Champagne for a pittance

News reports indicate that farmers in Parkejuli village in Assam pay Rs 21,000 to their counterparts across the border in Bhutan for using water from rivers flowing from the Himalayan Kingdom. The practice reportedly dates back to 1956 when the annual tax was just Rs 100. The rate of payment has since been revised several times. It seems there is an unwritten obligation on the part of the downstream users to pay their upstream counterparts for sustained supplies.

Unlike most city dwellers, Parkejuli inhabitants do not take the water that flows downstream for granted. In most cities across India water is ferried from distant watersheds to meet the growing demand. Quite often, neither is consent sought from local inhabitants for such transaction nor is payments made for the services they render. The crucial question is whether robbing Peter to pay Paul is justified in a market-driven economy?

Based on multi-location studies in eight countries the book has attempted to examine the issue of payment for watershed services from social, economic, legal and institutional perspectives. There are mixed evidences though. Payment for hitherto unrealized ecosystem services brings into the open the potential winners and the likely losers, setting the stage for a negotiated settlement to create a win-win situation. Without doubt, the payment schemes seem difficult to set up.

However, the Catskills-Delware watershed has sustained a large chunk of the 4.5 billion litres of daily supply of water to 9 billion people in the New York City on 'payment for ecosystem services' principle. Considered 'champagne' of drinking waters, the quality started deteriorating in the early 1980's due to intensification of farm activities in the watershed. It was estimated that to maintain water quality, the city would need to invest $ 6 billion in setting up a treatment plant.

The New York city instead struck a deal with the farmers, paying for pollution control investments on each farm. Between 1990 and 1993, 93 per cent of landholders in the Cat-Del watershed had signed up the program at a cost equivalent of about 11 per cent of the proposed treatment plant. New Yorkers have retained their champagne drinking water at a fraction of the cost of treatment. Curiously, exceptional cases like these have yet to inspire replication.

The case of New York city indicates that ensuring buyers alone may not be sufficient to set the system rolling. What the buyer pays for and what the seller gets may not be enough, the challenge is to ensure that watersheds get a fair deal....Link

Fair deals for watershed servicesby Ivan Bond & James Mayers 
IIED, London, 112 pages, $ 18

Charity begins at home

At about the time when Indian government had shut door on some of the leading development donor agencies, philanthrocapitalists of all hues had mushroomed to fill the gap. Driven by corporate profits, such foundations promise to save the world by bringing the magic of the market to philanthropy. That business-is-best philosophy has been seductively presented to remove the messiness of social change. And no one seems to be complaining.

But Michael Edwards considers it an attractive proposition that is also a dangerous mirage. After all, if business wants to save the world, there are plenty of opportunities to do so at the heart of their operations: pay taxes; pay decent wages; don't produce goods that kill; and follow government regulations. Ironically, businesses evade $385 billion a year of corporate tax in developing countries, far more than what flows as foreign aid.

Small Change is a tiny volume filled with incredible insights on philanthropy, civil society and social change. A must read for all those engaged in the business of social change, the book argues that solutions to complex social and political problems have to be fought for and negotiated - not produced, packaged and sold. Unless a social space free of external influences is preserved, people cannot hold government and business accountable for their action.

The non-profit sector may be getting larger, but it is becoming weaker due to increasing corporatization of non-profit groups. By reducing non-profits to the role of service providers, businesses have not only avoided areas that are essentially unprofitable for them but have also distanced the non-profits from their prime role of addressing inequality and individual alienation, which has essentially been the creation of capitalism.

Having spent three decades in the nonprofit sector, Edward backs up his argument with some clear logic that holds one's attention with a lot of interesting stories. The metrics-driven methodologies of the business world have failed more than once. For instance, the Gates Foundation has admitted that its $258 million investment in AIDS control in India has achieved none of its goals and is too expensive to be handed over to the government.

However, the story doesn't end here. A World Health Organization official had complained in 2008 that it was no longer possible to find independent reviewers for research proposals because they were all on the payroll of the Gates Foundation. It is no accident but part of a deeper conspiracy. By violating regulations and evading taxes the capitalists amass wealth, a portion of which is directed for social causes that in turn helps appropriate policies. A win-win scenario!

Digging deeper into the world of corporate philanthropy, Edwards contests the dubious claims of the 'philanthrocapitalism' espoused by Michael Bishop, the so-called 'creative capitalism' offered by Bill Gates, the 'fortune at the bottom of the pyramid' of C K Prahalad as guises to legitimise window dressing by corporate social responsibility and social entrepreneurship that address symptoms rather than root causes.

If you wish to get insights on how businesses are corrupting governments and the civil society, Small Change could make a thoughtful beginning.....Link

Small Change: Why Business Won't Save the World
by Michael Edwards 
Tata McGraw Hill Edition, New Delhi, 125 pages, Rs 299.