1. The Issue

The European Commission has proposed the establishment of a European Water Network that would allow "dry" regions in Southern Europe access to the sources of water-rich countries like Austria. Trade in water is most likely to take either of two routes, bottles or pipelines, both of which are not unprecedented. However, given the specific nature of this natural resource, its redistribution proves to be a highly contentious issue. Water use, management and ultimately trade thus have deeply reaching legal, economic, political, environmental and cultural aspects that bring about justified societal debate which can prolong and hinder the implementation of any projects for the improvement of European water supply. How will Austrian policy makers and society at large respond to the challenges that potential fresh water export would pose? Is water trading sustainable both economically and environmentally? Answers to those questions will be found in the future but future outcomes are determined by our present actions.

Water. Some call it "white gold" and    for a good reason. Fresh water amounts to less than half percent of all water    on Earth. The United Nations estimates that one billion people already lack    access to fresh drinking water. More than five million people, most of them    children, die of illnesses caused by drinking poor quality water. At the same    time North Americans use about 5000 liters of water per person per day.   

Obviously, fresh water is not only scarce but also unevenly distributed. Europe is clearly an example. The following map shows the intensity of water use, i.e. the the proportion of water abstracted in relation to resources. It is easily observed that Austria belongs to the reagion with the lowest water use intensity, whereas most of the rest of Europe is in the middle range and some Southern countries are even at the highest end of water abstraction in relation to availability of resources. (Map Source: Eurostat Free Data)

These facts undoubtedly contribute to the perception that Austria could become the "Saudi Arabia of water" like Vienna Greens spokesman Christoph Chorherr said. Corporations in Austria are particularly keen to explore this opportunity. Notably, the national company Verbund, which hopes to reap the benefits from the liberalization of water, says annual turnover from Austria's water is currently worth 530 million Euros ($451.1 million). The growing demand for fresh water as well as the cutting edge technology and know- how of Austrian companies could indeed turn water into a highly profitable business with a value of billions of dollars. Water industry's appetites are evident in a statement made by the deputy chairman of Verbund, Herbert Schroefelbauer and cited by The San Diego Union-Tribune. "In theory we could supply everyone in the European Union, all 370 million of them. We could supply the EU with all kinds of water - be it surface water, which needs treatment, or well water".1

However, liberalization of the water market is not limited to the issue of economic benefits and corporate interests do not necessarily coincide with the opinions of other relevant actors. For example, so far there is not much support for "opening up" the water industry at the municipal or communal level. Liberalization of the drinking management is an especially sensitive area because it will transfer the control of water supply from communal to private entities. Therefore, the OVGW (the Austrian Association for Gas and Water), as representatives of the domestic drinking water management are particularly concerned about the damage that such a reform could cause. They argue that the cost effectiveness strategy of private enterprises might have various adverse consequences. The quality of the drinking water network will probably suffer (deterioration of infrastructure, inability to control quality when more than one supplier feeds water into the same system). While introducing competition in this industry will cause the deterioration of the otherwise excellent water quality, it will not drive a corresponding drop in prices.2 In addition, water markets are worldwidely controlled by several huge corporations (TABLE Global Leaders in Water). Selling off drinking water to them would mean that consumers will probably bear the costs of new investment and the public water supply would be in danger.

A similar argument is made by political parties. This is what some of them answer to the question asked by Aqua Press International. 3

"In your opinion, how should domestic water management and wastewater treatment be structured in the future?"

Glawischnig: (Austrian Green Party) "For me, both are regional and communal key tasks and this should not change! We do not oppose increasing professionalism and mergers that make sense, but our small structures should principally be maintained. My party will continue to oppose the outsourcing or privatization - mainly by information campaigns."

Schnattinger: (Social Democratic Party) "For the Social Democrats, water supply and wastewater treatment is a central task of the communes. Mergers have already taken place wherever they were necessary - e.g. in the form of wastewater associations. I have the feeling that problems are being artificially created! In addition, this is a subject, which is decisive for communal budgets. But when or how investments are to be made must not be decided in Frankfurt or Paris."

Fallent: (Freedom Party) "Future-oriented water supply and wastewater treatment using established technologies would be adapted to the structures and needs of people. My favored variants are, of course, near-natural solutions."

Clearly these views favor local ownership and management of water supply and are in contrast to the position of the Federal Government and the representatives of the water industry. Besides the obvious economic and trade ramifications of drinking water management, many of the expressed positions in the emerged water debate in Austria are underlied by the environmental, historical and cultural value of water. The significance of these aspects is evident in the way Vienna manages and protects its water supply.

