Organization: Corporate Europe Observatory
Regarding ‘Veolia calls for shift to ‘low-water economy‘:
It is little wonder that Antoine Frérot wants to change the economics of the water business. Veolia Water, the biggest global water corporation in the world, is now confronted with a serious threat: as Corporate Europe Observatory noted in its report (‘Turning on the taps in Brussels – Veolia Environnement’s lobbying activities on water at an EU level’), the volumes of water sold by Veolia have been decreasing in recent years, affecting Veolia’s income.
This is nothing exceptional and follows the trend in urban water use in Europe. Veolia Water’s distributed water volumes decreased by 1.9% in 2008 and 3% in 2007, and urban water use in Europe is also decreasing regularly, as shown by this study on water use by sectors by the European Environment Agency.
Veolia Water’s only fast-growing division, Veolia Water Solutions and Technologies, sells engineering solutions such as desalination plants. As a consequence, Veolia Water is now pushing for technological solutions such as wastewater re-use and seawater desalination to “disconnect” sold water from water abstracted from the environment – enabling water consumption to be maintained at its current level – and Veolia is now asking the EU to support and even legally impose these solutions, calling them “sustainable”.
The stakes are crucial for all water operators: this much-needed decrease in consumption affects the balance sheet of both public and private operators, particularly when stricter standards increase sanitation costs. It is indeed very important to design robust financing models for water utilities, and, as Frérot acknowledges, it is likely that the taxpayer will have to contribute more now that user fees no longer cover the costs – water systems in Europe were developed and maintained by taxpayers anyway, private companies being notorious for under-investment in water infrastructure.
A traditional definition of efficiency is measuring the ratio of the effective or useful output to the total input in any system. Frérot’s calls for energy-intensive solutions to allow water consumption to stay at its present level go in exactly the opposite direction as they would result in spending massive amounts of more and more expensive energy to sustain current – and still excessive – levels of water consumption. His calls to morality, in this context, are not credible.
A more meaningful approach would be a truly integrated vision which views the water cycle in a holistic way, measuring water systems’ efficiency and performance as their capacity to provide drinking or safe water to as many as possible, with as little cost as possible: the costs in water cycles are liabilities for all water users, including ecosystems.
Examples of such progressive management exist in Europe, where local authorities use synergies and positive loops between agriculture, forestry and urban water system policies to both minimise their costs and replenish ecosystems and river basin health (see CEO and TNI’s new discussion paper; ‘Progressive Public Water Management in Europe – In search of exemplary cases’, January 2009) .
Veolia’s proposals simply ignore such possibilities, firstly because they do not help short-term profit optimisation, but also because a private company’s limited remit structurally prevents it from being able to lead such transversal policies.
This highlights the contrasting attitudes between public and private players in the water sector: to some the global water crisis is a business opportunity, to others it is a political challenge.