by Miloon Kothari
1. While there has been a concern among the international community that globalization has exacerbated the current deepening inequality between and within nations, its direct impacts on the right to adequate housing - broadly defined to include access to land, as well as other essential services such as water, electricity and sanitation - have yet to be systematically studied or estimated. In his first report, the Special Rapporteur indicated his intention to establish linkages between the processes of globalization and the realization of the right to adequate housing (1). At the request of the Special Rapporteur, the Habitat International Coalition convened a meeting of international experts in New Delhi in November 2001 to examine selected case studies and to propose a research methodology for cataloguing the characteristics of existing alternative urban management practices in different cities around the world and testing their effectiveness in protecting, promoting and fulfilling the right to adequate housing.
2. It is generally recognized that the impacts of globalization on housing are complex and varied. Moreover, globalization affects countries and regions within countries differently depending on a range of factors, including the level of integration of the local economy into the international economy; the national and local policy context and degree of decentralization of power; the influence of different institutions in each country and locality; and demographic characteristics. Nonetheless, at the global level, the number of humanity's homeless or precariously sheltered persons continues to grow in step with indicators of economic inequality. To understand why this is occurring while global economic integration is creating new wealth as never before seen requires a better understanding of how and why processes of economic globalization are apparently not leading to the fulfilment of economic, social and cultural rights as contained in the international human rights instruments.
3. Overall, globalization and the process of increasing economic integration have limited the role and capacity of States to provide adequate resources and other provisions which are often necessary in fulfilling economic, social and cultural rights. Several macroeconomic factors influence the availability of resources for social spending, including on housing and essential civic services, including:
(a) Small or even negative returns from trade liberalization by developing countries, particularly LDCs;
(b) Financial volatility following deregulation of capital flows coupled with interest rate hikes which affect access to credit and mortgages;
(c) Increased land speculation as a result of more competition for prime locations in rapidly globalizing cities, which often forces out low-income residents to less desirable locations with poor service availability;
(d) Heavy burdens of debt-servicing;
(e) Fiscal constraints and austerity measures imposed by the IMF and the World Bank which are primarily designed to reduce public spending, and invariably lead to reductions in financial allocations to social sectors; and
(f) The process of public sector reform, particularly through decentralization and privatization.
4. In many cases, decentralization has enabled increased participation of civil society and the marginalized groups in the decision-making process that have direct bearings on their well-being. Decentralization of service delivery and public administration related to housing can have marked benefits when adequate resources are transferred into the hands of responsible and capable actors, including civil society groups, at the local level. When resources transferred are not commensurate with the responsibilities, local authorities are faced with the challenge of financing the gap from their own budgets and/or other sources, including by borrowing from the private sector through municipal bonds, attracting more business to raise tax revenue, or speculating on land and property.
5. Increased competition among cities to attract capital and businesses for generating employment and sources of tax revenues has led to widening inequalities between cities, with consequent discrepancies in the level of essential services provided to citizens. In large cities, the growing competition for central spaces has also initiated gentrification and the creation of new ghettos of exclusion. In economically neglected cities and rural areas, local authorities continue to face difficult challenges with limited revenues to deal with unemployment, increased demand for social security and the need to upgrade public services.
6. In the urban housing sector, reliance on market mechanisms has tended to result in neglect of the poor. The continuing deterioration of conditions, particularly with respect to housing and related services, faced by the majority of the urban and rural poor around the world has caused tremendous concern that unfettered globalization cannot bring about the fulfilment of economic, social and cultural rights, including the right to adequate housing. Notwithstanding the constraints and difficulties placed upon them, central Governments still have an important role to play in reconciling macroeconomic policies with social objectives, keeping in mind the primacy of their human rights obligations. Governments have the responsibility to make targeted interventions in order to ensure universal access to public services on a fair and equitable basis; this is fundamental for the fulfilment of the right to adequate housing. When participating in ongoing trade negotiations under the WTO, States should not forget their responsibility to ensure that their policies are compatible with their obligations under international human rights instruments. The General Agreement on Trade in Services (GATS), in particular, is expected to further deepen the process of privatization of resources and services relevant to housing rights, such as electricity, water, sanitation, transport, construction materials, etc.