Vienna is one of the greatest beneficiaries of Austria's abundance in high quality drinking water. Nearly a 100 percent of the water supply in Vienna comes from the pristine springs of the Alps - Lower Austria and Styria. Two hi-tech pipelines with a total of 270 km deliver around 400 000 m3 daily from the mountains of Schneeberg, Rax and Schneealpe (First Spring water main) and Hochschwab (Second Spring water main). The 32 Viennese reservoirs have a total reserve capacity of 1 650 000 m3 (which equals three times the daily consumption). 4

Water abstraction and transportation is carefully guarded both by federal and municipal laws and regulations. Vienna is the only city in the world that protects its drinking water under Constitutional Law, by means of the Vienna Water Charta (December 2001). Drinking water supply in Vienna is part of the Vienna Municipality and is governed by the respective Vienna Water Supply Law. Under the federal Water Law, the Viennese Waterworks, is authorized by binding decisions to withdraw certain quantities of water from specifically defined springs and wells for supply purposes. The organization won the IWA International Water Award for 2001, an award which covers the fields of supplying and liquidation, operation, production, science and universities. 5

The two pipelines are also characterized by their high environmental standard. For example, the difference in altitudes allows the natural transportation of water through the network of tunnels without the use of a single pump station. In addition, no cleaning stations are used either because of the extensive measures protecting the quality of the Alpine springs.

In addition, spring water may only be abstracted for water supply and use in hydropower stations if the ecosystem of the surface waters will remain unaffected even under low water level conditions. This implies that only part of the minimum water level resources is available for use. Recently a new emphasis is being placed on karst rocks and caves research because scientists have recognized the importance of the state of those rocks for the quality of spring water.

Alpine spring water has been valued by Austrians in earlier centuries and water supply constructions in Vienna date from as early as 1804 when the "Duke Albert water pipeline" was built. It was the first large-scale water transportation solution, followed by the "Emperor Ferdinand water pipeline" in 1814. In 1869 - 1873 the 1st Spring water main was designed and constructed and in 1900 - 1910 - the Second one. Between 1964 - 1966 the Lobau waterwork came into existence. It now serves a supplementary purpose and is operated only when requested but initially it was used as a continuous municipal supply of water. It is situated within the nature protection zone and the national park of the Danube wetlands. The long tradition of water projects in Vienna attributes water further and more symbolic importance. 6

Monuments all around the city are emblematic testimony to this. The Favoriten Water Tower, which supplied the city with its drinking water before the construction of the Second Spring water main, is now a popular attraction. The Old Installation Chamber today is transformed into a modern conference hall. The beautifully decorated Hackenberg Water Reservoir offers a magnificent view of the city, and Vienna's drinking fountains can be found all over the city. Designed by the sculptor Hans Muhr, they are all unique but they share one common feature - the letter "W" is formed by water jets and stands for Wien, Water and Waterworks. 7

Conclusion

Water is vital for human beings. Because it is scarce, some see it as a very profitable business and some see it as a finite resource that has to be conserved. These are probably two extreme views that show that the answer to the question should we sell our water or should we preserve it is somewhere in between. We live in a unique era that saw the birth of extraordinary inventions which go beyond the limitations of human beings - we can travel with the speed of sound, we can observe events that happen on the opposite side of the globe, we can even walk on the moon. And yet, it is precisely in this extraordinary time that we have not discovered how to deal with the persisting problems of hunger, poverty and war. And simple things such as thirst! Economic progress and development have changed people's lives enormously but it seems that, as much as we alter and manipulate our environment, we will never be able to sever the link between nature and human beings. Of course, by the laws of the modern world you can trade anything that is yours, and especially so, if there is a demand for it. However, how you trade it and at what price is a completely different matter. After all, who is paying nature back? Next time you have a refreshing sip of water appreciate it. Cheers!

The case of a possible drinking water exports is linked to the issue of privatization of water utilities in Europe, and Austria in particular, and therefore, to the issue of ownership. Austria is a peculiar case.

The Austro-Hungarian water right, amended in 1934 stipulates that the following waters are private and "belong", if no other vested interests exits, to the property owner:

• the water under the surface of a property (groundwater) and the water springing form a property;
• the waters accumulating on a property from atmospheric precipitation.

