Homeless, precariously sheltered continue to grow in number

The right to adequate housing is being imperilled by the scarcity of resources devoted to social spending and by the privatization of services essential to making any dwelling livable, according to a report by a Special Rapporteur to the UN Human Rights Commission.

by Chakravarthi Raghavan

GENEVA: While globalization affects countries and regions within countries differently depending on a range of factors, at the global level, the number of homeless or precariously sheltered continues to grow in step with indicators of economic inequality, says a Special Rapporteur in a report to the UN Human Rights Commission on adequate housing.

The report (E/CN.4/2002/59) by the Special Rapporteur Miloon Kothari focusses on the right to adequate housing -  broadly defined to include access to land as well as other essential services such as water, electricity and sanitation - as a component of the right to an adequate standard of living.

From an analysis of the outcomes of several UN-sponsored international conferences having a bearing or effect on the right to adequate housing, including water and sanitation services, says the Special Rapporteur, “there is an urgent need to move beyond reaffirmation of the principles and commitments towards adopting concrete steps for the progressive realization and operationalization of human rights.”

Diminishing resources

Globalization affects countries and regions within countries differently depending on a range of factors, including the level of integration of the local economy into the international economy, the national and local policy context and degree of decentralization of power, the influence of different institutions in each country and locality, and demographic characteristics, the report notes.

“Nevertheless, at the global level, the number of humanity’s homeless or precariously sheltered persons continues to grow in step with indicators of economic inequality,” the Special Rapporteur says. “[T]o understand why this is occurring while global economic integration is creating new wealth as never before seen requires a better understanding of how and why processes of economic globalization are apparently not leading to the fulfilment of economic, social and cultural rights.”

Overall, globalization and the process of increasing economic integration have limited the role and capacity of states to provide adequate resources and other provisions which are often necessary in fulfilling economic, social and cultural rights.

Several macroeconomic factors influence the availability of resources for social spending, including on housing and essential services. These factors include:

*        small or even negative returns from trade liberalization in developing countries, particularly least developed countries;

*        financial volatility following deregulation of capital flows coupled with interest rate hikes which affect access to credit and mortgages;

*        increased land speculation as a result of more competition for prime locations in rapidly globalizing cities, which often forces out low-income residents to less-desirable locations with poor  service availability;

*        heavy burden of debt servicing;

*        fiscal constraints and austerity measures imposed by the International Monetary Fund (IMF) and the World Bank, which are primarily designed to reduce public spending and invariably lead to reductions in financial allocations to social sectors; and

*        the process of public sector reform, particularly through decentralization and privatization.

Decentralization, the report points out, has enabled increased participation of civil society and marginalized groups in decision-making processes having a direct bearing on their well-being. The decentralization of service delivery and public administration related to housing can have marked benefits when adequate resources are transferred into the hands of responsible and capable actors, including civil society groups, at the local level.

However, when resources transferred are not commensurate with responsibilities, local authorities are faced with the challenge of financing the gap from their own budgets and/or other sources, including by borrowing from the private sector through municipal bonds, attracting more businesses to raise tax revenues, or speculating on land and property.

The increased competition among cities to attract capital and businesses for generating employment and sources of revenue has led to widening inequalities between cities, “with consequent discrepancies in level of essential services provided to citizens.”

In large cities, the growing competition for central spaces has also initiated gentrification and the creation of new ghettos of exclusion. In economically neglected cities and rural areas, local authorities continue to face difficult challenges with limited revenues to deal with unemployment, increased demand for social security and the need to upgrade public services.

In the urban housing sector, reliance on market mechanisms has tended to result in neglect of the poor. The continued deterioration of conditions, particularly with respect to housing and related services, faced by the majority of the urban and rural poor around the world has caused tremendous concerns over unfettered globalization.

Privatization pitfalls

Notwithstanding constraints and difficulties placed upon them, central governments still have an important role to play in reconciling macroeconomic policies with social objectives, keeping in mind the primacy of their human rights obligations.

Governments also have the responsibility to make targeted interventions in order to ensure universal access to public services on a fair and equitable basis.

In participating in ongoing trade negotiations under the World Trade Organization (WTO), adds the Special Rapporteur, states should not forget their responsibility to ensure that their policies are compatible with their obligations under international human rights instruments.