7. Privatization of essential services is another aspect that warrants close attention when assessing the impact of globalization on the right to adequate housing. Striking the balance between the promised gains of privatization in terms of economic efficiency and reduced cost of services vis-à-vis its social costs is a very complex and delicate matter for many Governments and international institutions that promote the policy. The Special Rapporteur has emphasized the primacy of human rights obligations in implementing such policies and programmes and that it is the "first responsibility" of States to achieve human rights for poor and vulnerable groups. Drawing from a preliminary case study, the rest of this section demonstrates specific impacts of privatization on one of the important elements of adequate housing: provision of potable water.
8. As the Special Rapporteur pointed out in his first report, full realization of the right to adequate housing is closely interlinked with and contingent upon fulfilment of other rights and services, including access to safe drinking water and sanitation (2). No dwelling should be deprived of water because such deprivation would render it unliveable (3). A review of current literature on the impacts of recent privatizations of water and sanitation services found that the vast majority of available case studies fail to demonstrate improvements in the quality and coverage of services to vulnerable groups. Indeed, higher costs to and service cut-offs of persons unable to pay higher rates have been more common, especially in developing and transition countries. This review also vindicates the concern that privatizations, while relatively easy to initiate, are extremely difficult to implement where universal coverage with acceptable quality at affordable prices for all is the stated goal of the service (4). Furthermore, when the population to be served includes low-income groups living in difficult-to-service areas and/or conditions, privatized service providers have generally been reluctant to invest in multiple forms of delivery or to apply cross-subsidies to meet the needs of these groups effectively. Nonetheless, support and encouragement from the World Bank and regional development banks for across-the-board privatization of water and sanitation services in low-income communities has been steadfast for more than a decade (5).
9. From a human rights perspective, three important lessons are drawn from the experiences and shortcomings of the privatization of water services, relating to the (a) overemphasis on profit-making or cost-recovery; (b) extent of the quality and coverage of services to the vulnerable groups; and (c) accountability of operators.
10. First, privatization by its nature is increasingly forcing central and local authorities to become profit-seeking in the provision of essential services. In a context where a large portion of the population lives in poverty, many groups cannot absorb the costs of providing a market rate of return to the investor for services provided through market mechanisms. Unless some costs are subsidized for these groups, as called for by general obligations of human rights instruments, they are likely to be excluded from receiving the services they need.
11. Secondly, earlier experiences of privatization also indicate that this emphasis on cost recovery - a cardinal principle of privatization - may also fragment service delivery and coverage. Many cities in developing countries are new to running social services and infrastructure provision as profit-making ventures. As noted earlier, rates of return and healthy cash flows for making repayments may take a much higher priority in project design than will poverty alleviation, or improvement of health and living conditions. It is thus quite possible that a city may borrow money to develop a new sewer system, ostensibly to better serve all the city's residents. The sewer will first be extended to areas that can pay the full price for the new services, typically the better-off areas. However, if lower-income areas fail to pay the same price for the services, the project may become unable to pay for itself. The city will then be obliged to tap into other sources of revenue (local taxes, for example) to meet its repayment obligations. If the money taken from the city's general revenue was to have been used to support other social services for the poor, then the poor are doubly worse off, having enjoyed neither the benefits of the sewer nor the services that would have been supported from the general revenue.
12. Thirdly, the accountability of private service operators vis-à-vis fulfilling the obligations Governments have taken on under the international human rights instruments needs careful attention. There is a growing number of instances of faulty advice and unethical, if not illegal, practices by private providers, as well as consulting firms and other institutions that aggressively promote privatization. In the United Kingdom, where privatization of water and sewerage provision has been scrutinized carefully, a study found that after privatization, profits started to soar in real terms at a time when customers faced continual price rises. A public outcry followed over the high salaries and benefits enjoyed by company directors (6). Bolivia, at the behest of the World Bank, turned over management of the Cochabamba city water and sewage system to a single-bidder concession of international water corporations in 1999/2000. Under the arrangement, which was to last for 40 years, water prices increased immediately from admittedly negligible rates to approximately 20 per cent of monthly family incomes. Citizens' protests were eventually met with an armed military response that left at least six residents dead. The protests continued unabated until the consortium was forced to flee the country. (7)
13. Public-sector underwriting of private investment risks can have devastating effects on the economy and social cohesion in case of default. Such risks include the failure of the project (e.g. Tucumán, Argentina); the contract becoming unworkable (e.g. Dolphin Coast, South Africa); the company failing (e.g. Azurix, Buenos Aires Province, Argentina); and corruption and distorted accounting (e.g. Grenoble, France) (8). A database compiled by the Public Service International Research Unit (9) reveals several cases of major water privatization efforts that have come under a cloud for one reason or another in the past few years.
