Thursday, February 9, 2012
Week # 1: Water Rights in Bolivia by A.S.C.
The water conflict in Bolivia arose in late 2000, following the government’s decision to privatize water. Pursuant to demands by international financial institutions, including the World Bank and International Monetary Fund (“IMF”), the government implemented a series of economic policies including opening the Bolivian economy to foreign products, privatizing state-owned companies, and taking strict measures to draw foreign investment into the country.# As part of the reforms, the government privatized the water system of Cochabamba, the third largest city in Bolivia, and sold it to the sole bidder Aguas del Tunari (“AdT”), a consortium led by Italian utility company Edison and US-based Bechtel Enterprise Holdings.# As a condition of the sale contract, AdT agreed to pay the $30 million debt owed by the previous controller of water in the city, the state agency SEMAPA.#
In October 1999, after a 48 hour session, the Bolivian congress passed the Drinking Water and Sanitation Law, known as Law 2029, which set the legal framework for the privatization of state drinking water and sewage disposal services.# Following the takeover in November 1999, the consortium raised the water rates by 35% to approximately $20 per month, which accounted for one fifth of the villagers’ monthly income. While Bechtel argued that as a consequence of the company’s efforts the water supply was raised by 30%, and it had received positive feedback from many consumers, around the same time, the villagers began to express their concerns about the concession agreement and Law 2029.# Specifically, the villagers were concerned about the excessive rate increases, loss of property (wells) under Law 2029, and inability to use natural water sources in accordance with the farmers’ traditional uses and customs.# Soon after the rate increases, villagers and city residents organized protests that lasted several months and led to over 250 injured people and the death of a 17-year old student, who was shot in the head by a sniper.# Almost four months after the initial protests, in April 2000, the Bolivian government announced that the privatization agreement had been cancelled and Law 2029 was repealed.# After seven months of operation in Bolivia, AdT executives left the country and the control of the water system was returned to SEMAPA.
Following their exit from Bolivia, the consortium began an arbitration process against the Bolivian state at the International Center for the Settlement of Investment Disputes (ICSID) to recover $25 million in damages.# In January 2006, Bechtel abandoned its case and agreed to damages in the amount of 25 cents, signifying an amicable settlement between the two sides.# A year and half later in November 2007, Bolivia left the ICSID and ended its 16-year affiliation with the center.# Today, SEMAPA continues to operate the water system in Cochabamba.#
In the case of Bolivia, two substantive rights, the right to property and the right to water, were at issue. In terms of the right to property, Law 2029 allowed AdT to control private or community-owned wells in the area.# While the right to property is not clearly identified under the ICESCR, it is recognized under the American Convention on Human Rights and the Universal Declaration of Human Rights, which prohibits arbitrary deprivations of property.# One argument for the local residents is that by allowing AdT to charge the well owners fees for the water drawn from their own property, Law 2029 violates the property owners’ right to property. However, given that all waters in Bolivia constitutionally belong to the state, this argument may fail to prove a human rights violation. Another argument reasons that the imposition of tariffs would deprive the wells of their value and hence, amount to a deprivation of the local owners’ property. Nevertheless, this argument depends on the theory that the local well owners reasonably relied on the continued access to free water, a theory challenged by the constitutional provision that provides for state ownership of all water resources in Bolivia.
Under the right to water, three subheadings have been discussed: privatization as violation of the right to water, affordability of water, and the interference with traditional arrangements for water allocation.# The third issue mentioned in the case of Bolivia, is strongly relevant and applicable to the water rights problem in the Bedouin villages of Naqab. According to UN’s Committee on Economic, Social, and Cultural Rights (“CESCR”), “the obligation to respect [the right to water] requires that State parties refrain from interfering directly or indirectly with the enjoyment of the right to water. The obligation includes, inter alia . . . arbitrarily interfering with customary or traditional arrangements for water allocation . . . .”# Under Law 2029, farmers were required to pay fees in order to draw water in areas controlled by the concession.# This and other requirements under Law 2029, impacted the farmers’ traditional uses and customs with regard to water allocation and therefore, violated the right to water.# Nevertheless, in order to constitute a violation of the right to water, this interference needs to be an arbitrary one.# In the case of Cochabamba, the interference with the local peasants’ uses and customs was merely a consequence of the sale agreement with AdT and served other purposes. Hence, it was clearly arbitrary and thus, a violation of the right to water.#