In March 2023, the UN 2030 Water Conference brought together international financial institutions, wealthy donor countries, philanthro-capitalist foundations, and private investment firms seeking new investment opportunities in water and water-related services (Heller et al., 2023). Within the context of the UN Sustainable Development Goals, these ‘opportunities,’ which are promoted as solutions to critical socio-environmental and developmental challenges, disproportionately target vulnerable communities in the Global South and the sources of water they rely on.

Although financialization is neither new nor unique to water, we are deeply concerned about emerging efforts to expand and intensify the role of finance capital in the management and distribution of a resource that is so vital to life. Here, we offer our analysis on these emerging threats as organizers and researchers who have been deeply embedded in water justice networks. These networks unite the grassroots movements, frontline communities, workers, critical researchers, and solidarity NGOs that are part of struggles to reclaim “water for life, not profit” (Murray et al., 2023). 

The characteristics that make water central to our vision of a just, equitable, and sustainable world are the same ones that have made it increasingly attractive to global finance: There can be no life without water; it is finite and has no substitutes. Demand for water continues to grow across all spheres of human activity. Yet, finance-driven initiatives are often less visible and legible to social movements than the activities of brick-and-mortar corporations. From a water justice perspective, we are concerned with questions of power. We are alarmed by the way financial actors are seeking to transform hydro-social relations – our relationships with and through water – by bringing them under the control of financial markets.

Water defenders around the world are at the frontlines of struggles against global capitalism, whether they are fighting the expansion of oil and gas pipelines that threaten rivers and aquifers (Estes, 2019), preventing mining projects from poisoning their freshwater supplies (Shiva, 2002), or reclaiming water and sanitation systems from multinational corporations (McDonald, 2012, 2019). Over the past two decades, water justice networks, including La Red Vida in Latin America, the Africa Water Justice Network, the European Water Movement, and the global coordinating platform the People’s Water Forum, have built the connective tissue among frontline communities and have amplified local struggles, strengthened grassroots capacity, and fostered global solidarity.

Given this background, our participation in Reclaiming Futures: Water Sovereignties contributes to the efforts of our networks to build literacy on water financialization among frontline water justice organizers, support the identification and monitoring of local impacts, and cultivate collaborative research with critical water scholars. By critical water research, we refer to scholarship that makes visible the power dynamics shaping systems and processes that produce unequal hydrosocial outcomes. 

In this essay, we examine the role of market-based environmentalism, or blue-green capitalism, in facilitating the financialization of freshwater sources. We highlight instances of blue-green capitalism rolled out in Latin America that have subsequently been replicated in other parts of the world. As a way forward, in the final section, we reflect on the creative and life-affirming practices of communities resisting water dispossession.

Defining water financialization

Broadly, water financialization refers to a range of processes aimed at turning water services and water resources into financial assets (Bayliss, 2014). It also denotes the expanding power of financial actors and instruments in water-related services, water infrastructure, and sources of freshwater (Reis et al., 2024; Allen and Pryke, 2013).

Amidst the conceptual fuzziness in the proliferating literature on the growing influence of financial actors, institutions, and processes across all spheres of life, critical water scholars emphasize the role of “interest-bearing capital” in what they refer to as the financialization of water (Allen and Pryke, 2013; Fine, 2014; Bayliss et al., 2017; Loftus et al., 2018). They define financialization as the advancement of interest-bearing capital in anticipation of returns from the future earnings of productive capital. Loftus et al. highlight the impacts of revenue extraction in the form of rents, or, in other words, value derived from new streams that are not tied to the production of goods or services. 

Recognizing the challenges of taming complex and unruly hydro-social relations to the needs of global finance, the World Bank, OECD, and the newly launched Global Commission for the Economics of Water advocate for performance-based financing strategies. These strategies pressure loan recipient countries to create enabling conditions and take precursory measures to lower investment risk and enhance the potential for stable revenue streams from water-related investments (see, for example, Khemka et al., 2023). Among other reforms, proponents of water financialization are pushing loan recipient and aid-dependent states to corporatize urban water and sanitation systems, establish market-based resource allocation, and create intermediary institutions to shelter commercial investments from political risks (Karunananthan, forthcoming.)

