Altruism versus Profit: The Challenges of Clean Water in’India
Lack of safe drinking water is a global issue. One of the United Nations Millennium goals is to “halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation.” Climate change has made this goal difficult to achieve, and the updated 2030 UN Sustainable Development Goals require investments in infrastructure, sanitation, and increased education. By 2050, water shortages are projected to impact 25 percent of the population.
Water is needed every day, several times a day, by all people. This makes long-term sustainability critical to any water project. A recent study in rural India found that 82 percent of the villagers collect water from a well or a pond, travelling up to one kilometer each time. This is a low prestige task most often done by women and girls. Over 70 percent of the surface water in India is contaminated and in many cases have been rendered unsafe for human consumption. This inaccessibility and increased pollution continues to be a serious health and economic issue in India and globally. UNICEF found that unsafe water worldwide causes four billion cases of diarrhea annually and “in India alone, the single largest cause of ill health and death among children is diarrhea, which kills nearly half a million children each year.”
The water crisis in India has been addressed in several ways, but with limited success. One of the solutions for water problems includes retail for-profit water sales and buying from mobile suppliers. Both Coke and Pepsi bottled waters are present in shops and restaurants in India through their Dasani and Aquafina brands, as are a variety of local providers, all part of the $300 billion global bottled water industry. However, the World Resources Institute report finds that bottled water comes at a significant price penalty compared to surface or piped water systems. Studies show mobile distributors charge up to ten times more than public utilities. Unfortunately, India faces many “basic service” issues and a fully functioning water system is very costly.
In addition to large, for-profit companies distributing bottled water in India, several socially responsible companies are also exploring the water filtration market in India. One example is WaterHealth International. They were profiled in Inc. magazine as the “Do Good Capitalist of the Year” in 2007. Water-Health installs a water filtration system and offers financing to local villages to purchase their water center packages. The villages then repay their loans with the profits of the water sales. However, many critics express concern at the expense of the WaterHealth Systems. Initial cost and financing issues are challenges for rural India and many areas trying to expand access to clean water.
Another developing for-profit enterprise is Hyderabad’s Waterlife. It is a franchise opportunity that offers a franchisee the ability to pay Rs. 30,000 (approximately Rs. 45 per US dollar) for the right to sell water at Rs. 5 per 20 liters; the franchisee keeps Rs. 2 per 20 liters for themselves and pays Rs. 3 to Waterlife. Gaurav Dwivedi, author of Public-Private Partnerships in the Water Sector; Partnerships or Privatization, writes that these for-profit enterprises “are being designed to enhance private profits without taking any serious responsibilities for extending coverage, or improving efficiency.” One concern in letting the market decide water access is that large areas of rural India will be left without coverage as they continue to face poor health and continued poverty. According to one KPMG study, only 32 percent of the rural population in India has access to safe water, in contrast to 73 percent of the population in large cities who has access. The challenge of assuming the private market will respond is that it is not lucrative enough to help the poor and the rural areas. The challenge in waiting for governmental response is that even more urgent social and economic issues overwhelm the priorities of the Indian government.
Nonprofit organizations are also attempting to address the water crises. One such organization is the Byrraju SWEET (Safe Water for Everyone using Effective Technology) water project, which was started in 2004. To build a water treatment plant, a village contacts the Byrraju Foundation and submits an application; residents are then asked to raise or donate 75 percent of the total plant, building and equipment costs, approximately $15,000. Byrraju adds the remaining loaned funds and provides expertise, supervision, and quality control. The village hires at least two residents to run the facility and offers a delivery route to enterprising entrepreneurs who earn a commission with each delivery. The water treatment plant is a “shared investment” between the foundation and the village. The village pays a percentage of sales to Byrraju for the 25 percent initial cost and for continued maintenance and water quality testing. This allows the “loan” to be paid back and villagers to have continued access to technological resources. Currently, they have nearly 60 water plants serving 1.2 million people.
However, the Foundation has been controversial. Ramalinga Raju, CEO and founder of Satyam Computer Services, founded the foundation in 2001, and over 90 percent of the Byrraju Foundation’s funding has historically come from Raju and his family members. Satyam was one of the top companies in India, employing over 30,000 people. Nevertheless, in January 7, 2009, Raju confessed to accounting fraud at Satyam and falsely reporting over a billion dollars in profits. Even in light of his well-known philanthropic efforts, per an article in the Indian Express. Raju was sentenced to, and is serving, seven years in jail. The Foundation continues to provide clean water to the villages with established water systems; however, it has been unable to expand due to its limited donations and fees.
Questions for Discussion
1. Looking at the options for addressing India’s water crisis, how do these reflect community partnerships and/or strategic philanthropy?
2. The Byrraju Foundation requires the village to donate funds. Is this a good strategy? Why/Why not?
3. Per the United Nation’s report, India’s water quality ranks 120th among the 122 rated countries in terms of quality water available to its citizens. What are the challenges to addressing environmental issues in emerging countries, and how does that differ from developed countries?
4. What are the differences in nonprofit versus for profit organizational forms of business when addressing these types of social problems? Is market demand the best determinant for basic necessities?
5. Which of the five stakeholder groups might have the most power to address social problems in developing countries, especially when there is instability in the government due to transitions, crisis, or corruption?
6. Corporate philanthropy has become more globalized and international development has seen increased funding even through recessionary times. Why are MNC’s interested in international giving?
