Commission’s Blueprint puts Water and Nature Up for Sale

When it comes to water policy, the buzzword in the EU is water scarcity. By looking at this from a purely economic angle, when a product is scarce the price should go up. This would be the case if water were to be treated as an economic good, which the Blueprint reminds us of in the very first page. By defining our mismanagement and over-pollution of water bodies both above and under ground as water scarcity, it has provided an opportunity for industry to provide new high-tech solutions – desalination, waste water re-use technologies, bottled water in flood and drought relief zones. Instead of looking at holistic ways of managing our water in a sustainable manner through changing agricultural and energy production choices as well as overhauling the decision making process by integrating actual citizen participation, the Blueprint prescribes the same medicine which has been proven to fail before.

The Blueprint itself acknowledges that domestic and industrial water consumption has decreased across Europe (see: Cost recovery and pricing in the Blueprint), thanks to lower household consumption and improved efficiencies in industrial processes; but continues to ignore the impact agricultural practices on the quality of water (see: Cultivating water bubbles) and has chosen to continue its focus on water pricing and full cost recovery mechanisms.

The Fitness Check carried out by the European Commission has shown that the polluter pays principle and full cost recovery mechanisms have not been well implemented in the EU until now and have not been the most effective at maintaining water quality. Under the threat of climate change and increasing droughts and floods in Europe, the Blueprint promotes two other concepts which it believes will lead to better water efficiency and distribution – water trading and payment for ecosystem services[1].

False Solutions proposed by the Blueprint

Water trading focuses almost purely on water quantity and not quality. What is water trading?

  • The bulk transfer of treated or untreated water from one place to another
  • The trading of water quality, functioning like a cap-and-trade system where one can pollute a water way or watershed as long as they pay

Bulk Water Transfer

The Commission admits that a water trading system at the EU level is not helpful, but that it would be more effective at river basin level to overcome water stress. It aims to develop water-trading guidelines within the framework of the Common Implementation Strategy (CIS) for Member States wishing to employ it at river basin level by 2014. Using the bulk transfer of water as an instrument against water stress only causes more long-term problems without addressing the cause. Water trading does not address the reason for increased drought and flood risk. Not only does it have environmental consequences on the local ecosystem, it also creates economic inequality by ensuring that those who can afford to pay more will have more access to the resource.

The push for destructive energy production choices such as hydraulic fracturing in certain Member States means that there will increased competition for local water. With water pricing mechanisms purely based on quantitative use in place, small neighbouring farmers could be competing with multinationals to access local water. With a water trading mechanism added, not only could neighbouring water users be affected by unsustainable practices, but also entire regions belonging to the same watershed or beyond.

Payment for Ecosystem Services & Water Pollution Trading

Where is Nature in all of this?

To further address climate change impacts, including droughts and floods in Europe, false solutions have been proposed by the corporate sector and policy makers.

As water becomes scarcer, the focus is not on how we need to change the way we use, access and manage water bodies, but on how to continue profiting from the increased need of water.

Such solutions have been advanced in UN circles and supported by the EU under a banner of the so-called “Green Economy.” While this term sounds innocuous, it has come to represent the commodification and financialization of nature —when private interests put a price on all natural resources.

Through financialization, corporate interests seek to use derivative-based financial instruments to speculate on shared resources, create futures markets, and eventually profit from their control. Examples of this commodification include cap-and-trade schemes, Payment for Ecosystem Services (PES), Reduced Emissions from Deforestation and Forest Degradation (REDD), and the creation of water markets and banks.

The Commission has proposed to further implement payment for ecosystem services to increase water efficiency in Europe together with the European Innovation Partnership on Water. Though it is still unclear on how they propose to do this, there are several problems with the concept and practice of PES.

Payment for Ecosystem Services (PES), we are told, establish a way for our environmental degradation to be slowed by paying those who protect the environment for their efforts. This effort fails both because it fails to properly account for the environment it claims to protect and because it ignores the complexity of nature. It also drives us farther from protecting nature and closer to treating the earth as a commodity.

PES supporters claim that natural processes – such as groundwater filtration, forests fixing soil and carbon and providing natural wind breaks, have an economic value, but have been traditionally provided for free. PES wants to change the name of these natural processes into “ecosystem services” so that beneficiaries of these services can pay the economic value of these services and help solve “scarcity”.

In line with the idea that unless water is priced high enough, there is no incentive to use it properly, PES states that since most natural processes are not paid for, we do not value them. It is a way to further equate value with price.

PES supporters claim that by placing value on and creating a market for these “services”, we can close the gap between those who enjoy nature and those who protect nature. But the gap does not exist, we all interact with the environment.

The purpose of bridging this supposed gap is supposed to be to give the buyer a service of environmental clean-up. In other words, the payer is paying to protect the environment. But it is usually not done just for the joy of the environment. Instead, the buyer is purchasing credits to offset environmental impact elsewhere in the region or world.

These credits are sold not to stop actual pollution happening in the industrial world. They are sold specifically to allow purchasers to continue to pollute. PES, in this sense, actually encourages pollution. A power plant that purchases credits through the PES market doesn’t reduce its pollution. It merely allows the purchaser to pollute more. PES overturns traditional environmental legislation by replacing regulation with compensation.

Extending our financialization of nature changes how we view the world. Nature, in this view, is a capital and a commodity, to which we assign exchange value, and its processes are simply productions in a market economy. But assigning a monetary value to nature is a mistake.

Waterways and watersheds are common resources, a market in water quality reverses that. It replaces compliance with compensation. Instead of saying that a polluter doesn't have the right to pollute our common resources, markets sell that right. You are allowed to pollute if you simply pay enough. But this introduces a new and unmanageable bargain. Once a price is put on nature, all of our common resources can be bought, sold and packaged. Worse, as we've seen in the past five years, a market can be manipulated, repackaged and resold as derivatives, bonds and other market measures. But the common resource doesn't gain from this trade. Only the traders and the polluters gain. Markets are not the answer to the challenge of water quality. Instead, we need to regulate those who dump pollutants into our waterways. We should not be selling the right to pollute, but reinforcing the idea that nobody has the right to pollute everybody's water.

Water trading schemes based on river basin management plans or at the Member State level are a dangerous precursor to building an integrated European market for water that so many bankers[2] wish to see. The European Commission should not be producing policy catered to the global financial market, but should instead develop legislation that protects our common resources and the right to access water and sanitation for all in Europe.

[1] Paragraph 2.3 – Water Trading & Payment for Ecosystem Services, Blueprint [COM(2012) 673 14.11.2012]

[2] The Water Market Will Soon Eclipse Oil