Being a student, my article reflects a student's point of view and it is mainly

for students like me. My article is primarily focused on the positive role playe
d by the WTO and international trade in solving the problem of "water crisis". A
s i have seen in many other articles, people do have a misunderstanding regardin
g it. People often blame the WTO for playing a negative role in natural resource
management including water.

Global water crisis: The role of International Trade in getting a way out.
Submitted by,
Astha Kaushik
Faculty of Economics,
Berlin School of
Economics and Law

Falsely, many people believe that there is an infinitive supply of water on eart
h. However, due to the increasing global consumption of water and factors like d
eforestation, urbanization, industrial farming etc, the problem of water crisis
is intensified . According to a 2006 United Nations report :"There is enough wat
er for everyone". It also claimed that water insufficiency is often due to misma
nagement, corruption, lack of appropriate institutions, bureaucratic inertia and
a shortage of investment in both human capacity and physical infrastructure.(1)
.Another report by World Water Vision states that there is a water crisis today,
but this crisis is about managing the available water resources, certainly not
about the availability of too little water to satisfy human needs(2). My researc
h examines the role WTO can play in order to get a way out of this crisis.
As the resource is getting scarce, water related conflicts are happening all aro
und the globe intensifying the tension among different users. Governments are fo
rced to think of a radical solution in order to solve this global problem. On th
e one hand, due to the rising population, there is an increase in the need of fr
esh water, and on the other hand there is an intense competition among users in
agriculture, industry and domestic sector pushing the ground water level even de
eper. To deal with this crisis, many experts suggest that tradable water would l
ead to the efficient use of water and its resources. In fact, water is highly un
der priced due to government regulation and subsidies in this sector, resulting
in high consumption.Most governments subsidies water supply on a huge scale by i
nvesting in infrastructure like dams, canals, water purification, distribution s
ystems and wastewater treatment making the economic value of water highly insubs
tantial. Consumers are hardly aware of the fact that manufacturing 1 kg of beef
requires approximately 16000lts of water.(3).
A few years ago hardly anyone knew about the privatization of water services. Ac
knowledging water as a human right, most of the world's water supplies remain in
the public trust, but according to some free market analogizes, private firms c
an do a better job than municipal governments. As quoted on the World Bank websi
te "Effective water management requires water to be treated as an economic good,
private participation in water and wastewater utilities has generally resulted
in sharp efficiency gains, improved service, and faster investment in expanding
service"(4). I guess, there is still a confusion among many people regarding the
term "Water Privatization", actually the term doesn't mean that water itself is
 privatized, it refers to the privatization of water supply including services o
f collecting, purifying and distributing water. In reality, if the market is not
open to private investment, a water distribution system will take much longer t
o be established which is certainly not favourable.

When it comes to the role played by the WTO and international trade in solving t
he problem of freshwater scarcity, experts give mixed opinions and mostly WTO is
inaccurately portrayed for crafting the rules facilitating the liberalization o
r privatization of services such as water, health and food. It was even claimed
by some political forces that the policies of water privatization has been impos
ed through the World Bank. In addition it was said that rules of trade liberaliz
ation negotiated in the WTO under the General Agreement of Trade in Services wou
ld supposedly usurp resources from people and put them in the hands of private c
orporations for making profits through privatization of essential services*.In r
eality, GATS doesn't required the privatization of any service. For all services
including water distribution, it states that the following options are open for
all WTO members:
-To maintain the service as a monopoly ( public or private);
-To open the service to competing suppliers (but to restrict access to national
companies);
-To open the service to national and foreign suppliers, but to make no GATS comm
itments on it;
-To make GATS commitments covering the right of foreign companies to supply the
service, in addition to national suppliers.
All these policy options are fully legitimate. If any commitments are made under
GATS regarding water distribution, they will not affect the right of Government
s to set levels of quality, safety, price or any other policy objectives as we k
now that there are same regulations for foreign as well as national suppliers as
the WTO follows the principles of product transparency and non discrimination.

According to Ricardo's theory, nations can gain from trade if they specialize in
the production of goods and services for which they have a comparative advantag
e, while importing goods and services for which they have a comparative disadvan
tage. Similarly, if we evaluate the economic insufficiency of trade in a water-i
ntensive commodity between two countries on the basis of opportunity costs of pr
oducing the commodity, the nation with comparatively low opportunity cost should
export the commodity (as the water productivity in the country is comparatively
high). It makes water scarcity the driving force behind the international trade
of water-intensive products helping countries with scarce water resources in sa
ving their water by importing water-intensive agricultural products .For example
, Egypt saves domestic water resources of around 3.6 billion m3/yr by importing
wheat, which is a water-intensive crop. Similarly, Mexico imports wheat, maize e
tc from USA in order to save around 8.5 billion m3 of water per year Another exa
mple is Jordan which covers its water shortage by exporting goods and services t
hat requires less amount of water and importing products that need a lot of wate
r. Jordan imports around five to seven billion cubic meters of water in virtual
form per year(5). We can say that the global trade pattern influences the use of
water in most of the countries, either by the reduction or enhancement of domes
tic water use. According to a study, international trade reduces global water us
e in agriculture by 5%. As around 80% of water is used in agriculture, establish
ing any international protocol it will surely contribute towards a more sustaina
ble usage of water.
I think this is just the beginning, there are many questions yet to be answered
and many steps yet to be taken. But at first, we all need to accept that, it is
indeed a global problem and it canâ t be tackled individually. It requires a global
solution and different policy options are open to all WTO members without forci
ng them to open there service sectors to international competition.

Footnotes:
1. Water, a shared responsibility. : The United Nations World Water Development
Report 2 (2006 ) Chapter 1
2. http://www.worldwatercouncil.org/index.php?id=25
3. http://www.waterfootprint.org/?page=files/Publications
4. http://www.thirdworldtraveler.com/Water/Privatization_TidalWave.html , Artic
le name : Privatization Tidal Wave.
5. The relation between International trade and freshwater scarcity , Arjen Y. H
oekstra , Jan 2010
*There was even an information sheet titled "Donâ t let WTO get hold of our water"
about the implications of GATS negotiations for water distribution services sayi
ng that it means privatization of public services.. (http://www.wto.org/english/
tratop_e/serv_e/gats_factfiction8_e.htm)