Why Water Privatization Is a Bad Idea for People and the Planet


From a years-long drought in California to poisoned water in Flint, Michigan, the issue of access to clean water is increasingly pertinent. Climate change will only exacerbate this problem as water becomes more scarce in numerous parts of the world. As water becomes more scarce and infrastructure deteriorates, there could be more efforts to privatize water systems, which does not help the situation. 

Climate change and water scarcity

It is a fact that climate change is occurring and human activities, particularly carbon and other greenhouse gas emissions, play a large role in driving it. The 2014 Intergovernmental Panel on Climate Change (IPCC) report issued dire warnings about climate change’s impact on the future of fresh water. The report said:

Climate change is projected to reduce renewable surface water and groundwater resources significantly in most dry subtropical regions…This will exacerbate competition for water among agriculture, ecosystems, settlements, industry and energy production, affecting regional water, energy and food security.

Not only will water become more scarce in dry, subtropical regions, its quality will diminish due to climate change. According to the report:

Climate change is projected to reduce raw water quality, posing risks to drinking water quality even with conventional treatment…The sources of the risks are increased temperature, increases in sediment, nutrient and pollutant loadings due to heavy rainfall, reduced dilution of pollutants during droughts, and disruption of treatment facilities during floods.

The report also projected that climate change will play a role in increasing floods “in parts of the south, southeast and northeast Asia, tropical Africa, and South America.” In other words, climate change will hurt all of humanity, but the world's poor will suffer the most.

By 2040, according to a World Resources Institute (WRI) report, 36 countries are predicted to face “extremely high” levels of water stress. This “means that more than 80 percent of the water available to agricultural, domestic, and industrial users is withdrawn annually—leaving businesses, farms, and communities vulnerable to scarcity.”

Residents, farmers and companies in these water-stressed countries are “highly dependent on limited amounts of water and vulnerable to even the slightest change in supply”—a risk heightened by the reality of climate change. These countries are located in the Caribbean, North Africa, the Middle East, South and Central Asia, and parts of the Mediterranean, including Bahrain, Barbados, Cyprus, Yemen, Pakistan and Afghanistan.  

Climate change could also impact international security, laying the foundation for future conflicts as natural resources diminish. Neil Adger, a geography professor at Exeter University told the Guardian in 2014, “The things that drive conflict are sensitive to climate, particularly poverty and economic shocks. If there is a decrease in food supply or lots of people are pushed into poverty … it creates the environment where you are susceptible to conflict.”

These kinds of climate-induced conflicts would look like “food riots and unrest triggered by spiraling prices; clashes between farmers and herders of livestock over land and water; competing demands on water for irrigation or for cities,” according to the Guardian. 

The U.S. military already recognizes climate change as a security threat, particularly as a “threat multiplier” for global challenges like infectious diseases, terrorism and broader international stability. As a result, the Pentagon has made numerous plans to deal with climate change in its operations and infrastructure

Water privatization

As climate change increases global temperatures and causes odd weather patterns, multiple cities across the United States are experimenting with some form of water privatization

In February 2015, Chris Christie, the Republican governor of New Jersey, signed a law green-lighting the privatization of municipal water systems. The bill, called the Water Infrastructure Protection Act (WIPA), allows municipalities to sell their water systems to private companies without a public referendum. Opponents argued it was a big giveaway to private corporations that undermines democracy. 

Wisconsin is another front for the battle over water privatization. A bill proposed by a Republican state legislator, at the behest of Pennsylvania-based water utility company Aqua America, would make it easier for private companies to buy Wisconsin’s municipal water systems. Current Wisconsin law says if a public water system is to be sold to a private company, it has to go through public referendum after all the facts are publicly known. The proposed bill would make public referendum optional instead of mandatory. 

Justin Sargent, chief of staff for Wisconsin State Senator Chris Larson (D), called it “mind-boggling.” He told AlterNet, “Instead of having an automatic referendum, you have to earn it. So you’d have to petition your neighbors. You’d have to go around and collect enough signatures to get a referendum pulled together.”

The signatures for the referendum would have to be collected before the Public Service Commission, a state oversight agency, determines all the facts of selling a public water system to a private entity. This gives the corporation an opportunity to present its side for privatizing water to the public before all the facts are available. If the public realizes they oppose it—after the PSC releases more information about the impacts of water privatization—they have no chance for a referendum against it. 

Another bill streamlines the high-capacity well approval process, eliminating state government approval requirements to replace and reconstruct high-capacity water wells. This means someone who owns a high-capacity well could make their well deeper or bigger without state approval. 

Both the municipal water sale bill and the high-capacity well bill failed to make it through the Wisconsin state legislature. Sargent told AlterNet that Sen. Larson has re-introduced a bill prohibiting the sale of municipal water systems. 

