The Politics of Water Privatization: 21st Century Oil?

The management of water, a resource long regarded as a public good rather than a market commodity, is fast changing hands as the worldwide freshwater crisis grows. Between total water consumption doubling every 20 years and the rapid pollution of water resources, it may not come as a shock that more regional, municipal, and national governments are looking to outsource worldwide water supplies to private companies.

According to the United Nations, 31 countries are now facing water scarcity. Until recently the private sector has not been interested in owning or managing water utilities, but with growing freshwater scarcity more and more major global corporations tied to water and sanitation are moving into the “water market” – which many argue is poised to become the oil market of the 21st century. Although only 5% of the world’s water is currently privately owned, the push to privatize water is gaining considerable momentum as companies from Vivendi to Nestle aim to profit in the United States, where some regions are suffering extreme water shortage.

Proponents of privatization argue that transitioning from publicly owned and operated utilities to the private sector will lead to greater economic efficiency, reduced public debt, stabilized rates, and improved budgetary management. Many giant water, energy, food, and shipping companies are already working to purchase water rights and privatize publicly owned water systems, along with promoting bottled water and selling water in bulk, transporting the resource from water-rich areas to communities facing water shortage.

Of course, the reality is never so simple. Problems with privatization abound: it can negatively impact low-income communities through astronomical rate increases and poor services, fail to include public participation, and many privatization efforts ignore the negative impact on local ecosystems and downstream water users. Privatization is also almost always paired with local lay-offs, because corporations seek to increase profit margins by cutting costs. Furthermore, to ensure maximum profits, large corporations are lobbying to weaken water quality standards and may neglect the potential for water use efficiency and conservation improvements.

Policies driven by the World Bank and the International Monetary Fund have left minimal room for local decisions and have forced water privatization on many poor countries. In some areas, such as in Bolivia during the 1990s, water privatization led to violent opposition and conflict. Water systems in the country’s poorer regions were sold to private investors at the urging of development agencies, pushing poor nations towards free market systems rather than state controlled industries.

When US-based corporation Bechtel took control of the water in Bolivia’s Cochabamba region, pledging to bring water to more areas, water rates more than doubled. Although water was available, many were unable to access it due to the expense. Violent protests erupted in the region, residents filling the streets and displaying their anger that a private foreign entity was denying them access to water. Bechtel was forced out of the country, resulting in chaos in water delivery in the region and raising serious doubts about foreign investment in the country.

Though water privatization has usually been thought of as a Third World issue, many US cities today are looking to relinquish their water supply to private interests. Some corporate interests want to sell bulk water from the Great Lakes, the world’s largest freshwater system, which has already suffered from pollution, lost two-thirds of its wetlands, and experienced a monumental loss of biodiversity. The bottled water industry, one of the most successful revenue generating systems for private corporations, is also looking to catch on, with companies like Perrier targeting water resources in Wisconsin and Michigan.

Only time will tell how the competing realities of water’s dwindling supply and governments’ inability to manage its sourcing, sanitizing, and distribution will play out. As the privatization of water grows as a concern for many communities, it is important to consider how this system exploits not only our depleting environment but also poor communities. A profit-driven corporate agenda will inevitably place more emphasis on generating income than on consistently delivering safe, clean water to citizens.

If the private water industry gets its way, not only do local communities lose control over vital resources, but people across the globe will be denied a fundamental human need and right simply because they cannot afford its escalating price. Local, national, and international governing bodies must play a stronger role in managing water resources, and with the right incentives and reworking, perhaps industry can develop and supply the needed technology to make water distribution not only more ethical but also cost-effective and environmentally friendly.

Senti Sojwal works with PopDev as a research and writing assistant. She is a second year student at Hampshire College where she is concentrating on creative writing and race and gender studies. A native New Yorker, Senti is a voracious lover of literature and hopes to someday travel the world in search of light and laughter.

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