Privatization of Water

The world is facing a scarcity of water. Each year about 3.4 million people die due to the scarcity of water! Several million more fall sick due to the poor sanitary conditions of the water supplied. The current situation is proof of the fact that the global water supply is not being managed properly.

Many economists are of the opinion that privatizing water resources would be the solution to this problem. While this may seem outrageous to many, this idea is certainly not new or unheard of. Many countries in the world like Colombia, Indonesia, and Kenya have seen the privatization of water as being an economic reality.

Also, it isn’t necessarily third world countries that opt for privatization of water. Even developed nations like Britain and Singapore have privatized some of their water resources. There is a huge debate whether such privatization is worthwhile or not. In this article, we will have a look at the pros and cons of water privatization.

Pros of Water Privatization

Many economists have been singing praises of water privatization. The benefits most commonly mentioned by them are as follows:

  • Better Operations: Traditionally, water supply has been the area of the government. Municipalities all over the world have control over the operations of water supply. The problem is that they have done a bad job. This is because government officials in third world countries are very corrupt. They would rather let the water resources get wasted than supply it without accepting a bribe. Privatization would solve this problem. Every instance of privatization has increased the coverage of water supply by an average of 20%. More people get access to water supply once it is given in private hands. This is despite the fact that water costs more when private companies sell it!

  • Higher Investment: Water supply requires extensive infrastructure. Dams and pipelines have to be built to supply water to people over long distances. Also, purification plants need to be put in place to ensure that the water being supplied is clean and fit for consumption. The government is itself under massive debt. They can barely manage their finances. To expect them to invest in the infrastructure that efficient water supply requires is simply a pipe dream! Hence, the belief that the ownership of water is better in private hands.

  • Less Mortality: 3.4 million is a lot of people. Hundreds and thousands of people are dying every single day because of the inefficiency of the government. When the government controls water, they do not protect it adequately from pollution and wastage. On the other hand, private companies are good at building systems that minimize the wastage of water. The argument, therefore, is to put these companies in charge of the water resources and save human lives.

Cons of Water Privatization

Water privatization has been at the receiving end of some major criticism. Some of the important points that have been raised in these arguments are as follows:

  • Profiteering: The most obvious disadvantage of water privatization is profiteering. Corporations have a tendency to put profits above people. This could be dangerous as far as water is concerned. People do not choose to drink water. The human body cannot survive without it. It is, therefore, the perfect product to benefit from. People who need it will pay any price for it. It is therefore very important that regulation of water resources should still stay in the hands of the government. Private ownership and investment along with government regulation have been a beneficial combination in many water privatization experiments.

  • Violation of Human Rights: Many economists believe that access to water is a fundamental human right. If water is treated as a marketable commodity, this right gets violated. This is because a market-based system will allow the rich to waste water if they want to whereas it would cause a drought amongst the poor. Social status should not affect the access to water.

  • IMF Pressure: Many countries have privatized their water resources because they had no other options. The World Bank, IMF, and other financial institutions would only lend money to these nations if they privatize their natural resources including water. This has often led to protests by the population. In Bolivia, the privatization of water resulted in a 45% increase in price. The poor were simply being denied water. These atrocities led them to rally on the streets and ensure that the privatization is repealed. Bolivia was penalized heavily by the World Bank and IMF in retaliation.

  • Siphoning of Water: Lastly, people believe that the water resources of a particular place are part of the natural wealth of that place. However, the private market does not operate like that. There is nothing that would stop corporations from buying up vast tracts of land and siphoning the water underneath to a different location where they can get a higher price for their product. This would disturb the ecological balance of the region.

The efficiency of services is considered to be a given when talking about the privatization of water. However, that is not the case. A major lead poisoning incident in the waters of Flint, Michigan is evidence that privatization can go horribly wrong too.


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