Negotiating Water, on the Road to and from Financialization


From "Promoting Water Affordability and Collaboration," Water Finance Research Foundation, USA.

Our relationship to water as both existential necessity and a resource to be managed and operationalized reflects the dynamic entanglement of nature and the systems that run societies.[1] Through codified values, policies, models, protocols, technologies, governance structures, and institutional networks, a mutating web of organizational artifice subjugates nature to its determinations while simultaneously negotiating processes outside of human control. Human survival—and the distribution and quality of that survival—rely on the logics of this negotiation and the ideological vectors that shape them.

Over the last seven hundred years, the ideological formation of capitalism has not only expanded its geographic reach, but also mutated in relation to the socio-natural fabric it was organizing.[2] And while the advent of industrial capitalism heralded the most technologically intrusive phase of expansion and mutation through scalability and standardization, it was primarily with the rise of financial capitalism in the late twentieth century that capital began responding to and managing future risks generated by its own reorderings. By the same token, financial capitalism opened up a vista for accumulation that did not require ownership of capital as a precondition.

In the broadest sense, financialization signals capitalism’s detachment from the interests of local or regional industrial production in favor of transnational financial circulation as the prime source of accumulation.[3] This shift in turn impacts how resources necessary for human and societal survival are managed locally. And while neoliberal lubrication has played a grave role in these processes, financialization as an ordering model may contain certain emancipatory facets that can be harnessed with a nuanced and ethico-politically non-binary approach to its workings. With that in mind, this brief account considers how the resource of water has been woven into the financial regime, particularly in the context of the so-called “developing world.”

I. Bad Privatization

About 71 percent of the Earth’s surface is covered by water.[4] Our bodies are also made up of more than 50 percent H2O, which is carefully balanced with our bodies’ sodium levels to regulate various physiological processes such as blood pressure and gastrointestinal acidity.[5] When it comes to societal consumption, saline water (which makes up around 96.5 percent of all available water) is not suitable for human usage, crop irrigation, and most industrial and manufacturing processes.[6] This makes the less than 4 percent of available fresh water the ultimate golden resource. Currently, fresh water can be found in ice caps, glaciers, mountain lakes, rivers, aquifers, and soil, while provision of clean fresh water for human use is often inhibited by pollution and inadequate or inexistent sewage systems. Simultaneously, shifting climate patterns arguably spurred on by increasing carbon dioxide emissions are further straining the availability of fresh water.[7]

Yet availability is not determined only by natural circumstances, but by political and techno-social engineering as well. In the early 1980s, economist and philosopher Amartya Sen overturned a long-held belief that famines were caused by food shortages, triggering an onslaught of research analyzing famines as a product of human (in)action or systemic (mis)management tied to specific political interests.[8] In a similar vein, and more than two decades prior to Sen, German historian Karl Wittfogel put forward his “hydraulic theory” exploring the links between autocratic rule and irrigation systems.[9] Though Wittfogel’s conclusions were disputed, his theoretical framework sowed the seeds for analyzing the social organization of fresh water provision from the perspective of governance, infrastructural arrangement, and the various explicit or implicit interests of resource management systems.[10]

As an ideological, political, and economic battleground, “management” finds its application in governance. An article that first appeared in The Financial Times on August 25, 2005, written by Fredrik Segerfeldt from the libertarian think-tank Cato Institute, summarizes the arguments that the author puts forward in the book Water for Sale: How Businesses and the Market Can Resolve the World’s Water Crisis:

Ninety-seven per cent of all water distribution in poor countries is managed by the public sector, which is largely responsible for more than a billion people being without water. Some governments of impoverished nations have turned to business for help, usually with good results. In poor countries with private investments in the water sector, more people have access to water than in those without such investments. Moreover, there are many examples of local businesses improving water distribution. Superior competence, better incentives and better access to capital for investment have allowed private distributors to enhance both the quality of the water and the scope of its distribution. Millions of people who lacked water mains within reach are now getting clean and safe water delivered within a convenient distance. […]

