USC Dana and David Dornsife College of Letters, Arts & Sciences > Blog

April 17, 2013

Water Privatization

Filed under: California Drought — Tags: , , — lecollin @ 10:55 am

“Food and water are basic rights. But we pay for food. Why should we not pay for water?” 
-Ismail Serageldin at the Second World Water Forum

Water privatization is a current, controversial issue that also seems to be relatively misunderstood. Water privatization is the private ownership of water-related infrastructure, and is not a new concept.

World Bank data indicates a sharp rise in the investment into private water projects. Source: Bakker --same article as in citations/works cited

World Bank data indicates a sharp rise in the investment into private water projects. Source: Bakker –same article as in citations/works cited

Public and private, artisanal and industrial, corporate and community controlled water supply systems coexist around the world (Bakker 36). “Privatization” of the water sector can be understood as private enterprises, rather than governments, obtaining control of water-related infrastructure. Examples include “operation of a water delivery or transport system, a complete transfer of system ownership, or even sale of publicly owned water rights to private companies” as defined by the Pacific Institute. Water, when privatized, is then treated like any other economic good.  *

Deaths due to sub-par water quality and availability are prevalent in poor countries. Proponents of privately owned water believe this would be improved by replacing public infrastructure. IMG source http://thewe.cc/thewei/dp/water1123g.jpg

Deaths due to sub-par water quality and availability are prevalent in poor countries. Proponents of privately owned water believe this would be improved by replacing public infrastructure. IMG source http://thewe.cc/thewei/dp/water1123g.jpg

Proponents and opponents of water privatization stand divided on a number of issues, ethical as well as environmental and economical. Those in favor of water privatization believe that private management will encourage conservation of water, and it can be priced accordingly. It is believed that privatized, clean water could also better be delivered to those humans normally struggling to find safe access to it.  Opponents believe water ought to be protected by more than market forces, and may find it unethical to make a profit supplying people with a resource essential for life, ecological health, and human dignity (Bakker 47). Opponents also find the possibility of private management, driven by greed, will create environmental harm–namely pollution and scarcity of water.

A question Susan Spronk poses in her article, is privatization really the alternative if a government fails to supply its citizens with a basic factor to all life? Bolivia provides an excellent case study to examine privatization efforts, as well as provide a case study from which we can base recommendations.

Bolivia is the poorest country in South America and also home to one of the world’s most contentious water privatization programs. With the World Bank’s assistance in the 1990s, the water systems of some of Bolivia’s poorest regions were put up for sale to private investors and shareholders. A US-owned company, Bechtel, in Cochabamba, Bolivia, gained rights to administer and distribute water in this specific area.  Bechtel extended water access to many communities who had little to no access to water. However, a consequence of their involvement was less welcoming to neighboring cities—the prices for water had a sharp increase.  Bechtel consumed and controlled local wells, water pumps, public system infrastructure that was already in place, and many other resources used by the community for water supply (Mulreany, Calikoglu, and Ruiz ). The costs for these improvements and additions were far too expensive and unrealistic for their generally poor customers–costing up to twice the previous cost people had been paying when water was government-owned. Access for them was still not possible.

bolivia water

These results highlight the complexities of water privatization and differences between economic theory and what happens in the real world–social factors play a huge role. Positive impacts of privatization–ie, access to clean water for underprivileged areas–must have a way to subsidise the cause for poorer communities, as in the case of Bolivia.

Buenos Aires, conversely, experienced a water-privatization case with better results. Image source: (Pacific Institute -- same article cited in text.)

Buenos Aires, conversely, experienced a water-privatization case with better results. Image source: (Pacific Institute — same article cited in text.)

There are understandably many more factors to consider when, where, and how water would ideally be privatized (strength of current system, appropriate market, environmental concerns in the area), but from the Bolivia case study we can draw these conclusions:  We propose that, when water becomes privatized in certain regions for economic gain, a strict set of regulations must be upheld in order for the practice to be fully supportable. Beyond making sure it remains affordable for local communities, human and environmental needs should be prioritized, and all those dependent on the source should have a voice in the decision-making process.

By Meghan Heneghan and Renee Daniel

Works Cited:

Bakker, Karen J. “A Political Ecology of Water Privatization.” Studies in Political Economy (2002)

Gleick, Peter and Gary Wolff, Elizabeth Chalecki, Rachel Reyes . “The New Economy of Water: The Risks and Benefits of Globalization and Privatization of Fresh Water.” February 2002. Pacific Institute.

Mulreany, John P., Sule Calikoglu, and Sonia Ruiz. “Water privatization and public health in Latin America.”SciElo Public Health. 19.01 (2006): n. page. Web. 5 Apr. 2013. <http://www.scielosp.org/scielo.php?pid=S1020-49892006000100004&script=sci_arttext>.

Spronk, Susan . “Roots of Resistance to Urban Water Privatization in Bolivia: The “New Working Class,” the Crisis of Neoliberalism, and Public Services1.”International Labor and Working-Class History. 71.01 (2007): 8-28. Web. 5 Apr. 2013. <http://journals.cambridge.org/action/displayAbstract;jsessionid=4CD04064EA4920D7942DDE5BC7393B19.journals?fromPage=online&aid=1354424>.