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Abstract
This paper explores the forms of debt that come into play as public water utilities are privatized and financialized. On the one hand, the financialization of water utilities sets in motion a politics of frantic municipal debt repayment. As infrastructures become financial assets, they also become vehicles for future financial returns. On the other hand, the financialization of water infrastructures often provokes a very different calculus of debt, articulated by people mobilized into protecting ‘their water’ from privatization – that of the human debt to water as life. Based on research conducted in Europe, particularly Italy, I show how water movements insist on a very different kind of value – an incalculable, that is to say transcendent value that derives from life’s indebtedness to water. I argue that water movements’ insistence on the human debt to water as life opens up powerful pathways for a critique of capitalism’s extraction of value from life, and of the financialization of value as such.
Acknowledgements
My gratitude goes to the water movements and their generosity and deep wells of patience. I also thank the Wenner Gren Foundation for Anthropological Research for its trust in this project, and audiences at Yale, Cambridge, CUNY Grad Center, Mainz, Hamburg and Edinburgh who asked such pointed questions.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Ethical approval
Ethical Approval for this research project was received from the University of Toronto in 2014, Human Research Protocol # 30166.
Notes
1 The rise of infrastructure as an asset class is well described by Collier (Citation2011, pp. 227–230) and Bear (Citation2015, Citation2017). Both have argued that the unitary entity called ‘infrastructure’ emerged in a 1994 World Bank report, where international financial institutions, government committees, global investors and market consultancies assembled a series of public works as disparate as railways and water works into one, singular category (Bear Citation2020, p. 64). At stake was the transformation of public works into infrastructures, with people being reconceptualized as users of these systems rather than as citizens who built them through fees and taxes (see also Langley, Citation2018).
The water market, in contrast, was for a long time a corporate aspiration rather than actual reality (Dukelow, Citation2016, p. 146), with talk abounding about [the new water barons] treating water as the ‘new oil’ (Yang, Citation2020). Citigroup’s chief economist noted years ago that he expects to see a globally integrated market for fresh water within 25–30 years: ‘Once the spot markets for water are integrated, futures markets and other derivative water-based financial instruments […] will follow. There will be different grades and types of fresh water, just the way we have light sweet and heavy sour crude oil today. Water as an asset class will […] become the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals’ (cited in Bayliss, Citation2014, p. 302). At the time of this writing, this is exactly what has happened, with water joining gold, oil and other commodities traded on Wall Street. As CNN reported on 7 December 2020, investors can now for the first time in the United States trade water futures and thus hedge against or bet on projected water scarcities in the future. The market has thus moved from letting buyers and sellers buy and sell water rights in the California spot markets in dry years (i.e., in markets where financial instruments or commodities are traded for immediate delivery) to allowing traders to buy and sell water in futures markets on the Chicago Mercantile Exchange. The argument is that a futures market will allow for the better management of risks and a better alignment of supply and demand through transparent pricing practices.
2 I thank Stefan Leins for alerting me to the growing literature on social finance markets, which offer investors measurable social impact as well as financial returns on investment. They thus allow for a proliferation of new forms of social and financial value to co-exist and blend, creating what investors are calling double and triple bottom lines (Langley, Citation2020a; CitationLeins, 2020).
3 The role of water in extractive industries such as oil, gas and mineral exploitation is not just an existing but a growing concern for industry. Recent moves to financialize water (please see Note 1 above) are clearly also linked to this growing demand on the part of the extractive industries, since the buying and selling of water rights will allow owners to auction off rights to the highest bidder in times of future scarcity.
4 Water financing is strongly differentiated globally. Water utilities in many parts of the world continue to be funded out of a mix of domestic resources, tariff payments, taxes and international aid. In part, this is the result of the fact that global water corporations have been hesitant to invest in low-income countries where opportunities to recover costs are insecure. But they have also shied away from investments because political backlash in the global South has often been strong. Both impediments have played less of a role in middle and high-income countries so far (McDonald et al., Citation2021, p. 122).
5 These private loans frequently come with interest rates between 3 and 7 per cent, rather than with the 0–1 per cent when taken out directly by governments. Private borrowers initially always pay higher interest rates because they, unlike governments, cannot pledge their tax base as collateral. In the case of public-private partnerships, private investors can refinance their loans from, say, 6.5 to 4.5 per cent, while the state ‘partner’ is still contractually obliged to pay the original interest to its creditors. So, in addition to the contractually agreed return of investment, private investors can count on these additional ‘windfall profits’ (Rügemer, Citation2008, pp. 44–45).