The finance sector’s expansion into water and sanitation infrastructure is well-documented by a substantial body of critical water research (Allen and Pryke, 2013; Bayliss, 2014; Loftus et al., 2018; Pryke and Allen, 2019). However, as Reiss et al. (2024) note, there has been significantly less research regarding the mechanisms through which freshwater sources are being captured by financial markets.

Latin America: An incubator for blue-green capitalism

Latin America’s rich natural landscapes and socio-political histories have positioned the region as an important site of experimentation for market-based water governance models that facilitate the transformation of freshwater sources into financial assets.

For instance, water markets, long championed by the World Bank as an efficient way to allocate scarce resources (see Easter et al., 1999) were first established in Chile, which became a laboratory for the most extreme neoliberal experiments following the US-backed coup in 1973. Pinochet’s 1981 Water Code enabled state-issued water rights to be sold and resold without public oversight (Budds, 2020; Bauer, 2004). Once all rights to a water source are allocated by the state, those seeking access to surface or groundwater are required to purchase rights from existing owners through the water market (Budds, 2020; Bauer, 2004). Urban drinking water utilities compete to outbid mining companies and big agribusiness over rights to water (Molina Camacho, 2016). While extractive industries and commercial agribusiness have benefited, Indigenous communities, whose traditional rights are not recognized by the system, have lost control over water sources on their territories (Molina Camacho, 2016). The injustices produced by water markets are part of the ongoing legacy of a violent military regime that enshrined the primacy of property rights while running roughshod over human rights and Indigenous self-determination.

Water markets have since emerged and taken on new forms in various locales. California’s experiments with water markets demonstrate their role in rendering water more legible to financial markets (Moore, 2024). The allocation of water usage rights through markets in California paved the way for the world’s first water futures market on the Chicago Mercantile Exchange in December 2020, allowing investors to speculate on the future price of California water rights (Food and Water Watch, 2021; Moore, 2024).

Although water markets are the exception, not the norm in Latin America, the region has been as a testing ground for other predatory models of market-based water conservation that are being replicated elsewhere in the world, including debt-for-nature swaps and water funds. Both use payment-for-ecosystems services (PES) schemes to establish “market or market-like exchanges” in freshwater ecosystems (Kosoy and Corbera, 2010). These measures monetize complex hydro-social relations, generating revenue streams that can potentially be invested in, traded, and speculated upon (Kosoy and Corbera, 2010). 

Debt-for-nature swaps

In October 2024, El Salvador made history by signing away its authority over the Lempa River, the country’s primary source of drinking water, in a $1 billion debt refinancing deal with JP Morgan (Furness, 2024). Touted to be the first agreement of its kind to target a riverine ecosystem (White, 2024), it builds on the region’s long history with debt-for-nature swaps (DNS) first introduced during the Latin American debt crisis of the 1980s.

In the face of insurmountable debt, several Latin American countries allowed for large portions of their territory to be converted into conservation areas managed by business-friendly international NGOs (BINGOs), including the Coca Cola-funded World Wildlife Fund and The Nature Conservancy (TNC) in exchange for debt forgiveness (Isla, 2015; Naidu, 2015). In Costa Rica, 28.5% of the territory was enclosed as foreign-controlled conservation areas by 2009 (Isla, 2015). Displaced Indigenous people became cheap labor for ecotourism, monoculture farming, and bioprospecting activities conducted on their own land. As Ana Isla (2015, p. 4) observes, DNS produced “new instruments, new experts, new types of nature and new labourers.” In Bolivia, the first country in the world to have adopted a DNS in 1987, Indigenous communities have challenged neocolonial environmentalism and established decentralized regimes of community-based forestry (Leon et al., 2012). Nonetheless, DNS has since spread to other regions. El Salvador’s Lempa River swap is part of what the United Nations Development Programme (UNDP) and other proponents see as “a new wave of substantially larger deals” targeting more than 50 countries that are currently on the brink of defaulting on sovereign debt (UNDP, 2023).

