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Water privatization by aqua-danone : what lies behind it and what are the lessons learned

Keywords : Political ecology/economy, water privatization, environmental justice movement


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“The wars of the next century will be fought over water” .

This sentence stated by former World Bank Vice President Ismail Serageldin could be the best starting line to open this essay which aim to reveal problems in accordance to water privatization and its implication. Seemingly, this predictive-sentence is really happening in the midst of the increasing private-participation to water supply (Bakker 2003: 1).

Private sector participation in managing (includes financing and construction of) water resources has been an interesting topic to be discussed, seen from researches and international forum revolve around this topic which generate pros and cons of this discourse (Bakker 2003; Bakker 2007). Not to mention that water is considered as a basic human needs and common property resources in which people can use it without being excluded (United Nations 2001; Marcouiller 1999). The advocates of water privatization argued that governments has failed to fulfill water supply universally and therefore explicitly say that private participation to increase efficiency and distribution of water supply is needed. On the other side, the repellents contested that privatizing water is against human rights to water. Furthermore, there is no guarantee that private sector could perform more efficient and well-managed compared to public sector. (Bakker 2007 : 436 – 437). In addition to that, water privatization can also resulting in overexploitation, which is unsustainable, decreasing water quality and leads to water scarcity (Bhattacharya and Banerjee 2015; Snyder n.d.). Shiva (2002 as cited in Bakker 2007 : 441 – 442) even argued that “the real water crisis arises from socially produced scarcity”,…, twinned with the rise of corporate power (and in particular water multi-nationals)….”. It is therefore clear that water privatization creates greater adverse impact rather than its advantages.

In this essay I want to focus more about the water privatization in Indonesia especially in the case of groundwater privatization by Aqua-Danone . Despite the water power potential owned and can be developed in Indonesia, Indonesia is facing clean water crisis (Badan Pusat Statistik 2017; Lestari 2018; Ambari 2018). The causes of water crisis in Indonesia can be seen through apolitical and political lenses. While the apolitical lenses sees the central driving explanation for water crisis is the increasing human population, political ecology lenses sees the human-environment interactions drives the problem (Robin 2012). It seems that water crisis in Indonesia is more likely to happen because of the mismanagement in one’s water resources (Kruha 2012: 3).

The starting point of water privatization in Indonesia

Water privatization was initiated in Indonesia due to 1997/1998 economy crisis which hit, albeit the rapid urbanization experienced by the country. At that time, Indonesia received funding from World Bank (WB) and Asian Development Bank (ADB) to restructure its water and irrigation sector . In turn, Indonesia need to adopt “the logic of privatization” encouraged by the banks which sees water as “economic goods” in order to be used effectively and therefore raised the need of private “hands” in water sector for a better performance – in terms of efficiency, service, and investment. (World Bank 1999; Asia Development Bank 2004; Siregar 2004).

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To fulfil the requirement for the loan, Indonesian Government shaped a regulation – which is finally amended on “Indonesian Law number 7 of 2004 about Water Resources” opening the opportunity for private sector (especially multinational corporations) in providing drinking water and exploit natural springs which located in several regions in Indonesia (Pasandaran 2015; Ministry of Energy and Mineral Resources n.d). As the consequences of this regulation, Aqua-Danone was given the rights to exploit eleven spring water location through its fifteen factories (Warburton 2011).

Despite “the logic of privatization” introduced by World Bank was believed to increase water sector quality, it seemed that this “logic” was not necessarily applied successfully in Indonesia. In fact, privatization of water has led to overexploitation and furthermore caused adverse environmental and social impacts which were perceived by local people living near the natural springs where Aqua operates. As the reaction to this problems, several movements against Aqua water privatization (better known as environmental justice movement) had started to taken place. These movements which were run by local people with the support of non-governmental organization was finally came to an end with the triumph of the “marginalized” people as Indonesian government decided to revoke the law in 2015. (Kruha 2012; Erviani 2013; Alexander 2015).

Overall, this essay will try to analyze what lies behind water privatization projects and what lesson can be learned through political ecology and economy lenses. In the following section I will explain the political ecology and economy concepts to explore the problems induced by groundwater privatization. Subsequently, I will use the concepts to explore how the problems happens, who are the actors involved (who gains and who losses) and what impacts that the problem give to the people and environment.

Implications of Political Ecology Concepts on Water Privatization Problems

Robin (2012: 3) said that “politics is inevitably ecological and that ecology is inherently political”. It is clearly seen that there is a political forces behind water privatization which leads to the environmental equity, sustainability, and justice problems. In this sense, political ecology can be used to help disentangling problems related to the ecological distribution conflicts as a result of human-environment relation (Martinez-Alier 2002). Furthermore, political ecology lenses helps to analyze and reveal the central questions in this discourse : who gains and who loses, the winner and the losers, and the hidden power and costs (Robbin 2012 : 20). There are several definition of political ecology, but the one which I refer to in this essay belongs to Watt (2000 as cited in Robin 2012 : 16) where political ecology is a field of study “to understand the complex relations between nature and society through a careful analysis of what one might call the forms of access and control over resources and their implications for environmental health and sustainable livelihoods” and therefore the goal of political ecology is to “explain environmental conflict especially in terms of struggles over knowledge, power, and practice and politics, justice, and governance.” I decided to choose this definition as it gives the perspective to analyze water privatization issue related with access to natural resources and its implications to social and environmental concerns through political lenses.