6 The English water industry is a good example of this. As the Guardian recently reported, the water industry there is ‘dominated by overseas investment vehicles, the super-rich, companies in tax havens and pension fund investors’, with the ownership structure almost entirely opaque. 70 per cent of the industry is owned by international investment funds and sovereign wealth funds, including the Qatar Investment Authority, BlackRock, Abu Dhabi Investment Authority, Lazard Asset Management and the Vanguard Group. Two Canadian pension funds, Ontario Municipal Employees Retirement System and Canada Pension Plan, own a third of Thames and Anglian Water respectively (Leach et al., Citation2022).
7 I thank Karen Ho and Horacio Ortiz for pushing me on this point.
8 Canadian public pension funds are particularly egregious players in this regard in that they have become indistinguishable from other financial investors. As Kevin Skerrett (Citation2018) from the Canadian Union of Public Employees (CUPE) notes, these ‘new masters of the neoliberal universe’ have become ‘pioneers in infrastructure investing’ and ‘global leaders in the direct ownership of public infrastructure, primarily in other countries’ (Citation2018, p. 122). Canadian pensions funds have thus become key beneficiaries of infrastructure privatization while public-sector workers in other parts of the world have seen their employment, wages and benefits suffer. This model of investment has by now found aggressive support by the G20, OECD and the World Bank. This means that pension funds from the global North will further be investing in the acquisition of public infrastructures elsewhere – i.e. precisely the ‘assets’ that trade unions and those on the political Left usually demand stay in public hands.
9 https://www.watermeetsmoney.com/urban-water-catalyst-fund/ Last accessed 10 December 2020.
10 Central governments have also played an important role in financing: This has sometimes involved paying directly for the water supply service, so that there is virtually no role for charges (Ireland); distributing some part of central tax revenue to support local authority spending on water (Canada); providing cheap loans for local authorities to use for capital investment (United States); or collecting part of water charges centrally and redistributing it back to authorities (France). In Europe, the EU itself plays a major role in public financing of water systems in poorer states through the cohesion and solidarity funds, and through low interest loans from its public sector development instrument, the European Investment Bank (Hall & Lobina, Citation2012, p. 5).
11 On 9 November 2018, GORI again signed a long-term industrial agreement with the region of Campania and the Campania Water Authority (Ente Idrico Campano), establishing the terms and conditions based on which the company will complete its takeover of the facilities and operation of the integrated water services within the respective water district.
12 Acea SpA (originally an acronym for ‘Azienda Comunale Elettricità e Acque’ – ‘Electricity and Water Municipal Utility’) is a multiutility operative in the management and development of networks and services in the water, energy and environmental sectors. It is a leading actor in the Italian water sector and serves around nine million inhabitants in four regions. It also operates in Latin American countries such as Honduras, the Dominican Republic, Colombiaand Peru. Acea is one of four major Italian water corporations (‘the four sisters of water’ – le quattro sorelle dell’acqua – as a recent news report sarcastically referred to them (Giovannini, Citation2017, p. 9)).
13 The phenomenon of the fiscal strike has a long history in Italy (Guano, Citation2010).
14 Four years later by 2017, GORI had again amassed 100 million euros in debt even as its users continued to report regular breakdowns of infrastructure and constantly struggled with unannounced water shortages. By 2019, major Italian financial news outlets reported that the region of Campania had just seen the most important ‘operazione di finanza strutturata’ that the Campanian water and waste water sector had ever seen; 80 million euro worth of long term loans provided to GORI by numerous banks and Acea itself.
15 This sense of criminalization has a long history in a country that did just that. A long genealogy of ‘anthropologists’ in Italy insisted that racialized, lower-class Southern Italians were ‘savage races’ with a tendency for fury, vengeance, and carnal love, thus making them ‘born criminals’ (Schneider & Schneider, Citation2008, p. 353).
16 As Razsa and Kurnik (Citation2012) have noted, this slogan or variants of it has been reiterated many times by political movements across Europe (p. 239).
17 I am indebted to Francesca Coin for pointing this out to me.
18 As McAllister shows for water struggles in Chile, the language of ‘sister water’ is further accompanied by a theopolitics of Godly grace (‘In the Book of John … Jesus offers to quench the thirst of those who believe in him, making “rivers of living water” flow from their hearts’ (John 7:37–39; see also John 4:14)). This harkens to Jeremiah, in which God is described as ‘the fountain of living water’ (Jeremiah 17:3), and to ‘images of God’s grace – the condition of possibility for eternal life – filling souls as though they were cups’ (McAllister, Citation2020).
19 Rennes, now also a member of France Eau Publique (FEP), a network of public water operators in France, has contracted with around 2,000 local farms and their pledge to shift to pesticide free farming both protects Rennes’s water resources, lessons the cost of water treatment, and provides around 11,000 organic school meals a day.
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Andrea Muehlebach
Andrea Muehlebach is a Professor of Maritime Anthropology and Cultures of Water at the University of Bremen in Germany.