Water funds

Water funds, another financial instrument designed specifically to target freshwater ecosystems, were also first piloted in Latin America by TNC. Since the launch of the first water fund in Ecuador in 2000, variations of this model of privatized water conservation have been replicated throughout the world. There are currently 65 water funds at different stages of implementation, 32 of which are in Latin America.[1] Although details vary from one fund to another, they are generally designed to pool resources from the large public and private users of a watershed, whose contributions are invested in financial markets through trust funds (TNC, 2012). Financial returns from trust fund investments are used to pay for activities aimed at improving targeted ecosystem services within the watershed (Goldman, 2009). Priorities for the disbursement of funds are set by a board of directors comprised of partners and stakeholders, including public water utilities and big beverage companies that have contributed to the fund and benefit financially from the recovery and maintenance of these services (TNC, 2012). The board also includes regional development banks, bilateral donors, as well as universities interested in research opportunities. Water funds have enabled corporations that have poisoned or dried up watersheds to reinvent themselves as part of the solution. These corporations are granted a seat at the decision-making table on water boards that operate outside the authority of the state and without accountability to communities (Joslin and Jepson, 2018).

Ignoring these long histories of violent dispossession, the Global Commission on the Economics of Water (2024) has been a powerful advocate for PES schemes as a way to manage what they see as an urgent ‘global water crisis.’ The drive to establish more DNS and water funds in countries of the Global South coincides with a push to make freshwater resources more amenable to financialization. These PES schemes reduce complex “hydro-social territories” (Hommes et al., 2019) to a set of monetized functions which can be bought and sold (Kosoy and Corbera, 2010). Traditional relationships to water are reconfigured according to market values, and communities alienated from their hydro-social territories are being driven to poverty (Isla, 2015).

Latin America: An incubator for resistance to blue-green capitalism

Where there is oppression, there is always resistance. Latin America’s long history with predatory forms of hydro-social dispossession also makes it a reference for creative ways to fight back.

So, what are the solutions to defend water, land, and territories from the growing threats of financialization? There are many ways to answer this question, but we would like to focus on one concept highlighted by our comrade, Colombian water justice activist Javier Marquez, in a forthcoming report: “We respond to their neoliberal notions of conservation by defending our water sovereignty.”

There are countless examples throughout the continent of communities challenging corporations by reclaiming their water sovereignty. The tidal wave of at least 267 cases of water remunicipalization in 37 countries (McDonald, 2018) began when the people of Cochabamba, Bolivia, successfully reclaimed their drinking water system from a US multinational corporation in the famous “Cochabamba Water War” in April 2000 (Olivera, 2004). Despite the multiple hydro-social challenges plaguing Uruguay today (see Castro, 2023), the country’s 2004 ban on water privatization is a testament to the power of local organizing (Santos, 2005). The actions of right-wing Salvadoran President Bukele do not detract from the power of grassroots movements whose efforts to defend water from neocolonial extractivist development made El Salvador the first country in the world to ban metal mining in 2017 (Cuffe, 2017; Montoya, 2023).

Asserting water sovereignty through community water cooperatives

Beyond these acts of resistance, communities have continued to assert their sovereignty through systems and practices that cultivate life-affirming relationships with land and water. We highlight community-based water cooperatives as a powerful counterforce to the financialization of water in Latin America.

There are thousands of autonomous community-based water cooperatives responsible for the provision of drinking water in rural peri-urban areas in Latin America on a not-for-profit basis (Olivera and Archidiacono, 2021).[2] Their role goes far beyond the provision of basic services. They act as custodians of water sources, defend community water rights, and ensure participatory decision-making. The embedded video tells the story of a network of community-based water cooperatives in the Tasco region of Colombia at the center of a campaign to stop coal mining on their territory. In 2017, they organized to oust a mayor who had failed to comply with a mandate to protect local water sources.