202094 Free to choose? Safe water, cheap water, and the liberalization of trade in water services

Tuesday, November 10, 2009: 11:10 AM

Sheikh Shahnawaz, PhD , Graduate School of International Policy Studies, Monterey Institute of International Studies, Monterey, CA
Anita Chaudhry, PhD , Department of Economics, California State University, Chico, Chico, CA
Does liberalization of services trade in the water sector enhance public health and welfare? Under what conditions does trade openness improve water access? We use economic analysis to study the implications of the liberalization and privatization of water services on population welfare. The liberalization of trade in services is premised on the notion that it garners efficiency gains stemming from a reallocation of scarce resources. However, the liberalization of many publicly provided services is problematic, often due to the incompatibility of domestic policies and liberalization commitments. The desire to enhance public access to clean water, for example, is undercut by the privatization of water supply, which typically leads to price increases. This makes people vulnerable to water-borne infections and diseases since higher prices force them to collect their water from untreated sources. According to some estimates, more than two million annual deaths, most of which are children, can be attributed to diarrheal diseases due to a lack of access to clean water. It is therefore critical to assess the current push for water-sector liberalization under agreements such as the GATS. The analysis highlights the tension between the goals of openness and greater access. We identify conditions under which socially inefficient outcomes may arise and point out policies and avenues for advocacy that have the greatest likelihood of moving us toward the most desirable results. Among the influences on efficiency access considered are domestic investments in water provision and the structure of capital markets. The conclusions are illustrated using country experiences.

Learning Objectives:
Evaluate open trade regimes toward the water services sector; Identify aspects in the interaction of trade liberalization and the water sector that promise the highest returns to advocacy; Discuss and identify policies that ensure increased access to clean water by poorer populations

Presenting author's disclosure statement:

Qualified on the content I am responsible for because: I am an economist by training. The paper is an economic analysis of water services liberalization.
Any relevant financial relationships? No

I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.