14. As alarming as these concerns may be, it is equally important to note that some of the best practices found in water and sanitation provision in developed and developing countries are publicly operated. The vast majority of people in North America, Europe and Japan receive water and sanitation services from publicly owned and operated facilities. These often compare favourably in terms of efficiency with privately operated facilities. Some examples of reforms of public sector water undertakings can be found in São Paulo, Brazil, Debrecen, Hungary, Lilongwe and Tegucigalpa (10). Indeed, a multicountry comparison of public service delivery in developing countries found that "purely public water supply systems were among the best performing services overall". (11)
15. Ensuring links with the local needs through wider participation of the community is an essential factor in promoting broader accountability. In the Philippines, where cost recovery is well above the Asian average, water districts have an organizational structure which provides for representation of users. In the Netherlands, municipally owned water companies have a high degree of transparency and accountability, through having representation of workers on the supervisory board and users in locally elected bodies (12). In the State of Rajasthan, India, a civil society organization, Tarun Bharat Sangh, has shown remarkable results by working with villagers to regenerate groundwater through environmental restoration.
16. At the same time, local authorities and organizations of civil society in many cities around the world are seeking to provide alternative approaches to urban development and management. Indeed, there are incipient examples of new approaches. Among these are the "Human Rights Cities" initiative, in which cities (13) have made commitments to implementing participatory budgets, or attempting to guide municipal decision-making by adopting a human rights framework, or implementing thoroughgoing decentralization of administration and decision-making through democratic processes. It is believed that there are many variants of such processes. Some of them have shown promise, but have yet to be properly documented and analysed to determine their concrete and sustainable results.
17. In order to identify and understand the differences in
policy and outcomes in different regional and national contexts, further research
and analysis is needed on such experiences in a number of cities undergoing
rapid integration into the international economy. From these experiences it
will be possible to draw lessons to assist policy makers, local authorities
and civil society groups to make globalization more inclusive, while minimizing
negative impacts on the realization of the right to adequate housing. Based
on such research, an expert group meeting could be organized to assist government
authorities and civil society organizations to use a human rights framework
to identify policies and measures that are most likely to improve conditions
for low-income and marginalized groups in cities.
Note
(1) E/CN 4/2001/51, par. 56-61. (torna su)
(2) Ibid., par.62. (torna su)
(3) Henry Smets, "Le droit a l'eau", mimeo, 2001,
pp. 64-70; "The right to water as a human right", Environment Policy
and Law, vol.30, 2000, p.248. (torna su)
(4) V. Ana Hardoy e Richard Schusterman, "New models
of privatization of water and sanitation for the urban poor", Environment
and Urbanization, vol. 12, N. 2, 2000, pp. 63- 75. (torna su)
(5) See, for example, the web site of the World Bank's
Rapid Response Unit (http://rru.worldbank.org) which contains a useful list
of papers and links on the impact of privatization. (torna su)
(6) House of Commons Select Committee on the Environment,
Seventh Report 1999-2000: Water Prices and the Environment, HC 597, 14 November
2000 (HOCSCE7), Introduction, para. 20. Available at http://www.parliament.the-stationery-office.co.uk.
Quoted in Emanuele Lobina and David Hall, UK water privatisation - a briefing,
Public Services International Research Unit, 2001. Available at http://www.psiru.org.
(torna su)
(7) Karin Jordan, "Bolivians drive out water privateers",
Ottawa, Canadian Union of Public Employees, 2000. Available at http://www.cupe.ca.
(torna su)
(8) David Hall, Kate Bayliss and Emanuele Lobina, "Still
fixated with privatisation: a critical review of the World Bank's water
resources sector strategy". Paper prepared for the International Conference
on Freshwater (Bonn, 3-7 December 2001), p. 9. Available at http://www.psiru.org.
(torna su)
(9) Available at http://www.psiru.org. (torna
su)
(10) For further examples and evidence, see David Hall,
"Water in public hands", June 2001, available at http://www.psiru.org.
(torna su)
(11) Quoted in Brendan Martin, "Privatization of municipal
services: potential, limitations and challenges for the social partners",
ILO Working Paper No. 175, Geneva, ILO, 2001, p. 28. (torna
su)
(12) Quoted in David Hall, op. cit. at note 52, p. 18. (torna
su)
(13) These include Rosario, Argentina, Nagpur, India, Kati,
Mali and Thies, Senegal. (torna su)