A debate on water privatization, part three
Everyone knows that water is the stuff of life. But is it best viewed as a commodity or as part of the commons? Should providing safe, affordable water be the role of governments, corporations, or partnerships between the two? On Tuesday, July 13 (dates may vary for local stations), the PBS show P.O.V. is airing “Thirst,” a documentary by Alan Snitow and Deborah Kaufman that addresses these and other issues about water privatization. In partnership with P.O.V., Grist is hosting a week-long debate on the merits of water privatization between Peter Cook, executive director of the National Association of Water Companies, and Maude Barlow and Sara Ehrhardt, anti-privatization activists with the Council of Canadians.
Maude and Sara,
Thank you for your reply. I welcome this educational debate and the opportunity to clarify some issues.
Let me start my response by saying that it is disingenuous to pick out a few public-private partnerships here and there that you claim failed — including one from the 19th century — and expect people to believe that represents the water-service business. To repeat from my first email, there are literally thousands of public-private water partnerships currently in place in America; the vast majority of which — 97 percent — are renewed when it is time to do so. Would cities and towns renew them if this “privatization experiment,” as you call it, had been “nothing short of disastrous”? Of course not. These contracts are being renewed, and new contracts signed, because it has been shown again and again that public-private partnerships save customers money and improve environmental compliance.
However, since you brought up Bolivia, let’s talk about Bolivia — but let’s talk about it completely, accurately, and dispassionately.
In the late 1990s, the Bolivian government turned to the private sector because the water and waste-water systems in Cochamba were in horrible disrepair after years of municipal ownership and operation. Service was spotty, unreliable, unsafe, and totally unavailable to 40 percent of the population. Poorer people, if they had service at all, often paid higher rates than wealthy people. Clearly the municipal operation had failed.
A consortium named Aguas del Tunari began operating the city water system in November 1999. They did not buy and did not own the water utility or the water itself. (By the way, Bechtel was only a 27 percent partner in the deal. Aguas del Tunari was not, as you say, a “Bechtel-owned private company.”)
In January 2000, the government raised the rates 35 percent, not Aguas del Tunari. The government did this partly to pay down the enormous debt the utility had accumulated under municipal ownership. This rate increase didn’t last long, however; it was rolled back the next month.
The government rescinded the contract in April of 2000. However, during the short time Aguas del Tunari managed the system, the availability of water increased 30 percent, hardly “disastrous.”
Also, let’s look at other parts of Bolivia you did not mention, La Paz and El Alto. Since 1997, Aguas del Illimani, a subsidiary of Suez, has managed the water and sanitation systems in these cities. Since the beginning of the private operation, both communities have gained universal availability of potable water (increased to 100 percent from 82 percent in El Alto and 92 percent in La Paz), plus the operational deficits that had built up under previous municipal operation were eliminated. These are clear success stories.
There is nothing immoral about making a profit. And if profit motivates a company to bring the kinds of success we see in La Paz and El Alto and thousands of municipalities all around the U.S., then it is a win-win situation.
In your message, you warn of water being “privatized and commodified,” implying a loss of ownership and control to the private companies. This is a concern we have heard before, and we understand it. Water is a vital and precious resource, which is why it is so very carefully regulated in the U.S. In any model of water service in the U.S., whether municipally owned and operated, privately owned and operated, or a public-private partnership, the ultimate control of the water itself generally stays in public hands. The utility, regardless of the ownership/management model, merely treats and delivers the water.
American private water companies are in the business of providing a service: delivering safe, reliable water at the tap. They are not in the business of buying and selling water as a commodity. The public continues to control the resource when a private company owns or operates the utility.
You told a story from 1837 at the beginning of your response. Now let me tell you a few stories about how the private sector is working with communities to improve water service today. In Indiana, the state Department of Environmental Management requested that a NAWC member take over the troubled Prairieton Utility, and made some loans available to do so. This creative solution was good for all involved. The customers are receiving safe, more reliable water at rates they can afford, the state of Indiana has addressed a potential health and environmental problem, and our member has increased its business. There is a similar story to tell in Gary, Ind., where about 1,000 people were receiving service from potentially contaminated wells. Working with the state, a private company extended service to those customers, solving problems all around.
A West Virginia private company worked with the Boone County Service District to extend vastly improved water service to approximately 30 communities. Similarly, in Fayette County, W. Va., the same company worked with the county to extend water service to approximately 1,200 families that had never before had public water supply, through the installation of over 63 miles of new distribution facilities.
These are private companies working today — not in 1837 — to solve today’s problems.
You are right when you say that municipally run utilities can, like private water utilities, also operate efficiently, use state-of-the-art technical and managerial expertise, and generally run good systems. No argument there; there are many municipally owned and operated systems that are well run. Furthermore, there are many sober, responsible local officials and municipal utility operators who understand the true magnitude of the environmental and financial challenge before them, and are looking for ways to meet the challenge. Private water companies have shown all over the U.S. — and all over the world — that they can be effective partners in meeting this challenge. It is beyond reason to deny municipalities this solution.
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