South America Water Issues

February 13, 2006

Gualeguaychú Journal

A Back-Fence Dispute Crosses an International Border


GUALEGUAYCHÚ, Argentina — For Argentines, few traditions are more treasured at this time of year than a relaxed beach vacation, preferably in neighboring Uruguay. But the residents of this border town are risking their countrymen’s wrath by blocking highways to Uruguay to protest the construction of a pair of paper mills there that they say will pollute the river that forms the frontier between the countries.

Just east of here, several dozen demonstrators, some playing cards, others sipping bitter maté tea from gourds or roasting sausages on grills, sat in the shade of a red cargo truck and a tractor that serve as a roadblock. “No to the paper mills, yes to life,” proclaimed their bumper stickers and the banners they had hung from the truck.

“The Uruguayans have no right to poison a river that belongs to all of us on both sides,” said José Pouler, the owner of a pizzeria here. “These projects are going to damage agriculture and kill off tourism, all for the benefit of a couple of foreign companies that don’t care about the people of this region.”

The paper mills — one owned by a Finnish-Swedish consortium, the other by a Spanish company — are being built on the riverbank in the Uruguayan town of Fray Bentos. They represent an investment of more than $1.9 billion, the largest in Uruguay’s history, and are expected to produce more than 1.5 million tons of cellulose for export each year.

The road blockages here began just before the new year, after the residents of this town of 80,000 expressed frustration that their complaints were being ignored in both capitals. They accuse Uruguay of violating a treaty that governs use of the river, and are irritated that their own president, Néstor Kirchner, has not been more energetic in opposing the projects.

Initially, the protesters announced in advance where and when they would block highways and for how long, allowing vacationers to adjust their schedules. But the picketers have raised the ante, now acting without warning and not telling motorists how long the blockade will last.


The environmental group Greenpeace has also led protests aboard boats in the middle of the river. But spokesmen for the paper companies say that the factories will meet the demanding environmental standards of the European Union and will employ technology that reduces pollution to a minimum.


Some of the vacationers who have come long distances from the interior of Argentina, only to be turned back here or at two other border crossings north of here, have cursed the protesters and refused to take the pamphlets they are handing out. But the opponents of the paper mills show little sympathy for them.


“Our health and well-being are more important than their being able to spend their summer vacation on a beach in Uruguay,” said Daniel Frutos, a physician here.


Luis Molivuevo, one of the boycott organizers, added, “We’ve asked other Argentines not to spend their summer in Uruguay, but if they don’t want to help, then we have to make our boycott obligatory.”


Commerce among the four countries that make up South America’s Mercosur customs union is also suffering, and that has led Uruguayan authorities to charge that the promise of free movement in the group’s founding charter is being violated. Trucks from Chile carrying mill equipment were forced to turn back, and on both sides of the border, drivers of other vehicles laden with cargoes of perishable food and machinery have been camped out, sometimes for days and with little money for food, waiting for the roadblock to be lifted.


Across the river, in sleepy Fray Bentos, sentiment is just as strong in favor of the projects. The town has been “economically dead” since a meat processing plant closed more than 20 years ago, said Dani Bazán, a commercial photographer there who welcomes the 2,000 new jobs and the revival of business activity the mills will bring.


“It’s not that we like the idea of the mills so much as that we welcome the jobs, and well-paying ones, at that,” said Sandra Caballero, a 35-year-old cook who is taking a course to become a solderer in hopes of getting a job at the plant owned by the Finnish-Swedish consortium. “There will undoubtedly be some pollution, but we have faith that our government will be able to control emissions and punish the companies if they do something wrong.”


For Uruguayans, the dispute has also become a matter of sovereignty and national pride. Their country was created 180 years ago as a buffer between Brazil and Argentina, and throughout their history they have often complained of being bullied and scorned by their much larger neighbors across the River Plate estuary, with whom they share a similar accent and culture.


Uruguay has recently expressed dissatisfaction with its secondary role in the Mercosur trade group and with the conduct of its neighbors. The left-leaning government of Tabaré Vázquez, which took office in March 2005, as a result has recently expressed interest in negotiating a free trade agreement with the United States; if reached, it would surely be a death blow to Mercosur.