Supporters of the 2015 New Jersey bill and other advocates of water privatization argue that handing control of water systems to private companies is sometimes necessary, especially if the government does a bad job of maintaining and operating those systems. 

There is also a Shock Doctrine element, in the sense that Republicans, hell-bent on gutting any government agency or social welfare and environmental protection in their sight, will cripple the government so much on the state, local and federal levels and then argue, "See, government doesn’t work. Time for the private sector to clean this up."

Not a good look for water privatization    

The record of water privatization efforts is far from rosy. A report by the Pacific Institute, an environment, development and security research organization, points out numerous problems with water privatization. 

One is undermining public ownership of water, water rights and public monitoring of water management. When water management and ownership transfers to private actors, there is less public oversight over how water systems are managed, which is a recipe for abuse. This can also lead to a transfer of wealth out of the community and into private corporations. “In the past, revenues generated from local sales of water and services went to local agencies for reinvestment in the community,” according to the study. Under water privatization, those assets derived from water services go to corporate profits, outside parties, and other corporate entities rather local communities. 

Privatization also sometimes leads to higher water prices, since a corporation’s primary goal is to maximize profit. On top of that, private corporations have typically been reluctant to invest in poor communities’ water sectors.

According to the Pacific Institute report, “Some multinational companies balk at provisions requiring expansion of coverage to marginal communities, stating that it is unrealistic to expect universal household connections in low-income areas in the immediate future, that lack of roads hinders expansion, and that rapid, uncontrolled peri-urban growth prevents proper water planning and service provision.” 

Water privatization also fails to protect surrounding ecosystems because “Private operators have little incentive to operate reservoirs to maintain minimum downstream flows required for ecosystem health, fishing or recreational interests, and so forth.” Related to that, privatization, without clear regulation, can lessen protection of water quality. As the report says, “Private suppliers of water have few economic incentives to address long-term (chronic) health problems associated with low levels of some pollutants. In addition, private water suppliers have an incentive to understate or misrepresent to customers the size and potential impacts of problems that do occur.”  

A June 2016 report by Corporate Accountability International found that water privatization, in the form of public-private partnerships (PPPs), not only fails to solve the problem of fixing public water systems to ensure safe and clean drinking water but actually exacerbates it. One example is Flint, Michigan, which since April 2014, continues to face lead contamination in its drinking water. 

In early February 2015, the city of Flint hired Veolia North America to assess the city’s water quality and provide advice on improving it. The company was paid $40,000 for its advice. Veolia is a French multinational company that does water and waste management, public transport and energy services, and has dozens of subsidiaries around the world, including North America. 

Veolia’s report to the city did not mention lead even though it discovered water discoloration and high TTHM levels. In addition, the company maintained that Flint’s water was safe to drink, despite complaints from residents and city council members. On top of that, according to Corporate Accountability International, “Veolia then attempted to parlay its two-week consulting contract to secure a multi-year contract managing the city’s water—a deal that would have given nearly total control of the city’s water system to Veolia.”

Veolia is now named in several lawsuits by Flint residents and the NAACP over its role in prolonging the city’s water crisis.   

Another example mentioned in Corporate Accountability International’s report is Pittsburgh, Pennsylvania. In 2012, the city signed a public-private partnership with Veolia granting the company important management roles at the Pittsburgh Water and Sewer Authority (PWSA), along with managing "day-to-day activities” at PWSA. Veolia's role at PWSA later changed to consulting instead of management.

In October 2016, PWSA filed a lawsuit against Veolia. In its suit, PWSA said:

“Contrary to Veolia’s claims of world-class expertise in the management of water utilities, PWSA asserts that Veolia grossly mismanaged PWSA’s operations, abused its positions of special trust and confidence, and misled and deceived PWSA as part of its efforts to maximize profits for itself to the unfair detriment of PWSA and its customers.

During Veolia’s tenure, failures included the botched procurement and implementation of a new automated water meter reading system, the improper billing of PWSA customers and the mishandled change in chemicals related to corrosion control resulting in the issuance by authorities of a notice of violation and an administrative order.” 

As climate change continues, water will become more scarce, and there may be more efforts to privatize public water systems. Water is a natural resource. Every living being needs access to clean, fresh water to survive. Clearly, it’s best to leave water in the hands of the public, rather than hand it over private corporations whose primary goal is maximizing profit.   

[Editor's note: A previous version of this article said that Veolia granted the company "senior executive, management and operations duties at the Pittsburgh Water and Sewer Authority." This has been updated to say that Veolia granted the company "important management roles at the Pittsburgh Water and Sewer Authority," and that "Veolia's role at PWSA later changed to consulting instead of management."]

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