Power for the cities, property rights for the poor

Lawrence Solomon
National Post
June 5, 2001

Tomorrow, 171 governments from around the world will congregate in New York City to promote a globalization agenda that includes property rights, privatization, decentralization and trade – the same combination that inspired the riots in Seattle and Quebec City.

Yet Maude Barlow, the labour unions and other anti-trade protectionist activists aren’t manning the ramparts to shut down the meetings, or to at least win a public relations victory for trying.

The New York meetings, backed by some of the world’s leading international development NGOs and held in a Special Session of the United Nations General Assembly, not only have impeccable credentials, they have captured a moral high ground no protesters could storm.

At their heart, the meetings are about stripping political power from national and state governments. Half of the world’s population now lives in urban areas – a far cry from the world 200 years ago, when but 2% lived in cities – and cities are now widely viewed as being the engines of national economies, the conference papers make clear.

Yet governance today more reflects the demographics of 1800 than 2001. City governments almost nowhere exercise the power that is their due. The New York conference aims to promote a devolution of power to urban communities and to the people – especially the disenfranchised poor – who inhabit them. Their means to good governance – private capital, property rights, and consumer choice – is enough to give anti-globalization activists hives.

Consider the radical approach of London-based Panos, an international development NGO, in financing the most basic of urban infrastructure needs: water supply. To get away from the past practice of building unsustainable showcase projects that poor societies can’t possibly maintain – the Third World is littered with boondoggles that begin to rust soon after the photo-ops have concluded – Panos proposes different drinking water systems for the rich and for the poor.

As an example, Panos describes the water privatization of Buenos Aires, where a private firm, Aguas Argentinas, won a 30-year concession to supply the city’s residents, including 200,000 who lived in favelas, or unserviced shanty towns. How could the company lay new water and sewage pipelines, and provide new connections, for households that lack the ability to pay for them?

"In association with a local non-governmental organization, the company created the Low-income Settlement Programme to ensure that the service would be extended to the poorer areas and that it would be affordable and sustainable," Panos explains in Governing Our Cities: will people power work?, a book released in conjunction with the conference. Because conventional water service would not be feasible, the poor areas agreed to obtain most of their water needs (for washing clothes and bathing) from unpotable groundwater, and to purchase their drinking water from the utility. "The charges were worked out to ensure affordability; this in turn helped in collection of user charges," the Panos book explains. "It also proved that poor communities are willing to pay if they can get reliable service and if they have a chance to participate in the decision-making process." Elsewhere in the book, Panos favourably describes how South Africa’s Durban Metro Water provided water to a shanty town through a combination of household tanks – which were replenished daily if the household’s utility payments were current – and common standpipes, which provide water for a per-bucket charge.

The moral of the story: "It is crucial to bear in mind that a concession contract for a city with low-income areas cannot be socially and economically sustainable if it provides a single homogenous service with no variation in levels of service throughout the area covered by the contract. A pro-poor concession should offer different levels of service at different prices and the contract should include provision for subsidies."

The New York City meetings – dubbed Istanbul + 5 – are a follow-up to the United Nations’ 1996 Habitat II conference in Istanbul. Rather than fight globalization, the Istanbul conference decided to harness globalization’s power to feed and house the world’s poor. "Gone is the assumption that central Governments will provide housing for the poor," says Istanbul + 5’s conference materials. "The traditional welfare state model is giving way to partnership and participation," for example by giving property rights to people who now live in the shanties – typically on land owned by governments that refuse to privatize the land. Once people have secure tenure, communities become stable. "Such stability helps cities to attract corporate and individual investment, which in turn can improve the access to services and the living conditions of the urban poor."

Neither the Istanbul + 5 conference nor development groups such as Panos believe the process of globalization will be easy – many governments are corrupt or incompetent, democratic institutions are often weak, and abuses are sure to occur.

But the movers and shakers in the global movement to strengthen city governments also recognize that, without property rights, privatization, user pay and other globalization principles, no economy can be sustainable. In their model, the private sector will often supply the capital and the expertise needed for water infrastructure and other public services. That’s what the private sector does best.

And governments, accountable to the people, will regulate the private sector providers. That’s what governments do best.


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