True, many privatizations have been troublesome. Proper supervision has been missing. Regulatory bodies charged with enforcing contracts have been non-existent, incompetent or too weak. Contracts have been badly designed and bidding processes sloppy. But these mistakes do not make strong arguments against privatizations as such, but against bad privatizations. Let us, therefore, have a discussion on how to make them work better, instead of rejecting the idea altogether. Greater scope for businesses and the market has already saved many lives in Chile and Argentina, in Cambodia and the Philippines, in Guinea and Gabon. There are millions more to be saved.[11]           

Regardless of context and history—whether it’s Chile, Argentina, Cambodia, Philippines, Guinea, Gabon or anywhere else—the recipe of market governance providing “superior competence, better incentives and better access to capital for investment” offers a one stop solution to (not) deal with the wider dynamics that may be impacting the provision of a public service, whether it’s socio-economic stratification and ethnic strife resulting from colonial legacy, denigration of infrastructures in the aftermath of war, or narrow corridors of access to political and economic leverages in states that have been burdened by debt or are deployed as proxy battlegrounds for better leveraged global actors. In other words, the neoliberal template functions as a power consolidation technique that allows to disregard historically contingent conditions while binding locally constituted elites with external actors keen to capitalize on local inefficiencies and regulatory vacuums. Comparative advantage is invoked as an ethico-political virtue, and the template’s capacity to stack multiple predatory interests ranging in scale from local to global is perhaps what has made it so efficient in the late twentieth and early twenty-first centuries.[12]

One pattern that is particularly relevant to countries labelled as “developing” concerns the manner in which delegating management of resources and infrastructures to the market has been branded as democratization. For many states that transitioned from externally directed governance to self-governance in the last sixty years, rapid processes of primitive accumulation and partitioning of zones of influence took place under the twin flags of private property and competition, while external players simultaneously mediated the “chaos” for their own economic and geopolitical aims. In countries like Ukraine, the rawest phase of “market competition” actually preceded the official neoliberal phase that dawned in the 2000s, with the latter consolidating and legitimizing power constellations that had crystallized at the close of the ravaging 1990s. The defining difference between these two interdependent phases is the distinctly virtuous flavor of the slick liberal-corporate ethos adopted by capital-holding elites as they grew into the domain of transnational finance. Neoliberalization thus lubricated the integration of everything with the capacity to generate value, creating a domain where resources and infrastructures are first and foremost exchangeable assets. Meanwhile, on the ground, the widely noted foul effects of neoliberal policies—i.e. mismanagement resulting in dispossession, poor services, privileging of shareholders’ interests above those of the beneficiaries (now called “customers”), lack of legal accountability, etc., all tending to lead to social collapse, militarization, and radicalization—were placed under the catch-all category of what Segerfeldt termed “bad privatization.”

But Segerfeldt’s account does not mention the following. While neoliberalism pledges allegiance to the project of liberal individuation, values of human rights or emancipation from various forms of oppression are consistently dispensed with—structurally and at times even at the level of political branding. In most of the non-Euro-American world this is typically explained by the legalist liberal tradition being neither at home nor seen as necessary to extend, while in today's Euro-American context, the increasing traction of right-wing sentiments over those of liberal cosmopolitanism is indicative of a wind change that may be read as a departure from the neoliberal status quo.

Whether such spaces may still be called “neoliberal” or not becomes a beguiling question. One may stipulate that participation in programs of the World Bank, the International Monetary Fund, US Foreign Aid, and others that have historically promoted the neoliberal agenda becomes an essential criterion for a neoliberal regime. At closer inspection, however, the vertical integration of the top tiers of neoliberal institutions with the most abject carving up of land and populations into a porous multi-dimensional circulatory sphere that we call “the market” makes “neoliberalism” too narrow a category to describe the constitutional predicament at hand. At the same time, it remains necessary for showing how its template logic wreaks havoc and mutates beyond the wildest dreams of any liberal imaginary. 

