has
led to major conflicts, especially around large -scale projects involving multinational
companies. As an alternative to full-fledged privatization, several countries have
opted for Public -Private Partnerships (PPPs), where private partners are to differing
extents involved in the design and construction of infrastructure and/or in the
management, operation and/or the financing of assets. The privatization of the
collection, purification and distribution of water is often met with opposition,
particularly from those who stand to pay increasing costs to finance the improvements
in water supply. In addition, there is concer n that the benefits of these improvements
flow to more affluent segments of the population. Transnational water companies
operating in developing countries have shown a tendency to cherry pick –
concentrating on supplying large cities and those consumers who can pay market
prices, while rural areas, small and medium cities and poor neighbourhoods have been
disregarded. 139 In addition, liberalization in the waste management sub-sector of the
environmental services market presents high risks of employment displacement, since
excessive mechanization and modernization target the livelihoods of some of the
138 World Water Council: www.worldwatercouncil.org
139 OECD, “Public-Private Partnerships in the Urban Water Sector”, Policy Brief (Paris: April 2003)
(www.oecd.org/dataoecd/31/50/2510696.pdf).
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