Around the world publicly owned, government-run water utilities are being sold off to for-profit companies. Water privatization often leads to rate increases—which leads many people to collect water from untreated sources, increasing the number of deaths from water-borne diseases. "[Private water companies] don't go into countries with thoughts of doing the poor a good turn," says U.K.-based Save the Children trade adviser John Hilary. For instance, the privatization of the water supply in Argentina by a French-owned company, reports Hilary, led to a rate increase of 100 percent. In the Czech Republic, privatization increased tariffs by 100 percent between 1994 and 1997.
Despite justified opposition to water privatization, proposals for public-private partnerships in water supply and management are likely to become more numerous in the future. The independent Pacific Institute has developed 13 principles for analyzing the risks and benefits of the new water economy.
Mark Twain reportedly said, "Whiskey is for drinking; water is for fighting over." Well, the fight is on. —Rose Marie Berger
Thirteen principles for navigating the new water economy
1. Access to sufficient water is an inviolable human right that should be guaranteed under any privatization agreement.
2. The water supply for natural ecosystems must be protected and that protection enforced by government oversight.
3. The basic water requirement for users should be provided at subsidized rates for the poor.
4. Water and water services should be provided at fair and reasonable rates designed to encourage efficient and effective water use.
5. Rate increases should be linked with agreed-upon improvements in service.
6. Water subsidies should be economically and socially sound—encouraging efficient water use and subject to regular public review.
7. Private companies should focus on improvements in water conservation and efficient use before they are permitted to raise water rates to pay for new water-supply projects.
8. Governments must retain or establish public ownership or control of water sources to ensure that the "social good" dimensions of water are fully protected.
9. Government agencies or public watchdogs—not private water suppliers—should define, monitor, and enforce water quality laws.
10. Public-private contracts must explicitly ensure the quality of service and a regulatory regime that is transparent, accessible, and accountable to the public.
11. Practical dispute-resolution procedures that build upon local practices and are free of corruption should be specified clearly in any public-private contract.
12. Independent technical assistance and contract review should be standard prior to the acceptance of any public-private agreement to make sure all language is clear and all systems are applicable.
13. Public advisory committees should be established to represent community needs and values, promote public education, and facilitate public review of contracts prior to signing privatization agreements.
Source: "The New Economy of Water: The Risks and Benefits of Globalization and Privatization of Fresh Water" (The Pacific Institute, 2002).