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Private Investment in Water and Sanitation Services: Rights-Based Approaches and International Investment Law – a Possible Way Forward?

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It is often assumed by those opposed to the involvement of the private sector in the provision of water and sanitation services, particularly by those concerned about private sector involvement in developing countries, that recognition of the human right to water ought to operate to hinder such involvement (Smets 2005: 177–183; Morgan 2006: 215). However, while practical application of the right to water should help to ensure that certain aspects of social protection, relating particularly to affordability, equality of access, restrictions on disconnection, public participation, and quality of supply, are respected and protected, for example by means of their inclusion in contracts concluded between public authorities and private companies for the provision of water-related services, the normative requirements emerging from this right do not per se restrict the privatisation of water services. In fact, the only statement of international declarative law impacting directly on private sector participation in this area is that included in the 2001 Bonn Recommendations, adopted by 118 States at the Bonn International Conference on Freshwater, to the effect that ‘Private sector participation should not be imposed on developing countries as a conditionality for funding’. Indeed, the emergence of the human right to water may serve to facilitate private investment in water services by identifying broadly accepted standards of service and social safeguards, which private investors can factor into their investment decisions and which make it difficult for public authorities to alter the regulatory environment arbitrarily.

The inclusion of water and sanitation targets among the Millennium Development Goals (MDGs) has highlighted the need to mobilise private investment in order to have any realistic chance of meeting such targets. For example, it is quite clear that a number of key UN agencies envisage a significant role for private sector water providers in making progress towards the MDG target. It is telling that the World Panel on Financing Water Infrastructure, which was convened by the UN Secretary General, chaired by Michel Camdessus, a former President of the World Bank, and made up of representatives of the international financial institutions, banks and businesses involved in funding private investments in the water sector, adopted a report providing unqualified support for the existence of right to water.(Winpenny 2003; Smets 2005: 175; van Hofwegen 2006) In addition, the CEOs of at least two leading water multinationals, Suez and VĂ©olia, have expressly recognised the universal nature of the right of access to water.(Smets 2005: 175–176)
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Document Type: Research Article

Publication date: 01 January 2010

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