Mr. Kirchner initially declared that stopping construction of the paper mills was “a national cause.” But faced with the prospect of Uruguay’s defection from Mercosur, he has toned down his language and sought to discourage the roadblocks, although the police have not intervened to halt them.


Though the two presidents have recently talked by phone about the standoff, they seem reluctant to make concessions that may offend their supporters. A Uruguayan congressman has suggested Vatican mediation, an idea that the papal nuncio quickly quashed. Argentina is talking about taking the case to the World Court in The Hague, where a decision would come only after the plants were operating.


In his most recent public declaration, Mr. Vázquez vowed that “construction of the plants will not be halted.” As a way of criticizing the Argentines, he recalled the lyrics of an old tango, comparing their behavior to that of “the man who beats his wife because he fears she may cheat on him four or five years from now.”


“That is exactly what is happening to us right now,” he said. “They are inflicting real damage on us out of fear of some hypothetical damage we might cause them in the future.”


Copyright 2006The New York Times Company


November 24, 2002  (New York Times)

As Andean Glaciers Shrink, Water Worries Grow



CHACALTAYA MOUNTAIN, Bolivia — From the top of this snow-capped peak 17,400 feet up, the surrounding Royal Range looks as healthy as ever: deep, glittering snow and a thick covering of glaciers as far as the eye can see.


But as Eulalio Gonzales, a veteran mountain guide, surveyed from the craggy peak overlooking Bolivia’s windswept highlands, all he saw were remnants, fading and shrinking fast.


This mountain’s glacier, boasting the world’s highest ski slope, has been melting so steadily that scientists predict its demise in a decade. The Zongo glacier on the nearby mountain of Huayna Potosi is retreating by 10 yards a year.


On a third peak, the 18,000-foot Condoriri, the glacier that supplies the largest reservoir in the Bolivian highlands is shriveling so fast that scientists fear a scarcity of drinking water in the decades to come.


“Each day we are more and more worried because these are the waters we drink from, but there is retreat all around,” said Mr. Gonzales, peering through sunglasses under a bright sun and springlike climate. “This was so much different before — there was just much more snow and ice.”


In a phenomenon scientists here and abroad call a calamity in the making, the glaciers of the central Andes are vanishing because of global warming driven at least in part by pollution.


Their disappearance, scientists now say, is nearly unavoidable and could lead to water shortages in places like Bolivia and Peru that depend on glaciers and the rain and snow that fall on the mountains for water for drinking, irrigating fields and generating electricity.


“For our future, it is worrisome because we may not have enough water,” said Ronaldo Maldonado, the government’s chief meteorologist. “Demand could grow, but supply could be less. If this happens we could be in a tremendous crisis.”


Shrinking glaciers are a worldwide phenomenon, with great slices of snow and ice disappearing every year from the Austrian Alps to Glacier National Park in Montana. But the glaciers of the tropics — the vast majority in the Andes, stretching from Venezuela to Bolivia — are losing ground the fastest.


They are smaller to begin with and are located in a region that is more sensitive to climate change — and the climate has changed.


In Bolivia the temperature rose by 1 degree centigrade in the last century, mirroring the rise in some other parts of the world, said Robert Gallaire, a hydrologist with the Institute of Research for Development, a French scientific organization studying glaciers here.


At the same time, less rain and snow are falling in the area around La Paz, with the average annual rainfall dropping to 17.88 inches in the 1990’s from 22.4 inches in the 1980’s, according to measurements at Milluni Lagoon at the foot of Huayna Potosi.


Scientists attribute the unseasonably dry years to El Niño, a weather phenomenon generated by warm Pacific currents off the South American coast that has struck numerous times in the last two decades.


The changes are already being noticed by the people who live in the mountains, raising anxieties. “It is worrisome,” said Angel Quisverte, 55, a potato farmer who lives on the north side of Zongo, “because if there are no snows, then there is no life.”


