Waterr - Village Magazine

3 8 April 2017

POLITICS

ITH WATER charges back, as the

Oireachtas water committee con-

siders ‘excessive use’ charges, it

is timely to look at the theory

which underlies water-pricing.

Austerity and the arrival of the Troika to Ire-

land exposed the fact that several aspects of

water services provision have been critical

issues for decades.

Not unique to Ireland, these issues have been

addressed by the roll-back of what is known as

the ‘hydraulic’ or ‘municipal’ model of water pro-

vision and the roll-out of what Karen Bakker has

called a market environmentalist model. This

shift remains uneven and contested.

The hydraulic model, which evolved after

states ﬁrst took interest in supplying water as a

public good and a public health measure in the

nineteenth century, treated water as a plentiful

resource. Provision was supply-led, with an

emphasis on equity and universal access. Water

was paid for primarily through general taxation,

and user charges, in place across Europe, were

treated as a supplementary form of income. For

infrastructure costs too great for general taxa

tion, government bonds were issued.

Crises in municipal water services date from

the 1970s, when several aspects of the hydraulic

model became no longer tenable. In particular,

ageing infrastructure required new investment,

in a strained ﬁnancial climate. Other pressures

have since emerged, including: the cost of devel-

opments in water treatment technologies;

higher health and environmental standards for

drinking water which, in the case of EU member

states, are set supra-nationally; and threats to

supply induced by climate change, with drought

and ﬂooding affecting the quality and continuity

of supply.

Market environmentalism marks the merger

of neo-liberal thinking about the role of the State

and the growing inﬂuence of market-based

thinking in solving environmental problems. The

hallmarks of the market environmentalist model

of water provision are that it is demand-led and

fully costed. In the process the understanding of

water as a public good is displaced by the under-

standing of water as an economic good. It is

assumed that the price signal is a key policy

instrument for regulating demand and supply,

as well as central to changing behaviour, ‘valu-

ing’ the environment and conserving scarce

natural resources. This is underpinned by a dis-

course of ‘state failure’. The state is berated for

its neglect of water services infrastructure, yet

public funding and public management is also

assumed to be a sub-optimal solution leading to

inefﬁcient and unaccounted-for subsidies which

private-sector involvement and commercial-pric-

ing rules will overcome.

In practice, private involvement in the water

utility sector has grown in a variety of complex,

hybrid relationships. With the exception of Eng

land and Wales, ownership of water supply

systems in Europe have remained in public

hands. Rather than complete state withdrawal

via privatisation, the neo-liberalisation of water

can involve the roll-out of new institutions and

the forging of complex state-market relation-

ships. These include the commercialisation of

water utilities, as well as their ﬁnancialisation in

the sense of the increasing inﬂuence of ﬁnancial

motives in how water is funded and managed,

and the commodiﬁcation of services.

Ireland’s water services funding challenges

stem from the decision to abolish domestic rates,

under which water charges were subsumed, in

1978. As early as 1983, local authorities were re-

granted the power to levy charges for water,

sewerage and waste. Mounting resistance and

the near political success of an anti-water charge

candidate in a Dublin by-election led to the with-

drawal of local authority power to charge

domestic users for water, in 1997. Against that

background also an exemption from the water

charges element of the EU Water Framework

Directive was sought and achieved by the Irish

State. However, even during the early to mid-

2000s, domestic water charges were never

completely off the political agenda.

By the late 2000s, before the arrival of the

Troika, ideas to re-introduce water charges, to

introduce domestic water-metering, and to

rationalise the sector by creating a single water

utility burgeoned in domestic policy proposals.

In particular, recommendations made in 2009,

by both the Commission on Taxation, and by the

Special Group on Public Service Numbers and

Expenditure Programmes, bore the increasing

influence of market-environmentalist ideas

regarding water pricing and cost recovery. Troika

conditions relating to full cost recovery for water

Even with the likelihood of charges for

wasteful use of water, as recommended

by the Report on the Funding of Domestic

Public, the State will remain much more

central to water provision than under erring

market environmentalist models

by Fiona Dukelow

Waterr

Market environmentalism assumes that the price

signal is a key policy instrument for regulating

demand and supply, as well as central to changing

behaviour, ‘valuing’ the environment and conserving scarce

natural resources. This is underpinned by a discourse of ‘state

failure and a pro-PPP agenda’.

It's everywhere in Ireland

April 2017 3 9

services and the establishment of a water utility

that would become self-funding over time were

therefore not completely new and externally

imposed ideas.

