A blue bottle of water being poured

Privatizing water: An iffy proposition

What additional evidence do we need that privatization results in larger profits for the companies that swoop in to take advantage of the practice? Haven’t we seen what happens when prisons and probation companies are privatized? Instead of learning their lesson, local governments–including many in Wisconsin–are pushing to privatize water utilities.

Speaking of water companies, things are looking good at Aqua America, a U.S.-based private water corp. In fact,

… three-quarters of the company’s year-over-year revenue growth was driven by customer growth, with acquisitions playing a big role in that growth after the company completed four municipal acquisitions during the year.

Good for them, convincing municipalities to sell them their utilities at a time when many cities and counties are in financial straits. Doesn’t sound at all predatory to me. The company’s gross revenue in 2015 was $197 million. They must be doing quite a service to citizens to bring in that kind of revenue, don’t you think? According to an Isthmus article,

Residents of Superior, the state’s only community with a non-public water utility, pay more than twice the average rate of major water utilities in the state … Midwestern states … have seen the average water bill under private utilities increase by 67%, according to the Food & Water Watch report.

O.K., so it’s more expensive once a private company owns your city’s water, but I assume people must be getting more for their money. Right? When Veolia, the largest private water company in the world, was given the rights to test Flint, Michigan’s water, they testified it was compliant with federal regulations. Clearly, as witnessed by the people losing their hair, having seizures, getting rashes, and needing to boil their water in order to ward off e.coli. When Flint’s city council voted to go back to their original water supply–not the Veolia-deemed “compliant” stuff–the governor overrode the wishes of the citizens because of the expense.

Dirty bottles of water
Photo courtesy of Keoni Cabral on Flickr.com

Hmm. So we’ve established that we can’t trust private water companies to give citizens honest answers AND they’ll cost tax payers more money. Yet Wisconsin  is considering going this route. Like so many things, it probably isn’t a coincidence that Aqua America spent $40,000 hiring a former Republican legislator and his son to lobby on the company’s behalf in our state last year.

If you still aren’t convinced that selling our water off to corporations is a bad idea, here’s a a fact sheet put out by Citizen.org detailing more reasons why the move to privatize would equal disaster:

1.) Privatization Leads to Rate Increases Corporations have utilized rate hikes to maximize profits. This bottom line often comes at the expense of water quality and customer service, but not at the expense of maintaining inflated executive salaries. . Because living without water is not an option, people are often forced to consume unsafe water.

2.) Privatization Undermines Water Quality Because corporate agendas are driven by profits rather than the public good, privatization usually results in the compromising of environmental standards. The National Association of Water Companies requests that all federal regulations be based on sound cost-benefit analysis, which means that public health is compromised for the sake of higher profits.

3.) Companies Are Accountable to Shareholders, Not Consumers In many cases, deals that government agencies make with water companies include exclusive distribution rights for 25 to 30 years, effectively sanctioning a monopoly. Companies are under little pressure to respond to customer concerns, especially when the product in question is not a luxury item that families can do without if they are dissatisfied with the performance of the only provider.

4.) Privatization Fosters Corruption Contracts are usually worked out behind closed doors, even though it is the public that will be directly affected by the conditions of the contract. This situation opens itself up to bribery.

5.) Privatization Reduces Local Control and Public Rights When water services are privatized, very little can be done to ensure that the company — be it domestic, foreign or transnational — will work in the best interest of the community. Furthermore, if a community is dissatisfied with the performance of the company, buying back the water rights is a very difficult and costly proposition.

6.) Private Financing Costs More than Public Financing There is a false perception that when water services are privatized, the financial burden will shift from the public to the private sector, which will save taxpayer money. In reality, taxpayers wind up paying for these projects through their monthly bills. Tax-free public financing translates into lower-cost projects, while taxable private financing results in higher interest rates.

7.) Privatization Leads to Job Losses Massive layoffs often follow in the wake of privatization, as companies try to minimize costs and increase profits. At times, service and water quality are put at risk due to understaffing. As a result, layoffs can be devastating not only to the workers and their families, but to consumers as well.

8.) Privatization is Difficult to Reverse Multinational trade agreements provide corporations with powerful legal recourse. A private company, for example, can use NAFTA’s secretive tribunals to contest challenges to privatization. And in World Bank loan deals, which often makes water privatization a condition, companies are usually guaranteed cash payments if a government agency returns its water system to public control.

9.) Privatization Can Leave the Poor with No Access to Clean Water Contrary to public assertions, World Bank and IMF privatization schemes in the developing world usually result in reduced access to water for the poor. Impoverished, politically enfeebled countries are not in a position to refuse these conditions. As a result, the World Bank and IMF are able to provide lucrative and virtually risk-free contracts for multinationals, due to guaranteed rates of return and investment protection clauses.

10.) Privatization Would Open the Door for Bulk Water Exports Fully aware of bleak water supply prognostications, corporations are in a mad dash to obtain access to fresh water that they can sell at huge profits. It goes without saying that those who control water supplies will exercise economic and political power at almost unimaginable degrees. Bulk water exports — transporting water from water-rich countries to water-poor countries — could have disastrous consequences. Disrupting aquifers by over-extraction often damages the environment and socioeconomic standards. Groundwater is being over-extracted as it is, and once aquifers are emptied or polluted, they are almost impossible to restore.

Hopefully now you’re convinced and ready to do some clickdivism. Get your signing finger ready:

1.) Action Network’s petition.

2.) Food and Water Watch’s petition.

3.) A MoveOn petition to fund offshore desalination projects.

And–if it comes up in conversation–remind your friends and colleagues that what happened in Flint could happen where you are too. Privatization isn’t a solution to failing infrastructure. It’s more like an over-priced bandage that further infects a wound.




2 thoughts on “Privatizing water: An iffy proposition

  1. Privatizing water is very scary. It’s almost like privatizing the air. It’s something that should belong to all people. One of the first things that the IMF does to countries it bails out is insist they privatize their water. They know when they have countries at their mercy. It almost always leads to more hardships for people who are already beset by major standard of living problems.

    Liked by 1 person

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