Water Inc: The Privatization of Water
I think I’ll keep my well.
I think one thing is important. We need to stop reacting. We need to be proactive. In order to do this we need to be educated. In order to understand the future we need to understand the past. The week I want to talk about the privatization of water. I want you guys to help me. ALL OF YOU GUYS! You! Bolivia guy speak up! If people do not want to speak up here please feel free to send me an email at firstname.lastname@example.org. I’m psych nurse. I’m a secret keeper. So your info is safe with me.
Also I’d like to put a list together of all the water documentaries and even narratives about water.
Here is an example:
Here is a list of all kinds of documentaries about water from around the world. It’s time to end the cranial rectal inversion.
This is what wiki has to say about the privatization of water.
Broadly speaking, there are two forms of private sector participation in water supply and sanitation. In a full privatization, assets are permanently sold to a private investor. In a public-private partnership, ownership of assets remains public and only certain functions are delegated to a private company for a specific period. Full privatization of water supply and sanitation is an exception today, being limited to England, Chile and some cities in the United States. Public-private partnerships (PPPs) are the most common form of private sector participation in water supply and sanitation today.
The three most common forms of PPPs, in the order of increasing responsibilities for the private partner, are:
- a management contract, under which the private operator is only responsible for running the system, in exchange for a fee that is to some extent performance-related. Investment is financed and carried out by the public sector. The duration is typically 4–7 years.
- a lease contract, under which assets are leased to the private operator who receives a share of revenues. He thus typically bears a higher commercial risk than under a management contract. Investment is fully or mostly financed and carried out by the public sector. The duration is typically 10–15 years.
- a mixed-ownership company in which a private investor takes a minority share in a water company with full management responsibility vested in the private partner.
- a concession, under which the private operator is responsible for running the entire system. Investment is mostly or fully financed and carried out by the private operator. The duration is typically 20–30 years.
Concessions are the most common form of PPPs in water supply and sanitation. They are followed by leases, also called affermages, that are most commonly used in France and in Francophone West Africa. Management contracts are used in Saudi Arabia, Algeria and Armenia, among others. Mixed-ownership companies are most common in Spain, Colombia and Mexico.
A concession for the construction of a new plant is called a Build-Operate-Transfer (BOT) contract. Under a BOT contract the private operator signs an agreement with a utility that purchases treated water or wastewater treatment services.
External influences, such as from the World Bank and the International Monetary Fund (IMF), often play a role, as it was the case in Bolivia and in several African countries. This may take the form of structural adjustment programs. Other aid agencies have also supported water privatization. These include the Inter-American Development Bank (e.g., in Ecuador, Colombia and Honduras), the Asian Development Bank (e.g., in China), the European Bank for Reconstruction and Development in Eastern Europe, German development cooperation through KfW (e.g., in Albania, Armenia, Jordan and Peru), French development cooperation (e.g., in Senegal) and British development cooperation (e.g., in Tanzania and Guyana). In the UK, the World Development Movement campaigned against the support of water privatization through aid from the UK.
Forms of regulation
Being monopolies, all water utilities – public or private – need to be regulated concerning tariff approvals, service quality, environmental compliance and other aspects. The awareness for the need to regulate typically increases substantially when profit-oriented private operators become involved: Monitoring the performance of both the private and the public partner, applying sanctions in case of non-compliance and dispute resolution become particularly important. The regulatory tasks depend on the form of private sector participation: Under a management contract the monitoring of the achievement of performance standards, on which the remuneration of the private company depends, is typically carried out by an independent consulting firm. Under a concession contract or in the case of an asset sale, tariff regulation through a regulatory agency or the government is a key regulatory function. Water concessions are frequently renegotiated, often resulting in better terms for the private company. For example, negotiations of concessions in Buenos Aires and Manila resulted in investment requirements being reduced, tariffs being increased and tariffs being indexed to the exchange rate to the US dollar. The quality and strength of regulation is an important factor that influences whether water privatization fails or succeeds. The tasks, form and capacity of the public entities charged with regulation vary greatly between countries.
Impact on tariffs
In almost all cases, water tariffs increased in the long run under privatization. In some cases, such as in Buenos Aires and in Manila, tariffs first declined, but then increased above their initial level. In other cases, such as in Cochabamba or in Guyana, tariffs were increased at the time of privatization. In some cases in Sub-Saharan Africa, where much of the investments are funded through development aid, tariffs did not increase over a long period. For example, in real terms tariffs remained stable in Senegal, while in Gabon they declined by 50% in five years (2001–2006) and by 30% in ten years in Côte d’Ivoire (1990 to 2000). These exceptions notwithstanding, tariff increases are the rule over the long term. However, initial tariffs have been well below cost recovery levels in almost all cases, sometimes covering only a fraction of the cost of service provision. Tariff increases would thus have been necessary under public management as well, if the government wanted to reduce subsidies. The magnitude of tariff increases is influenced by the profit margin of private operators, but also to a large extent by the efficiency of utilities in terms of water losses and labor productivity.
I found this
Thanks for listening and lets do this. It’s so hard when we are living our own nightmare but if we can see other peoples issues around the world it will help us to be proactive not reactive. You folks from other places. You write me blogs about your water woes and I’ll put them here. Send photos! We are all in this together for clean water!