Revisiting privatization, foreign investment, international arbitration, and water

Includes bibliographyA subject relevant to the governance of water resources and public services is the effect that international trade and investment agreements may have on national capacities to manage natural resources and to regulate public services. As a consequence of globalization, many public services are provided and water rights held by companies within foreign investment protection systems or special conflict resolution regimes, which means that external jurisdictions can intervene in local matters. These agreements, which override national laws, restrict the power of governments to act in the public interest and in that of local communities. The region has yet to assess the consequences that international investment agreements may have on the economic, social and environmental sustainability and efficiency of natural resources utilization and provision of public services. Such an assessment is necessary when formulating public policies, adopting natural resources legislation and regulatory frameworks for public services, granting water rights and wastewater discharge permits, and entering into contracts related to economic activities in which water is an input or end product. This paper is a first step in this direction. It summarizes the main issues raised by Mann (2006a);, Hantke-Domas (2005); and Barraguirre (2005);, and at the same time expands on some of them. This study also draws on the research done by Agua Sustentable of Bolivia, the International Institute for Sustainable Development (IISD); and the International Development Research Centre (IDRC); of Canada, the Water Law and Indigenous Rights (WALIR); project (ECLAC/The Netherlands, University of Wageningen);, and the Forum for Democracy and Trade of the United States