He said he feared for the future of agriculture in the green valley where he lives. “All the mountains here had snows before, but now it’s melting,” he said. “Ten years ago I started to see it — and every year it keeps going down and down.”


The climatic changes have been disastrous throughout the region for mountain glaciers, which have been vanishing at a particularly rapid pace in recent years.


At the huge Quelccaya Ice Cap, which stretches across Peru, the largest glacier, Qori Kalis, is retreating at a rate 44 times as fast today as it was from 1963 to 1978, when American scientists determined it was melting by about four yards a year.


Glaciers in Venezuela are nearly extinct, and in Bolivia the mass of glaciers and snowcaps has shrunk by 60 percent since 1978, according to government estimates.


In all, according to the Byrd Polar Research Center at Ohio State University, Andean glaciers have retreated by as much as 25 percent in the last 30 years.


“They cannot resist,” said Mr. Gallaire, the hydrologist, speaking in his office in La Paz. “These glaciers are much more fragile than in the north. It is the great problem of the tropical glaciers.”


Government officials and scientists believe that if the glaciers keep melting at this rapid pace, a serious water shortage could loom for Bolivia, which lacks the resources or know-how to adapt to the significant climate changes it has done little to generate. Most scientists blame industrialized nations, like the United States, the world’s largest producer of heat-trapping gases.


Government officials said the country had not planned for the effects of continued global warming. No in-depth studies have been conducted, and no plans for building or improving reservoirs and other infrastructure are even on the drawing board.


“The problem is we are using reserves that are being reduced,” Mr. Gallaire said. “So we have to ask, what will happen in 50 years? Fifty years, you know, is tomorrow.”


The most pressing concern, government officials said, is the possible shortage of water for the 1.5 million people of La Paz and the adjacent city of El Alto. Over the next decade, water use in the region is expected to increase by 20 percent.


Scientists say that without the glaciers the region’s natural water cycle will be disrupted. Glaciers release water in dry seasons and collect it in rainy ones.


“It’s a natural dam,” said Lonnie Thompson, a research scientist at the Byrd Center who has studied Andean glaciers closely. “Some people refer to these glaciers as the world’s water towers, and once they’re dry, you lose that water.”


For now, at Aguas de Illimani, the French company that runs La Paz’s water supply, the situation is not seen as critical. The president, Roberto Bianchi, asserted that the company depended mostly on rainwater for its supplies.


But scientists said that glacial melt contributed, too, and Mr. Bianchi acknowledged that “if, as a consequence of a possible disappearance of glaciers, the routine of precipitation is altered, we are exposed.”


Up in the mountains, what is happening is no secret to farmers, shepherds and the hardy mountain guides of the Bolivian Andean Club. They have seen the spectacular ice caves of Charquini mountain, conical ice sculptures formed by fierce winds, disappear. They have also seen the glaciers give up the ghosts of the past, like the wrecks of airplanes that had disappeared into glaciers decades ago.


In a country where half the population is indigenous and reveres the mountains as Achachilas, or givers of life, the changes are seen with deep melancholy.


“People have to ask for life from the mountain,” explained José Huanca, 32, who lives next to the Tuni reservoir at the base of the Condoriri glacier. “They are the owners of the land, of the animals. But I think the Achachilas are leaving.”


Copyright 2002 The New York Times Company



August 26, 2002  (New York Times)

As Multinationals Run the Taps, Anger Rises Over Water for Profit



SAN ISIDRO DE LULES, Argentina — When Jorge Abdala’s water bill jumped to 59 pesos a month from 24 a few years ago, he went looking for someone to

blame. He soon found his villain: a French multinational company at the forefront of a global effort to privatize government-run water systems.


Mr. Abdala, a soft-spoken 54-year-old, scarcely seems the revolutionary. Scrambling for a living like most of his neighbors in this sprawling town tucked up under

the Andes, he runs a meager catering business out of his kitchen.


But the protests Mr. Abdala organized here forced the company, now known as Vivendi Environnement, to abandon its long-term contract to overhaul and manage the

waterworks of the Tucumán Province, where Mr. Abdala and roughly one million other Argentines live.