II. Uncooperative Water

Applied widely across the world, the “public-private partnership” (PPP) model advocated by Segerfeldt has been one of the most insidious markers of protocol-driven neoliberalization. It is based on the premise that a public service is ripe for delegation to the private sector if it fails on certain efficiency indicators—indicators which, in developing countries, are usually set in consultation with a foreign agency like the World Bank (at least for countries that are historically linked to NATO) as part of a wider development program and/or loan negotiation. While a public body may be deemed inefficient for valid reasons, the terms set out for analyzing the situation often equally obfuscate the complex circumstances feeding into “corruption,” unhealthy “balance sheets,” and inability to reach industry-specific performance benchmarks.[13] Such was the chain of events that led to the second-wave PPP of Senegal’s water supply and sanitation services.

In 1995-1996, as part of a larger development policy produced in consultation with the World Bank, the Senegalese government delegated the management of water provisions (including the control and development of water and sewage infrastructures) to a private operator. After a two-stage bidding process between four French companies, the SAUR group (Société d'Aménagement Urbain et Rural) was granted the operating contract and 51 percent of shares in the newly created holding company Sénégalaise des Eaux (SDE).[14] The PPP has been consequently heralded as one of the most successful in sub-Saharan Africa.[15]

The narrative of success rests on semiotic constructs produced in evaluation reports. The following excerpt is taken from a 2011 report entitled “Water Supply and Sanitation in Senegal (Turning Finance into Services for 2015 and Beyond),” commissioned by the African Ministers’ Council on Water and developed by the World Bank–administered Water and Sanitation Program:

This brief introduction puts the service delivery pathway in context, which can then be explored in detail using the CSO2 scorecard, an assessment tool providing a snapshot of reform progress along the service delivery pathway. This scorecard looks at nine building blocks of the service delivery pathway, which correspond to specific functions classified in three categories: three functions that refer to enabling conditions for putting services in place (policy development, planning new undertakings, budgeting); three actions that relate to developing the service (expenditure of funds, equity in the use of these funds, service output); and three functions that relate to sustaining these services (facility maintenance, expansion of infrastructure, use of the service). Each building block is assessed against specific indicators and scored from 1 (poor) to 3 (excellent) accordingly. The scorecard results for Senegal show a positive situation, not only for enabling conditions (political, legal, strategic, and programmatic context), but also for sustaining services. The country’s performance as far as these two aspects are concerned is slightly higher than the average for Senegal’s economic peer group—low-income countries with a GNI per capita above US$500 (see Figure 3). As a result, Senegal is one of the countries often held up as a model within the West African subregion.[16]

The scorecard’s function is not so much to reflect reality as to target inter-institutional constructs and feed into standardized governance strategies, as well as investment briefs. NGOs and community groups, however, do question ground level realities, arguing that infrastructural improvements post-PPP have tended to benefit more visible and financially solvent urban dwellers at the expense of those in rural areas who have neither experienced considerable improvements in accessing clean water nor managed to keep up with the fees, leading to discontinuation of services.[17] In a similar vein, Aide Transparente claims that the steady increase in the usage of imported bottled water—previously associated with unnecessary luxury—is linked to the worsening quality of tap water.[18]

From "Conclusion for the European Public-Private Partnership (PPP) for Resilience scheme," The European Union Agency for Network and Information Security (ENISA), 2015.

From "Conclusion for the European Public-Private Partnership (PPP) for Resilience scheme," The European Union Agency for Network and Information Security (ENISA), 2015.

For critics, these ground-level realities show water to be an “uncooperative commodity” when its commodification does not lead to democratized distribution and better quality services.[19] Such critics argue that “in the South, [there are] virtually no examples in which pricing does the allocative- and efficiency-enhancing work that mainstream economics wants it to do.”[20] While that may be the case, it is equally important to emphasize that from an entrepreneurial perspective, water’s “uncooperative” status leads to market failures, increased risks and scarcity, all of which present new opportunities for businesses and financiers. In fact, “water-related” markets are increasingly on the investors’ agenda precisely because of the ground-level problems that such neoliberalized markets generate:

Recent years have seen an upswing in the demand for investments that seek to profit from the need for fresh, clean water. If the trend continues, and by all indications it will, investors can expect to see a host of new investments that provide exposure to this precious commodity and to the firms that deliver it to the marketplace. [For example, when] it comes to bottled water, the market is growing internationally. Demand is on the rise from China to Mexico, following in the footsteps of the spike in U.S. consumer demand. Estimates suggest that within the last ten years American per-capita consumption of bottled water has doubled—the average American drinks approximately 200 bottles of water a year.[21]

Financialization of water-related industry also means that concerns over clean water provision within a given local setting is superseded by concerns over the exchangeability inherent to financial circulation. “Nature […becomes] reconfigured conceptually, semiotically, materially, [in order] to be integrated into new accumulation regimes.”[22] To this extent, a trend worth highlighting that signals increasing incorporation into the transnational financial order is the proliferation of water-industry related price indexes since the early 2000s.[23] Through financialization, the market transitions away from the sphere charged with the authority to manage how resources are operationalized and allocated locally to become an index-generator for globally accessible portfolio investment opportunities. SAUR’s 2010/2011 sale of its SDE shares to Finagestion—a company owned by Emerging Capital Partners, a Pan-African private equity firm—is in line with these developments. It is worth noting that, with increasing financialization, social responsibilities at the local level become a collateral and optional concern.[24] Emerging Capital Partners is a signatory to the Principles of Responsible Investment (PRI)—a set of guiding principles advocating an “economically efficient, sustainable global financial system.”[25] The PRI framework, attached to a transnational membership body, was initiated in 2005 by then UN Secretary General Kofi Annan, developed together with a group of international investor institutions, and launched in April 2006 at the New York Stock Exchange. The self-referentiality of the PRI principles is both striking and indicative of governance under global financialization:

As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time).

We also recognise that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following:

1. We will incorporate ESG issues into investment analysis and decision-making processes.

2. We will be active owners and incorporate ESG issues into our ownership policies and practices.

3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4. We will promote acceptance and implementation of the Principles within the investment industry.

5. We will work together to enhance our effectiveness in implementing the Principles.

6. We will each report on our activities and progress towards implementing the Principles.

Echoing the CSO2 scorecard, “ESG issues” here functions in a similar black box manner. Local environmental and social issues are paid tribute to, but while becoming enmeshed and compounded into a cycle of self-delegated authority. The self-referentiality of the PRI framework is similarly indicative of the self-regulatory ethos that makes unchecked financialization so potentially hazardous. The question is particularly urgent given that futures markets and derivatives are the new frontier of water financialization. One such market platform in Australia called Waterfind, according to its website, “enables irrigators to trade water through a free, easy to use, online water exchange, or through an honest, experienced water broker.”[26]

III. From Privatized Public Assets to Socialized Finance

The transition to derivative and future markets encapsulates financialization’s peculiar tiering of realities and its privileging of financial circulation over local concerns of access and distribution.[27] As a financial instrument, the derivative is a contract whose value is determined in relation to its underlying asset, provided that the underlying asset is standardized and its prices are easily tracked. The nature of that relation does not, however, hinge on the productive potential of the underlying asset (a given resource or situation), but on its capacity to generate risk. In other words, the reality of the underlying asset—whether water, grain, weather, war, or another derivative—is only relevant insofar as it offers a mechanism for producing risks that may be abstracted, objectified, and traded.[28] To this extent, the integration of basic resources and operational infrastructures into the derivative/futures markets domain sends off alert signals even for those who have the most street-level understanding of how they work. As Frederick Kaufman has remarked, “we saw what derivatives did for mortgage-backed securities; [we] don’t want them doing that for water.”[29]

The current model of financialization is very much in line with neoliberal thinking and is predicated on privatizing gains from financial circulation and letting public institutions deal with its costs—as is clearly illustrated by state-backed bailouts of banks and the crippling knock-on effects that financial market crashes have had on even the most seemingly removed localities and situations. Yet, despite the very real dangers that financialization poses to some of the most basic resources in historically and geopolitically vulnerable contexts with uncertain futures, there is also a need to understand and recognize its potentially progressive aspects. As J. W. Mason has recently written, the project of socializing finance is not as crazy as it may sound on the surface.[30] Through finance, on the one hand, “money claims against social persons of all kinds—human beings, firms, nations—[are enforced] that extend and maintain the logic of commodity production.” On the other hand, “the financial system is also where conscious planning takes its most fully developed form under capitalism insofar as the banks’ […] lending decisions determine what new projects will get a share of society’s resources, and suspend—or enforce—the ‘judgment of the market’ on money-losing enterprises.”

