Droughts are nothing new. So why didn't São Paulo's water provider have a back-up plan?

A water protester on the outskirts of the city. Image: Getty.

São Paulo’s ongoing water crisis has left many of the city’s 20m or more residents without tap water for days on end. Brazil’s largest metropolis is into its third month of water rationing, and some citizens have even taken to drilling through their basements to reach groundwater. Most commentators agree that the crisis is to blame on multiple factors, but few have questioned the role of the water company in charge: Sabesp.

The utility, responsible for water and waste in São Paulo and the surrounding state of the same name, has clearly failed its public service remit. Yet, it’s not even clear whether public service is the highest priority for part-privatised Sabesp, whose directors have just awarded themselves bumper bonuses despite millions of their customers going thirsty. São Paulo’s water will go from crisis to crisis so long as Sabesp prioritises profits over long-term investment.

Clearly there are human-induced environmental factors at play: climate change, deforestation of the Amazon, pollution, as well as overconsumption. The pressures we put on nature are likely to increase water shortages worldwide, perhaps eventually leading to conflicts and wars.

But droughts are nothing new. Historical records going back hundreds of years show how cities and regions have struggled with extreme water shortages. Periods without rain happened long before our current struggles with climate change. But if that is the case, shouldn’t it be the responsibility of water utilities to plan for such events, putting in place contingency measures to manage possible water shortages?

Previous water levels are marked on the pillars of a bridge over the Atibainha reservoir. Image: Getty.

São Paulo’s extraordinary growth in recent decades has overloaded the Cantareira, the city’s water supply system. But the rapid increase in water usage was hardly a surprise; it’s something that could have been managed and planned for. Sabesp has failed to do exactly that.

A profit-making public monopoly

One of the world’s largest water utilities, Sabesp was founded as a public institution in 1973. Since part-privatisation in 1994 the state of São Paulo has maintained at least half of the company’s voting capital, though shares are also traded on the New York and São Paulo stock exchanges.

While The Economist and others were keen to point out that Sabesp is “majority-owned by the state government”, this doesn’t tell the whole story. The utility is neither a public organisation concerned with providing a public service, nor a private company facing competition from other companies and controlled by regulatory agencies. Just like the “natural monopolies” enjoyed by water companies in the UK, Sabesp has a publicly guaranteed monopoly, yet its profits are part-privatised – earlier this year it paid out R$252m (US$83m) in dividends.

Residents collect rainwater in buckets. Image: Getty.

São Paulo’s water is just one of many public utilities that have been privatised throughout the world over the past few decades. Governments have followed the ideological belief that, in order to conserve and manage water properly, it is essential to put a price on what used to be a public good. In 1992, the UN adopted the Dublin Principles, declaring that putting a price on water and establishing a “participatory approach” – which is about involving users, planners and policy-makers at all levels – was the best way to reach a sustainable and equitable governance of water. The principles were quickly adopted by Brazil’s government, and implemented first in, you guessed it, São Paulo.

"Many of the necessary measures to prevent the current crisis were not implemented because they would be unprofitable to Sabesp’s shareholders"

The Dublin Principles call for the establishment of “basin committees”, formed of government, water companies, local residents and civil society. These committees are supposed to be responsible for deciding on water use in a particular watershed. Yet, 23 years after this mechanism was supposedly implemented by Law 7663 in São Paulo – and after 17 years of a similar rule at the national level – we still do not know who participated in these committees. On paper these committees exist, but in practice they are not empowered by state structures.

Dysfunctional governance in São Paulo state has left the part-privatised utility, Sabesp, to mainly follow the principles of the market and the interests of its private shareholders. This inevitably skews its strategy towards the short-term.

When deciding whether to make the necessary investments to prepare for possible water shortages, Sabesp has had to choose whether to safeguard the public supply or increase the value of its shares. The company did invest US$4bn from 2005-2013, but that is still not enough. Many of the necessary measures to prevent the current crisis – such as upgrading the Cantareira system – were not implemented because they would be unprofitable to Sabesp’s shareholders .

The company’s lack of transparency since the crisis kicked off highlights its planning failure. For many months Sabesp denied that water was being rationed. Then state governor, Geraldo Alckmin, acknowledged that there was lack of water, but said they were “isolated and private” cases. Then a bonus offered to those who economised water in their daily use, later turned into a fine for those who “waste” water.

The most essential resource of all has now become a struggle in São Paulo. And ever-deepening inequality has turned a water crisis into a social and economic crisis – communities on the periphery of the city and slums were inevitably the first to have their water rationed.