“Our main demand was, simply, `Go home!’ ” he said, shifting to the edge of his seat in the living room of his simple one-story home. “We kept presenting facts

showing that they were not making any investments, just raising the price of water. And any investments they made were with government money.”


Vast numbers of people have also demonstrated in Bolivia, in Ecuador, in Panama, in South Africa and elsewhere in a vivid illustration of how highly charged the

economics of water have become. At issue is this question: should water, a substance close to life itself, be a profit-making business?


The backlash in Tucumán continues today as the province struggles to find a new company to operate its aging water system. The reaction is still being felt by the big

European concerns that dominate the world water business and the Western aid institutions that support privatization.


Already, corporations own or operate water systems across the globe that bring in about $200 billion a year. Yet they serve only about 7 percent of the world’s

population, leaving a potentially vast market untapped. Protesters are determined to limit that market.


The protests have heartened the companies’ critics, mainly environmentalists who oppose globalization, but also consumer groups and labor unions. They all object to

private enterprise making a profit on water.


“Water is a resource essential to life,” said Hannah Griffiths, of Friends of the Earth, an environmentalist group based in Britain. “Decisions about allocation and

distribution should be democratic and based on everyone’s fundamental right to a clean, healthy supply.”


Not all agree. Some argue that unless water is treated as an increasingly precious commodity and priced to reflect its value — particularly for heavy users like farmers

and factories — much of it will be wasted.


It also often takes more money than some governments are willing or able to spend to improve the systems that deliver fresh water to cities and towns around the

world, especially to the poor.


But will allowing private enterprise to manage or own many of the world’s water systems help overcome those problems? And will it expose the poor to impossibly

high water bills?


The widespread inability of public utilities in the developing world to provide clean water is one of the strongest arguments in favor of privatization.


“As a general rule, they’re heavily overstaffed, provide poor quality, are unwilling or unable to invest, with not enough money to serve everybody,” said John Briscoe,

senior water adviser at the World Bank in Washington, referring to public utilities.


But private enterprise appears to be no panacea. Here in Tucumán, Vivendi’s critics say that the company recklessly pursued the contract in order to break into the

market and that most of the problems it encountered were of its own making.


To Gilda Pedinoce de Valls, a former state’s attorney in Tucumán, Vivendi failed to recognize how strongly people feel about tampering with the substance essential to

sustaining what has long been a dusty region noted for its citrus fruit crop.


Water, she said, “is a gift from God.”


Olivier Barbaroux, the president of Vivendi’s water business, agreed — but only up to a point.


“Yes,” Mr. Barbaroux said, “but he forgot to lay the pipes.”


More Water, but No Sewers

When water filled the cellar under Basilio Sajnik’s pizzeria in downtown Lomas de Zamora, a sprawling suburb of Buenos Aires, he, too, looked for a culprit.


Like Mr. Abdala, he found a leading French multinational. That company, Suez, along with Vivendi has led the push to privatize water management.


In 1992, Suez signed a 30-year contract to manage the water around Buenos Aires. Lomas, a sprawling low-slung city of 600,000 on the capital’s southern edge, is  home to many of the 2 million people that Suez provided with water for the first time.


But the company was slower to install sewers. Now the cellar under the three-family building that houses Mr. Sajnik’s pizzeria is permanently flooded. A pump runs  seven days a week.


“It’s the third pump I’ve purchased, yet nobody pays me for the electricity” Mr. Sajnik, 58, said recently as he waded in dirty water almost to the top of his knee-high  boots.


The water Suez brought to the neighborhood produced so much runoff that the water table rose, causing streams of sewage to trickle along curbs and flood cellars,  even in the driest of seasons. In summer, the stench is overwhelming. So far there have been no outbreaks of sickness, but the threat to public health is constant.


“I could go to court, but it is too slow, and the powerful always win,” Mr. Sajnik said. “They say it’s nature, and what can you do about nature?”