Mason believes that “a socialist program must [at once] reduce the extent to which human life is organized around the accumulation of money [but also] embrace the planning already inherent in finance because we want to expand the domain of conscious choice, and reduce the domain of blind necessity.” Putting forward a series of policy proposals which revolve around de-commodifying money—and with it deflating the highly lucrative business of trading abstracted risks—Mason argues for politicizing the finance sector. If the nation-state has become a vehicle of private interests, why not make banks accountable vehicles of transnational public interest? For such a program to truly serve the interests of populations beyond the developed world, what also needs to be formulated is a vision of transnationalism that is cognizant of inherited power asymmetries and that explicitly works against their reproduction. 

Socializing finance equally requires a cultural project of semiotic reattachment to the underlying reality and a reconceptualization of what a socially-driven domestication of finance could mean. In the introduction to a recently published compilation of texts under the title Derivatives and the Wealth of Societies, Benjamin Lee locates an emancipatory potential in conceptualizing derivatives not through the prism of contractual obligations that are comprehensible to highly specialized insider groups versed in its technical lingo, but in a way that allows for a “cross-fertilization” of knowledge forms between different domains.[31] Arguably, the latter would work towards (re)establishing’s finance’s social function, and with it increase the chances of progressive replicable templates for negotiating our relationship with the most fundamental resources such as water to emerge.[32] It is high time for a template that cunningly denounces predatory financialization for private profit and lobbies for socially-driven financial planning that prudently orders the socio-natural fabric of this planet.

[1] See for example, Manuel De Landa, A Thousand Years of Nonlinear History (New York: Zone Books, 2009).

[2] Giovanni Arrighi argues that financialization is not unique to our times and in fact represents a generic transition from one geopolitically hegemonic formation to the next that may be traced via four epochs of capitalist rule: from the Italian city states to the Dutch to the British and the American. See Giovanni Arrighi, The Long Twentieth Century (New York/London: Verso, 2009), 14.

[3] Greta R. Krippner, “The Financialization of the American Economy,” Socio-Economic Review 3 (2005): 173–208; Christoph Deutschmann, “Limits to Financialization,” European Journal of Sociology 52 no. 3 (2011): 347–389.

[4] The USGS Water Science School,

[5] Ibid.

[6] Ibid.

[7] Consider melting icecaps, rising sea-levels destroying coastal aquifers, as well as droughts drying up rivers, lakes and soil. See for example Naomi Klein, This Changes Everything: Capitalism vs the Climate (New York: Simon & Schuster, 2014).

[8] Amartya Sen, Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford: Oxford University Press, 1983).

[9] Karl August Wittfogel, Oriental Despotism: a Comparative Study of Total Power (New Haven: Yale University Press, 1963).

[10] Julia Obertreis, Timothy Moss, Peter Mollinga and Christine Bichsel, “Water, Infrastructure, and Political Rule: Introduction to the Special Issue,” Water Alternatives 9 no. 2 (2016): 168–181.

[11] Fredrik Segerfeldt, “Private Water Saves Lives,” Financial Times, August 25, 2005,

[12] On the subject of “stacking up,” see Benjamin H. Bratton, The Stack: On Software and Sovereignty (Cambridge: MIT Press, 2016). On the subject of “multipliers” and their function of reproducing infrastructural arrangements across different territories, see Keller Easterling, Extrastatecraft: The Power of Infrastructure Space (London/New York: Verso, 2014).