There are five main theses in political ecology discourse which are “(i) degradation and marginalization – related to environmental degradation and the cause for their change, (ii) conservation and control – especially the collapse of it, (iii) environmental conflict and exclusion – the exemption from getting access to environment services, (iv) environmental subjects and identity – new social groups whom identified themselves politically, and (v) political objects and actors – interlinked with socio-political conditions which impacted by non-human actors.” (Robbins 2012: 22). From all these theses, water privatization is considered under the third thesis as the nature of privatization by private firms which impede local people’s rights to access natural resources and thereby creates conflict amongst groups.

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To complete the “story” of water privatization by Aqua, I will try to use the concept of environmental justice movement which followed by the explanation of their victory. “Environmental justice movement” raised due to “ecological distribution conflicts” mentioned by Martinez-Alier (2003), spread since the 1980s and 1990s in the form of campaign slogans and taken place in conflicts related to environment with water justice in it. (Martinez-Alier et al. 2016). The notion of “water as human rights” stated in Bakker (2007) strengthened by Boelens (2011 as cited in Martinez-Alier 2016) that water should be best use for those who needs it for living, not for power nor money also contributed to the rise of environment justice movement and furthermore to water policies reform (Vanderwarker 2012). Environment justice movement driven by grassroots activism which developed as a response to unjust, unfair, and illegal policies and practice (Bullard 2000: 558) could be a tools opposing policy makers and therefore ensuring water access for marginalized people in the society (Fioret 2019). In this sense, environmental justice movement could be seen as efforts contributing to the victory of the people whose rights are threatened by the emerging private participation in water sector.

As mentioned above, this essay will attempt to answer the fundamental questions in political ecology regarding water privatization by Aqua-Danone in several Indonesia regions since there are not only environmental damage but also other impacts caused by actors and their interests. Furthermore, this essay will try to see how marginalized-people movement can fight against this strong multinational company.

When profit comes before people… Who benefits and Who Suffers?

Kapp (1963) explicitly said that the appearance of social cost is due to the dependency of economic system to private “hands” implying that water privatization is indeed impacting social and environment negatively. This statement is also supported by Grossman et al. (2003) where resource privatization which happen across nations – including Indonesia – is often driven by international actors such as World Bank, International Monetary Fund, and World Trade Organization, and this privatization framework is frequently put private profit by neglecting human and environment aspect.

From the background, it is clearly seen that loan project given from World Bank and Asian Development Bank was motivated by their intention in forcing neoliberal economy framework adopted by both organization. Let alone the fact that as of 2014, the aggregate amount of Indonesia loan from World Bank and Asian Development Bank was the biggest in Southeast Asia region (Carroll 2018). As in Bakker (2007: 433), neoliberalism interested in taking private property rights to organize the allocation of resources as it sees water as “economic goods” which have “economic value” and therefore must be priced.

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This economy framework which was realized by Indonesian Law number 7 of 2004 reinforced capitalism exercised by Aqua-Danone. Privatization of water drinking supply by Aqua-Danone is a concrete example of neoliberal reforms which categorized by Bakker (2007: 435) as renewal in “resource management institution” in the type of privatization, “resources management organization” in the type of private-sector partnership, and “resource governance” in the type of commercialization” . Reforms taken in water drinking sector has opened the door for Aqua-Danone to exploit water resources in several Indonesian regions such as Sukabumi, Klaten, Banten, Bandar Lampung, and Bali.

However, the operation of this multinational company does not necessarily increase efficiency as was aimed by neoliberal framework as in fact many local people – whom are mostly farmers and peasants- living near the natural springs feel disadvantaged. Privatization which lead to overexploitation by Aqua-Danone caused harms not only to human (social-impact) – as it is against people’s rights to water – but also to unsustainable to the environment (ecological impact) (Bakker 2007: 437; Bhattacharya and Banerjee 2015). Aqua-Danone has contributed to overexploitation of groundwater (approximately 3″,75 million liter per year) which led to the groundwater depletion and water crisis felt by local people (Membunuh Indonesia 2015). Based from Tempo (2004), Mangoting and Surono (2006), Kruha (2012), negative impacts which experienced by local people were seen in several regions where Aqua-Danone operates (summarized briefly below).

(i) in Padarincang (Banten), the operation of Aqua-Danone factory was the main factor influencing difficulties for farmers to supply their paddy field (and other plants) with water. As the consequences, their agricultural products declined and resulting in the loss of income (approximately 1″,3 million USD per month). On the other side, the profit gained by the company from Ground Water Basin of Rawadano (Padarincang) could reach 1″,8 million USD per day.

(ii) in Sukabumi, Aqua-Danone seized local people’s access to their land – by buying the land through local government – and surrounded the land using fence. The exploitation caused local people to perceived water drought as the water volume dropped dramatically and forced them to dig the well deeper (from 5 – 7 meters to 17 meters).

(iii) in Klaten, natural springs (Umbul Kapilaler and Sigedang) which usually irrigate the paddy fields naturally stopped flow resulting in more expense that need to be burden by the farmers to pump deeper groundwater. Moreover, even in wet season farmers also faced crop failure. In addition to that, water shortage has also resulted in fights between the farmers.

Although in this essay all the detail impacts to each regions where Aqua-Danone operates could not be revealed, the brief summary above has provide an overview of the answer to the political ecology questions of water privatization. In this case, it is clearly seen that privatization of water benefits those who have the “power” to reap profits – which is Aqua-Danone – at the expense of marginalized-local people.

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