Suez executives blame Argentina’s financial crisis instead of nature. Jacques Petry, chief executive of Ondeo, the water division of Suez, explained in Paris that Suez’s  original investment plan foresaw the installation of sewers. But the collapse of the Argentine peso has frozen the work. Suez, he said, supports a program to provide  1,500 pumps to the area.


For the time being, said Jean Bernard Lemire, the new chief executive of Suez’s Argentine affiliate, spending has been reduced to the essentials: paying wages, buying  chemicals and energy, and basic maintenance.


He acknowledges that renegotiating the original contract, which has already been modified dozens of times, mocks the original agreement.


“Of course, our competitors can say, `Under those conditions, we could have won the contracts, too,”‘ he said. But he added, “We cannot forecast on a 30-year basis;  we have to be flexible.”


Overall, Suez says it is proud of its accomplishments in Buenos Aires. It modernized treatment plants that were once on the verge of collapse, and efficiently runs a  fleet of more than 1,000 repair trucks. Billings are now computerized. And except for the first eight months, when Suez lost $23 million, it has been highly profitable.


Daniel Azpiazu, director of research at the Latin American School of Social Sciences in Buenos Aires, accuses Argentina’s political leadership of cynically permitting  the public utilities to deteriorate so that voters would embrace privatization.


In a 1992 survey, he said, 82 percent of Argentines questioned had favored privatization. In the haste to privatize, however, regulatory bodies and oversight authorities  were rarely installed.


“In the early phase, a regulatory agency was not in place,” said Abel Fatala, the engineer in charge of public services in the municipal government of Buenos Aires.  “When it did start up, it was made in the image of the water company. The concrete result was that there was no control at all.”


A Vast Market Gap to Fill

By 2025, as the world’s population grows to eight billion, the United Nations expects the number of people suffering from an inadequate supply of clean water to  grow to five billion from the current two billion.


The vast potential to make money by filling that gap has prompted several large multinationals like Vivendi and Suez to target what they see as a lucrative market for  the future.


The case for privatization germinated decades ago after the World Bank unsuccessfully tried to fix the public water supply system in Manila. Despite five repair  attempts over the years, water loss was as high as 64 percent.


“Fundamentally we realized that without a change in incentives — some very logical, sensible things — this was not working,” said Mr. Briscoe, of the World Bank  said.


Critics still say it is unrealistic to expect private companies, whose main responsibility is to their shareholders, to assume the financial risk of supplying water to  portions of the world’s population that may not be able to afford it in the first place.


But investors are betting that the business of water will boom in coming decades. “This is a $200 billion market, growing at a 6 percent rate annually, in terms of  population,” said Hans Peter Portner, a fund manager at Banque Pictet in Geneva who handles the bank’s Global Water Fund. He predicts that privatized water  systems will expand to serve about 17 percent of the world’s population by 2015, up from 7 percent now.


Compared with the Europeans, the American company with the biggest international business in the field, Bechtel, whose directors include former Secretary of State  George P. Shultz, is a novice. Another American company, Azurix, a unit of Enron, collapsed before its parent did.


That leaves the field mostly to the French giants, Vivendi Environnement and Suez. Last year, almost half of Vivendi Environnement’s $26 billion of revenue came  from water; roughly one quarter of Suez’s $38 billion in revenue was generated by the water division, Ondeo.


French dominance is now challenged by a third global player, Thames Water P.L.C. of Britain. Thames rose, after Margaret Thatcher privatized water services in  Britain in 1989, by swallowing up smaller British competitors. In 1999, it agreed to a $9.8 billion takeover bid from the big German utility RWE A.G.


All three European companies have spent lavishly expanding in the United States. This year, Thames acquired American Water Works, the American market leader,  for $7.6 billion. It was playing catch-up to Suez, which spent $6 billion in 1999 to buy United Water Resources and Nalco, a maker of chemicals for water treatment.  Earlier that year, Vivendi acquired the U.S. Filter Corporation for almost $8 billion.


