Trade Policy Note Final-rev08 - Development

poorest people. 140 Governments in developing countries are thus faced with a
dilemma: how to obtain the necessary investment and related technology while
ensuring that benefits are shared by all.
Box 22: The 4 th World Water Forum
The Ministerial Declaration of the 4 th World Water Forum held in Mexico city in March 2006
reaffirmed that “governments have the primary role in promoting improved access to safe
drinking water, basic sanitation, sustainable and secure tenure, and adequate shelter, through
improved governance at all levels, and appropriate enabling environment and regulatory
frameworks, adapting a pro-poor approach with the active involvement of all stakeholders”
(see www.worldwaterforum4.org.mx).
Environmental services are big business. The global market for environmental
services sector exceeded $365 billion, in 2002, 80 percent accounted for by water,
sewage and solid waste management. The industry has a dual structure, with a small
number of large firms accounting for about 50 per cent of output in individual market
segments,(the three largest water operators account for more than 50 percent of the
global market) 141 while a large number of smaller firms account for the remainder. In
developing countries, the emphasis has been on sewage treatment and water delivery.
Private investment projects have targeted high and middle income countries: LDCs
have hardly been touched. For instance, less than 0.2 percent of all private sector
investments in the water and sanitation sector of developing countries went to Sub-
Saharan Africa. Only 3 percent of the developing country population is provided with
drinking water t hrough private operators.
Box 23: Buenos Aires Water Supply Privatization
Questions remain about the assumption that market liberalization automatically produces
improvements in the efficiency of water utilities and in the connection of new customers. In
1993, following the advice of the IMF, the water supply system of Buenos Aires was
privatized and placed in the hands of a consortium led by the French giant firm Suez.
Although there were initially impressive gains in the extension of water infrastructure, the
majority of the concessions’ negative impacts have been most deeply felt in the poorest
sections of Buenos Aires 142 . Many poor households fell into serious arrears and were
disconnected from the network, especially prior to 1998. Environmentally, those living in the
poorest areas of the city have also been faced with the negative effects of rising groundwater
and the health risks associated with nitrate-contaminated aquifers. These municipalities have
some of the lowest average incomes in the Greater Buenos Aires area and yet a large part of
the financial burden for extending the network has fallen on these households. 143 . In March
2006, the Government of Argentina cancelled the contract with Suez.
140
UNDP, International Trade in Environmental and Energy Services and Human Development,
Discussion Paper, Asia-Pacific Trade and Investment Initiative (Colombo, 2005) at p. 22,
(www.undprcc.lk/Publications/Publications/International_trade-completed.pdf).
141 Hilary, John, GATS and Water: The threat of services negotiations at the WTO , Save the Children
UK (London, 2003) at p.16.
142 See www.cbc.ca/fourth/deadinthewater/argentia2
143 Loftus A. L. and D. A. McDonald, Of liquid dreams: A political ecology of water privatization in
Buen os Aires , Environment&Urbanization, Vol 13 No 2, October 2001
(www.queensu.ca/msp/pages/Project_Publications/Journals/Loftus.pdf). See also Hilary, John, GATS
and Water, op. cit.
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