Water privatization in the United States

In "Water Privatization Trends in the United States: Human Rights, National Security, and Public Stewardship", Craig Anthony Arnold argues that there is a lack of incentive for private water companies to carry out improvements or maintenance in public water systems that will have lasting benefits beyond their contract term.[3]

There are other criticisms of privatization outside the classic argument of "public" versus "private", the most of fundamental example being the claim that privatization does not lead to cost savings. Mildred Warner, a professor in the Department of City and Regional Planning at Cornell University and expert of government service delivery and privatization, completed a comprehensive analysis of all published water distribution studies published between 1960 and 2009. She and her colleagues found no evidence for cost savings.[2]

Other criticisms come from a potential loss of equality provided by the privatization of water. In the early 19th century, the majority of the water supply in the United States was privatized. However, there were problems with privatization at this time. Water provisions were focused more towards wealthier communities and the poorer areas were sometimes ignored. Additionally, the private companies tended to focus more on profit maximization than on the quality and quantity of service provided because water is a natural monopoly. Because of this, by 2000 only 15% of water supply remained privatized.[4][5]

There have also been multiple examples of privatization contracts being terminated by the government. One such contract was a 20-year contract in Atlanta with United Water in 1998. This contract was terminated after 4 years due to poor quality supplied and mismanagement issues.[3]

Another argument against privatization in the U.S. is for security reasons. Arnold writes, "The critical dependence of the U.S. public on public water supply systems, surface waters, groundwater, and water infrastructure heighten the vulnerability of these systems not only to conflict and scarcity but also to terrorism and intentional harm. Therefore, we require savvy, farreaching, effective government oversight of our water supplies and facilities for their security. Decentralized private control of waters and water systems complicates the government's attempts to fulfill this responsibility."[3]

Furthermore, some argue that the privatization of water gives up governmental control of a good that is essential to life and is ethically wrong. Commodifying water through privatization makes it a good to be bought and sold rather than a good that people have a natural right to, which has led to a loss of access to this resource in areas.[5][6]

Private water companies have existed in the United States for more than 200 years and number in the thousands today. The private water industry serves more than 73 million Americans.[7] According to the National Association of Water Companies (NAWC), more than 2,000 facilities operate in public-private partnership contract arrangements.[8] Data from Public Works Financing shows that 5,391 private water contracts came up for renewal from 2000 to 2015 and 97 percent were renewed within the industry.[9][10]

Within the United States, there is widespread, bipartisan support for the role of private water in improving infrastructure and delivering safe drinking water. The U.S. Conference of Mayors Urban Water Council,[11] the National League of Cities,[12] the Brookings Institution,[13][14] and the White House have said that private water companies provide proven and important options for municipalities facing urgent water infrastructure and operational needs.[15]

Private water companies enable communities to gain access to needed capital for infrastructure investment.[16][17][18] Each year, private water companies invest billions of dollars to improve water systems, conduct research, and develop new technologies.[19][20] A water system run by the private sector can be more efficient and cost effective.[21][22] Libertarian organizations such as the Reason Foundation have argued that privatizing water systems increases environmental compliance and reduces bureaucratic inefficiency, citing how studies have shown privatizing utility ownership or management reduces costs.[23][24] In addition, private utilities contribute via taxes to the economies of municipalities they serve.[25]

The largest private water utilities have fewer EPA violations, fines, or work orders when it comes to compliance with the Safe Drinking Water Act. An American Water Intelligence analysis of EPA data from 2001 to 2011 shows that NAWC members had 0.09 EPA enforcement actions per 1 million customers, while all other water operators had 30.03 EPA enforcement actions per 1 million customers.[26] According to an analysis of EPA data from 2010 to 2013, publicly operated water systems are more likely to incur health violations of the Safe Drinking Water Act than privately operated water systems.[27] According to Governing, public water employees are more likely to suffer an injury or illness on the job than private sector water employees.[28]

In 2004 The University of Michigan's Center for Local, State, and Urban Policy published a policy report [29] regarding privatization, the pros and cons, and its impact on local and state government in the United States. A summary of their conclusions follows:

• Private providers may or may not be more efficient than public providers. Whether privatization leads to greater cost savings depends largely on whether there is competition in service provision.
• The quality of privatized services may or may not be higher than publicly provided services. Governments can play an important quality assurance role by monitoring and evaluating the delivery of privatized services.
• In developing and transitional economies, privatization may reduce access to goods and services, particularly for low-income groups. Comparable studies need to be conducted to assess the distributional consequences of privatization programs in the United States.
• Privatization might lead to more rational labor market policies. However, the employment effects of privatization are more nuanced than commonly assumed by either proponents or opponents of privatization. Privatization tends to lead to substitution of high-skill for low-skill workers and reduction in total employment levels, but no change in net wages.
• Political considerations strongly influence both if and how policymakers contract-out services to private providers.

"While many states and localities are turning to privatization as a way to provide services to their citizens, surprisingly little is known about these choices. Much of the debate over privatization pays little attention to the rationales and consequences of private versus public service provision."[29]

Work crew digs water line