Corruption in Water Costs Billions of Dollars, Hits Poor the Hardest – Global Report

To compensate for the losses caused by corruption, Transparency International reports that an additional $45 billion would have to be invested over the next decade in order to reach the Millenium Development Goals, particularly increasing the access to safe water.


The Transparency International’s “Global Corruption Report (GCR) 2008: Corruption in the Water Sector” reveals corruption costs billions of dollars and hits poor the hardest.

Organized by IBON Foundation and Water Integrity Network (WIN), the East Asia forum launch of the TI report was held October 24 in Makati City. The GCR was previously launched in New York City, USA and in the Netherlands.

Priya Shah, assistant programme coordinator of the WIN, shared the highlights of the GCR 2008.

WIN is a network of individuals and organizations that are able and willing to support the cause of increasing Water Integrity. It has over 650 members in more than 50 countries.

Shah said corruption manifests in all of the areas of the water sector – water resources management, water and sanitation, water for food, and water for energy.

The GCR contains over 30 country reports.

According to the report, corruption jacks up the cost of water services between 10 to 30 percent globally each year.

Shah said that illegal payoffs increase the cost and lower the quality of public works projects by between 30 to 50 percent. Government monopolies inflate the prices for goods by as much as 15 to 20 percent as a result of illicit gains. Governments can pay prices inflated anywhere from 20 to 100 percent for expensive goods and services due to over-billing of procurement contracts.

Renaud Meyer, United Nations Development Programme (UNDP) country director, said that more than US$1 trillion (US $1,000 billion) are paid in bribes every year, just over three percent of world income in 2002.

More than 70 percent of small and medium enterprises in transition economies perceive corruption as an impediment to their business, he added.

In Africa, $148 billion leaves the continent every year because of corruption.

Shah cited unchecked water pollution and overuse in China and Spain; embezzlement and bid-rigging in large infrastructure development projects in India, Lesotho; embezzlement of water budgets in Paraguay, distorted distribution of water points in Malawi, inflated costs of infrastructure in India; local water mafias control supply in Ecuador and Bangladesh; water jobs awarded through patronage or bribery in Mauritania; bribery and extortion in bill collection, repair works in Kenya and Zimbabwe.

She said that corruption in irrigation contracts makes up to 25 percent of the contract volume in India and there are distorted subsidies where largest farmers collect disproportionate share of earnings in Mexico and US.

Hydropower, said Shah, attracts US $50 to 60 billion annual investments. The report reveals distorted environmental impact assessments in India; embezzlement, bribery, bid-rigging in construction in Argentina and Paraguay; fraud and manipulation in resettlement and compensation programmes in China, Indonesia and Zambia.

To compensate for the losses caused by corruption, TI reports that an additional $45 billion would have to be invested over the next decade in order to reach the Millenium Development Goals, particularly increasing the access to safe water.

Shah identified the fundamental characteristics of corruption in the water sector. These are: public officials have wide discretion and little accountability; lack of checks and balances; weak enforcement mechanisms; the benefits of corruption are greater than the consequences of being caught and disciplined; and, demand for accountability for services is usually missing.

Meyer, of the UNDP, cited the human cost of the water crisis. He said that some 1.8 million children die each year as a result of diarrhea—which is 4,900 deaths a day. This is equivalent to the under-five population in London and New York combined. Deaths for diarrhea in 2004 were about six times greater than the average annual deaths in armed conflict for the 1990s.

He added that 443 million school days each year are lost to water-related illnesses.

Millions of women spend up to four hours a day collecting water. Almost 50 percent of all people in developing countries are suffering at any given time from a health problem caused by water and sanitation deficits, he said.

Meyer said anti-corruption strategies can help guarantee the right to water, ensure access to affordable and safe water services by the poor, help reduce the risks on the environment and provide energy security and help reduce the impacts of climate change and impending food crises.

Shah said there is a need to forge actor alliances as the stakes are high and to empower local communities. (


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