The owner's right of disposition of these private waters encompasses the right to exclude others from its use. Claims that this provides an easy way for foreigners to utilize the waters that are constituent of the property they own are not justified. The utilization of ground water and spring water beyond an insignificant extent (extraction by manual pumps or scooping) is subject to authorization that takes into account environmental considerations as well as public interests considerations.8 Therefore, Oberleitner believes that "there are not many arguments in favor of giving up the private character of groundwater and spring water. Water as a public good would lose much of its value in the awareness of the general public. The inevitable consequence would be a detrimental effect on the protection of waters. For example, waters administered by the Austrian Federal Forests are not public but the regulations for public waters apply.9

6. Forum and Scope: WTO and Regional

Currently trade in bulk fresh water is under the disciplines of GATT. Article 11 already rules out any quantitative restrictions on the export of a good, but allows tariff measures, such as taxes or dual price systems. 10

No prohibition or other restriction other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by an contracting party on the importation of any product or any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

GATT contains rules for environmental exceptions for exhaustible natural resources that justify violations of Article XI of GATT

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures;
... (g) relating to conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production and consumption;"

But the new text proposes to do away with such export controls, making it illegal to restrict the export of bulk water for commercial purposes. Some argue that if such provisions are agreed upon in the GATT and GATS, this could significantly limit governmental control over water exports and environmental standards for water. Water privatization will reward polluter companies and allow them even greater profit maximization at the expense of higher prices and polluted environment. For example, in the UK seven out of the ten most prosecuted polluters in 2000 were water companies.11

7. Decision Breadth:All WTO members, EU member states

8. Legal Standing: Law

III. Geographic Clusters

Basic economic indicators

GDP	1.2% (2001)
Inflation	2.6% (2001)
Unemployment	4.8% (2001)

Composition of the economy

GDP composition by sector	agriculture - 2% industry - 29% services - 69%
Industries	construction, machinery, vehicles and parts, food, chemicals, lumber and wood processing, paper and paperboard, communications equipment, tourism
Agriculture products	grains, potatoes, sugar beets, wine, fruit; dairy products, cattle, pigs, poultry; lumber

Trade Indicators

Exports	$70 billion (2000)
Export commodities	machinery and equipment, motor vehicles and parts, paper and paperboard, metal goods, chemicals, iron and steel; textiles, foodstuffs
Export Partners	EU 63% (Germany 35%, Italy 9%, France 5%), Switzerland 5%, US 5%, Hungary 4% (2000)
Imports	$73 billion (2001)
Imports commodities	machinery and equipment, motor vehicles, chemicals, metal goods, oil and oil products; foodstuffs
Imports partners	EU 68% (Germany 42%, Italy 7%, France 5%), US 6%, Switzerland 3%, Hungary 2% (2000)

Source: CIA, The World Fact Book- Austria

19. Exporters and Importers: Austria and Many

Leading Austrian companies in the bottled water industry

Alpquell	Güssinger	Römerquelle
Alp's	Gasteiner	Severinquelle
Aqua Austria	H2O Alps	SilberQuelle
Aqua Pannonia	Juvina	Sound of Alps
Aqua Styria	Long Life	Spa Line
AquaLine	Markus Quelle	Sulzegger
Aubad-Quelle	Montes Austria	Vöslauer
Fontana di Dio	Oxygizer	Voslauer
Fonte Randa	Peterquelle	Waldquelle
Frankenmarkter Mineralwasser	Preblauer	Walter

V. Environment Clusters

27. Rights: No

28. Relevant Literature:

"Austria rich in high-quality water," the San Diego Union-Tribune, Novemeber, 4

Aqua Press International

Maude Barlow, "Don't Swallow Their Water Grab"

Water Pressure Group NetNews, "WTO Plans Mass Water Sell-off", 2 Nov 2001

Eurostat

CIA

ExxUN.com

29. Endnotes:

1. "Austria rich in high-quality water", The San Diego Union-Tribune, San Diego, November 4, 2000

2. OVGW, "Liberalization of Drinking Water Management," Aqua Press International

3."Water Discussion - the Sides are Taken," Aquapress International

4. Aquapress International, www.aquapress.at

5. Aquapress International, www.aquapress.at

6. The Vienna Waterworks Municipal Department 31, "A Short History of Water Supply in Vienna", Aqua Press International

7. "Viennese Watermarks", Aqua Press International

8. Dr. Franz Oberleitner, "Who is the Owner of Groundwater," Aqua Press International

9. Friends of Nature, "The Subtle Difference between Public and Private Waters," Aqua Press International

10. Maude Barlow, "Don't Swallow Their Water Grab", http://www.commondreams.org/views01/1130-03.htm

11. Water Pressure Group NetNews, "WTO Plans Mass Water Sell-off", 2 Nov 2001, http://www.water-pressure-group.org.nz/gats.htm

All images are courtesy of Austrian Views