However, attempts to commercialise and

ﬁnancialise the management and funding of

water by establishing Irish Water as a commer-

cial semi-state company, and efforts to

commodify water by converting citizens into

Irish Water customers have all essentially failed.

Resistance to water charges has, in effect,

rejected the notion of water as an economic good

and asserted its unique social properties as a

good held in common, and a basic need essen-

tial to human life, which should therefore be

provided without regard to ability to pay. The

likelihood of charges being limited to excessive

or wasteful use of water, as recommended by the

'Report on the Funding of Domestic Public Water

Services in Ireland', means that the state, and

the social aspects of water, remain much more

central to water provision than countenanced by

the market environmentalist model and its world

of water customers.

Yet the Report’s ‘ﬁx’ on the matter of domestic

water charges does not allay the long-standing

challenges associated with adequately funding

water services provision. As well as the chal-

lenge of deﬁning what excessive or wasteful use

of water IS, the challenge of how to fund water

provision, whether as “a dedicated tax, a

broadly-based ﬁscal instrument, or an adjust-

ment to existing taxes”, as the Report puts it,

remains. Irish Water estimates that capital costs

associated with up-grading water-services infra-

structure, to comply with quality standards, are

in the region of €13 billion. Though not limited

to domestic water supplies, the Environmental

Protection Agency suggests that Ireland is a long

way off meeting the legal requirements on water

quality speciﬁed by the EU Water Framework

Directive. In addition, lack of compliance with

the Urban Waste Treatment Directive in 38 loca-

tions across Ireland has resulted in an

infringement case being taken by the European

Commission against the State.

While efforts since 2010 to neo-liberalise

water along market environmentalist lines have

not progressed and reﬂect a long back-story of

political troubles with water charges, in other

respects there has actually been a longer and

less visible process of neo-liberalising water ser-

vices delivery.

Since the State embraced Public Private Part

nerships in 1999, research by Eoin Reeves shows

that over sixty per cent of all Public Private Part-

nerships in operation are contracted in the water

sector. A strong element of the rationale for pre-

ferring PPPs is the assumed value for money over

traditional public-sector procurement which, as

Reeves has found, undermines the objectivity of

value-for-money tests. Moreover, there is very

little transparency involved in the procurement

process. These contracts typically operate on a

design, build and operate procurement model,

with contracts awarded to private companies for

up to twenty years. Previous local government

procurement practice involved issuing separate

contracts for the design-and-build element of

infrastructure followed by the takeover of facili-

ties by Local Authorities. Existing contracts still

have some years to run. On termination, because

of the switch in government role from provision

to regulation and monitoring, skills and exper

tise in the public sector in the operation of water

services will have been lost. This increases the

likelihood of re-contracting the services to pri

vate operators.

Under the Water Services Act (No.2) (2013),

970 contracts for water services were trans

ferred from local authorities to Irish Water. Not

all of these are for full design, build and operate

services, but they do give an indication of the

range of transnational water corporations

involved in providing services in Ireland. These

include Veolia Ireland which operates more than

30 plants, and Glan Aqua a subsidiary of the Por-

tuguese group Mota-Engil, also operating

approximately 30 water treatment plants. Other

companies include Aecom whose global head-

quarters are in Los Angeles and which is involved

in design, build and operate infrastructural pro-

jects across 160 countries. Companies with UK

origins such as Severn Trent Response, North

umbrian Water Projects, Anglian Water

International (the latter two now owned by

global investment consortia) also have an Irish

presence. Since the establishment of Irish Water

a total of 115 design-build-operate contracts,

operating across 232 different sites were trans-

ferred from Local Authorities. Internationally, as

Global Water Intelligence has found, Public Pri-

vate Partnerships have become the preferred

mode of operation of many private water compa-

nies, because they represent model of making

money out of water that is more bankable than

outright private ownership.

The commodiﬁcation and commercialisation

of water-services provision has failed, yet this

failure sits alongside a longer-term process of

privatising the operation of water-services infra-

structure. Meanwhile the challenges of

adequately funding water services and more

broadly protecting water as an environmental

resource remain unsettled.

Dr Fiona Dukelow is College lecturer in Appied

Social Studies, University College Cork

This article is based on ‘Irish water services

reform: past, present and future’ in Murphy and

Dukelow (editors 2016), 'The Irish Welfare State

in the Twenty-First Century: challenges and

change'.

Resistance to water charges has rejected the

notion of water as an economic good and

asserted its unique social properties as a good

held in common, and a basic need essential

to human life, which should therefore be

provided without regard to ability to pay