[13] While it is clear that today all states are stages upon which the interests of various power holders are battled out—interests that are divorced from the basic values of liberal democratic rule—for states that have emerged from colonial rule or splintered off from larger state formations this condition is exacerbated by the unchecked power of local elites and the business opportunities they present for external actors.

[14] The other companies were Générale des Eaux (now Vivendi Environnement), Lyonnaise des Eaux (now SUEZ), and CISE (which has since merged with SAUR). Despite controversy surrounding SAUR’s pre-existing relationships with the Senegalese national water company, Société Nationale des Eaux du Senegal (SONES), the World Bank insisted on not disqualifying SAUR for that reason.

[15] “Water Supply and Sanitation in Senegal: Turning Finance into Services for 2015 and Beyond,”

[16] See

[17] Hawa Ba, “Water Privatisation in Senegal,” Pambazuka News, July 06, 2006,

[18] Ibid.

[19] Karen Bakker, An Uncooperative Commodity: Privatizing Water in England and Wales (Oxford: Oxford University Press, 2003).

[20] Obertreis et al., 170.

[21] See James E. McWhinney, “Water: The Ultimate Commodity,”

[22] Obertreis et al., 170.

[23] McWhinney, “Water.”

[24] There is of course a historical precedent to this. Human rights treaties and Millennium Development Goals were at once key references in pushing for various development frameworks and agendas, yet simultaneously were sidelined as criteria according to which specific policies were to be held accountable. 

[25] See the “Principles for Responsible Investment,”

[26] See

[27] Benjamin Lee and Edward LiPuma, “Cultures of Circulation: The Imaginations of Modernity,” Public Culture 14 no. 1 (2002): 191–213.

[28] Lee and LiPuma, “Financial Derivatives and the Rise of Circulation,” Economy and Society 34 no. 3 (2005): 404–427.

[29] Brandon Keim, “Public or Private: The Fight Over the Future of Water,” Wired, October 25, 2012,

[30] JW Mason, “Socialize Finance,” Jacobin, November 28, 2016,

[31] Benjamin Lee, “Introduction” in Derivatives and the Wealth of Societies, eds. Benjamin Lee and Randy Martin (Chicago: University of Chicago Press, 2016), 13. Lee considers finance through the prism of gifts and counter-gifts that “[connect] previously independent flows and exchanges’ and allow for the production of ‘new forms of social wealth.” He argues that “both the gift and the derivative are ways of creating new claims and obligations by performatively creating equivalences between ‘value flows’ that are in principle different.” Lee alludes to Marcel Mauss’ discussion on the Maori term hau that stands for ‘the principle of vitality and productivity’, based on the idea that benefits derived from re-gifting need to pay tribute to their source: “If A gives something to B and B gives it to C who uses it to produce some surplus, some of that ‘profit’ should be returned to A. In this seemingly dividualised ‘primitive’ exchange there is the outline of a lesson for our age of the derivative. Neoliberal policies deregulated and privatized the wealth produced by derivatives that tapped future cash flows and turned them into present assets. The message behind hau is that some of the wealth produced by exchange should go back to its source to ensure future fecundity for all.”

[32] Ibid.

Victoria Ivanova is a curator, researcher, and writer living in London, UK. Having previously worked in the human rights field, in 2010 she co-founded a multidisciplinary cultural platform in Donetsk, Ukraine, which critically explored the intersection between activism, education, and artistic research. Ivanova is one of the founding members of Real Flow—a research and development platform for socializing finance. Her practice is largely informed by systems analysis and her interest in infrastructures as mechanisms for shaping and (re)producing socio-economic and political realities. Ivanova's recent publications include ‘Art’s Values: A Détente, a Grand Plié' in Parse 2: The Value of Contemporary Art (2015), ‘Novelty Intermediation and the Future of Accelerationist Politics’ in Reinventing Horizons (2016), ‘Fractured Mediations’ in The Time-Complex. Postcontemporary (2016), and ‘Contemporary Art and Financialisation: Two Approaches’ in Finance and Society (Art and Finance issue, 2016). Ivanova is currently completing her PhD at the Centre for Cultural Studies, Goldsmiths.