Contracts are pouring in. This year, both Suez and Vivendi signed long-term deals, some for up to 50 years, to manage municipal water systems in China, which faces  huge water shortages. In Central Europe, cities like Warsaw and Budapest are struggling to upgrade their water systems to meet the standards of the European Union,  which Poland and Hungary are expected to join within the next few years.


Industry executives recognize the need for oversight. “It’s always a difficult decision to ask a private water company to manage such an essential service,” said Gérard  Mestrallet, the chief executive of Suez, in his Paris office. “It is your duty to demonstrate that the arrival of the private sector brings something concrete.”


But in their hurry, the companies often underbid to get a foot in the door, with prices that fail to take account of the full cost of upgrading old and inefficient water  systems. Contracts are therefore regularly renegotiated.


Renegotiation often means that parts of the contract, like obligations to provide sewers to go with water distribution, are cut or scaled back, sometimes causing  environmental difficulties. The situation in Lomas de Zamora is a pungent illustration of the point.


Critics charge that it is all part of corporate strategy. If the project doesn’t make money, the critics say, the companies cry for renegotiation, threatening to leave  otherwise.


Moreover, there is an inherent contradiction in many of the efforts to privatize water systems, particularly those in developing countries.


Municipalities award those contracts in part to shift the investment risk to the private sector. Often, however, the private contractors commit little of their own capital,  relying instead on the municipalities themselves, private lenders like banks, and international development organizations like the World Bank or regional development  banks.


In South Africa, for example, 80 percent of the money for a recent water development project came from the Development Bank of South Africa. In Peru, 100 percent  of the money for a similar project originated at the Interamerican Development Bank.


Given those flaws, opponents, many representing nongovernmental organizations that have becoming increasingly involved in development issues, contend that the  role of private companies in delivering water supplies should be sharply limited, confined to simply building things like treatment plants for public entities.


“Water has to be a public good,” said Mr. Azpiazu, of the School of Social Sciences. “It cannot be a predator business, in which you stay for a few years, make your  money and leave.”


In North America, most water remains publicly managed. Yet many municipal systems are old and inefficient, and competition to take them over is intense.  Indianapolis, Atlanta and Milwaukee are among the city water services licensed for management and operation to the European giants. In March, Suez landed a 10  year, $4 billion contract to mange the water system of Puerto Rico.


Company executives muse about the billions of dollars modernization of the old and dilapidated water works of great metropolises like New York might one day  bring.


Uniting Against Vivendi

After Suez landed its lucrative 30-year contract to manage the water system in Buenos Aires, Vivendi decided to jump in. It bid aggressively for the similar contract in  Tucumán Province, even after four other bidders dropped out.


After rates continued to rise, Mr. Abdala joined other consumer leaders from all over the province in calling for a payment strike. Vivendi’s collection rate in Tucumán,  which rose to 70 percent after it reorganized bill collecting, plummeted to 10 percent.


When Vivendi employees sought to shut off a nonpaying customer’s water, Mr. Abdala and other protest organizers sent demonstrators who stood on manhole covers  and blocked access to the water mains.

“We lived in a permanent state of mobilization,” Mr. Abdala recalled.

In early 1996, after manganese deposits, always present in the local water, became so great that tap water ran the color of cola, popular anger translated into large-scale  demonstrations against Vivendi. Local officials blamed the ineptitude of Vivendi’s French engineers; Vivendi suspected sabotage.

By the summer of 1998, Vivendi was losing almost $3 million a month in the province, and it unilaterally canceled the contract. One month later, Tucumán Province  pulled out of the deal as well. Vivendi then sued Tucumán before a World Bank tribunal, but lost.

Now the province is starting from scratch. Water engineers sent from a neighboring province to run the system have cut jobs at the water utility, to 500 from 850. A  regulatory agency is being established to prepare for a new contract later this year.

“We don’t know what company will invest here,” said José Cuneo Verges, a former government official who is working on the project. “Yet we want to show that  Tucumán is ready.”

That is why Mr. Abdala is still on the case.

“Whoever takes it over must have good ties to us,” he said. “We want the participation of consumers.”

Copyright 2002 The New York Times Company