Responsibility for this crisis lies with Sabesp and two decades of running water supply as a for-profit service. It is a failure of public-private partnership. As climate change and other environmental factors make water crises more likely, we better rethink the way water is managed worldwide.

Steffen Böhm is Professor in Management and Sustainability, and Director, Essex Sustainability Institute at University of Essex.

Rafael Kruter Flores is Lecturer in Administration and Organization Studies at Universidade Federal do Rio Grande do Sul.

This article was originally published on The Conversation. Read the original article.The Conversation

 
 
 
 

Budget 2017: Philip Hammond just showed that rejecting metro mayors was a terrible, terrible error

Sorry, Leeds, nothing here for you: Philip Hammond and his big red box. Image: Getty.

There were some in England’s cities, one sensed, who breathed a sigh of relief when George Osborne left the Treasury. Not only was he the architect of austerity, a policy which had seen council budgets slashed as never before: he’d also refused to countenance any serious devolution to city regions that refused to have a mayor, an innovation that several remained dead-set against.

So his political demise after the Brexit referendum was seen, in some quarters, as A Good Thing for devolution. The new regime, it was hoped, would be amenable to a variety of governance structures more sensitive to particular local needs.

Well, that theory just went out of the window. In his Budget statement today, in between producing some of the worst growth forecasts that anyone can remember and failing to solve the housing crisis, chancellor Philip Hammond outlined some of the things he was planning for Britain’s cities.

And, intentionally or otherwise, he made it very clear that it was those areas which had accepted Osborne’s terms which were going to win out. 

The big new announcement was a £1.7bn “Transforming Cities Fund”, which will

“target projects which drive productivity by improving connectivity, reducing congestion and utilising new mobility services and technology”.

To translate this into English, this is cash for better public transport.

And half of this money will go straight to the six city regions which last May elected their first metro mayor elections. The money is being allocated on a per capita basis which, in descending order of generosity, means:

  • £250m to West Midlands
  • £243 to Greater Manchester
  • £134 to Liverpool City Region
  • £80m to West of England
  • £74m to Cambridgeshire &d Peterborough
  • £59m to Tees Valley

That’s £840m accounted for. The rest will be available to other cities – but the difference is, they’ll have to bid for it.

So the Tees Valley, which accepted Osborne’s terms, will automatically get a chunk of cash to improve their transport system. Leeds, which didn’t, still has to go begging.

One city which doesn’t have to go begging is Newcastle. Hammond promised to replace the 40 year old trains on the Tyne & Wear metro at a cost of £337m. In what may or may not be a coincidence, he also confirmed a new devolution deal with the “North of Tyne” region (Newcastle, North Tyne, Northumberland). This is a faintly ridiculous geography for such a deal, since it excludes Sunderland and, worse, Gateshead, which is, to most intents and purposes, simply the southern bit of Newcastle. But it’s a start, and will bring £600m more investment to the region. A new mayor will be elected in 2018.

Hammond’s speech contained other goodies for cites too, of course. Here’s a quick rundown:

  • £123m for the regeneration of the Redcar Steelworks site: that looks like a sop to Ben Houchen, the Tory who unexpectedly won the Tees Valley mayoral election last May;
  • A second devolution deal for the West Midlands: tat includes more money for skills and housing (though the sums are dwarfed by the aforementioned transport money);
  • A new local industrial strategy for Greater Manchester, as well as exploring “options for the future beyond the Fund, including land value capture”;
  • £300m for rail improvements tied into HS2, which “will enable faster services between Liverpool and Manchester, Sheffeld, Leeds and York, as well as to Leicester and other places in the East Midlands and London”.

Hammond also made a few promises to cities beyond England: opening negotiations for a Belfast City Deal, and pointing to progress on city deals in Dundee and Stirling.


A city that doesn’t get any big promises out of this budget is – atypically – London. Hammond promised to “continue to work with TfL on the funding and financing of Crossrail 2”, but that’s a long way from promising to pay for it. He did mention plans to pilot 100 per cent business rate retention in the capital next year, however – which, given the value of property in London, is potentially quite a big deal.

So at least that’s something. And London, as has often been noted, has done very well for itself in most budgets down the year.

Many of the other big regional cities haven’t. Yet Leeds, Sheffield, Nottingham and Derby were all notable for their absence, both from Hammond’s speech and from the Treasury documents accompanying it.

And not one of them has a devolution deal or a metro mayor.

(If you came here looking for my thoughts on the housing element of the budget speech, then you can find them over at the New Statesman. Short version: oh, god.)

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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