The WTO’s General Agreement on Trade in Services (GATS), in particular, is expected to further deepen the process of privatization of resources and services relevant to housing rights, such as electricity, water, sanitation, transport, construction materials, etc.

Privatization of essential services is an aspect that warrants close attention when assessing the impact of globalization on the right to adequate housing.

Striking a balance between promised gains of privatization in terms of economic efficiency and reduced costs of services vis-a-vis social costs is a very complex and delicate matter for many governments and international organizations promoting such policies.

However, there is the primacy of human rights obligations in implementing such policies and programmes, and it is the “first responsibility” of states to achieve human rights for poor and vulnerable groups.

The right to housing includes access to safe drinking water and sanitation, and no dwelling should be deprived of water because such deprivation would render it unlivable, the report notes.

A review of current literature on impacts of recent privatizations of water and sanitation services found that the vast majority of available case studies “fail to demonstrate improvements in the quality and coverage of services to vulnerable groups.”

Indeed, higher costs and service cut-offs of persons unable to pay higher rates have been more common in developing and transition economies.

The review also vindicates the concern that privatizations, “while relatively easy to initiate, are extremely difficult to implement where universal coverage with acceptable quality at affordable prices for all is the stated goal of the service.”

Also, when the population to be served includes low-income groups living in difficult-to-service areas and/or conditions, privatized service providers have generally been reluctant to invest in multiple forms of delivery or to apply cross-subsidies to meet the needs of these groups effectively.

“Nevertheless,” comments the Special Rapporteur, “support and encouragement from the World Bank and regional development banks for across-the-board privatization of water and sanitation services in low-income communities has been steadfast for over a decade.”

In terms of experiences and shortcomings of privatization of water services, several lessons could be drawn.

Firstly, privatization by its nature is increasingly forcing central and local authorities to become profit-seeking in the provision of essential services. And in a context where a large portion of the population lives in poverty, many groups cannot absorb the costs of providing a market rate of resource for the investor for services provided through market mechanisms. Unless some costs are subsidized for these groups, as called for by general obligations of human rights instruments, they are likely to be excluded from the services they need.

Secondly, earlier experiences of privatization indicate that the emphasis on cost recovery, a cardinal principle of privatization, may fragment service delivery and coverage. Many cities in developing countries are new to running social services and infrastructure provision as profit-making ventures. Rates of return and healthy cash flows take a much higher priority in project design than will poverty alleviation or improvement of health and living conditions.

It is quite possible, thus, that a city may borrow money to develop a new sewer system, ostensibly to better service all the city’s residents. However, the sewer will first be extended to areas that can pay the full price for the new services, typically the better-off areas. And if lower-income areas fail to pay the same price for the services, the project may become unable to pay for itself. The city would then be forced to tap into other sources of revenues to meet its repayment obligations. And if the money taken from the general revenues was to have been used to support other social services for the poor, the poor would be doubly worse off.

Thirdly, there is the issue of accountability of private service operators in fulfilling obligations.

“There is a growing number of instances of faulty advice and unethical, if not illegal, practices by private providers, as well as consulting firms and other institutions that aggressively promote privatization.” In the UK, where privatization of water and sewerage provision has been carefully scrutinized, studies show that after privatization, profits soared in real terms at a time when customers faced continual price rise. In Bolivia, where, at the behest of the World Bank, management of the Cochabamba city water and sewage systems was turned over to single-bidder concession of international water corporations to operate for 40 years, the water price increased immediately to 20% of monthly family incomes. Citizens’ protests met with an armed military response that left six residents dead. The protests continued unabated until the consortium was forced to flee the country.

Public sector underwriting of private investment risks can also have devastating effects on the economy and social cohesion in the case of defaults, the Special Rapporteur notes, citing cases and examples from Argentina, South Africa and France.

According to a database compiled by the Public Service International Research Unit, several cases of major water privatization efforts have come under a cloud in the past few years.

Also, points out the Special Rapporteur, some of the best practices in water and sanitation provision in both developed and developing countries are publicly operated. The vast majority of people in North America, Europe and Japan receive water and sanitation services from publicly owned and operated facilities. There are also examples of reform of public sector water undertakings in Sao Paulo (Brazil), Debrecen (Hungary), Lilongwe and Tegucigalpa. (SUNS5091)

From TWE No 277 (16-31 March 2002)