The Issue of Water Privatization - Research Paper Example

Water privatization Introduction The issue of water privatization is a contentious one. In the previous years, the attempts by the government to privatize water has not only faced lots of opposition claims, but also has led to various confrontations with the concerned stakeholders. Some arguments are of the outlook that if water is privatized, then the resource will be made a market commodity; thus, its control will be extremely stressful. This results from the aspect water will no longer be a common resource but a commodity in the market. On the other hand, proponents of water privatization argue that through privatization of water, efficiency will automatically be achieved in the water sector. This is from the verity that the utilities of water provision will be of high quality and the investment in this sector will increase; thus, more access to water services. An analysis of the positives and cons of this aspect, therefore, needs to be analyzed so as to understand the issue in detail. Evidently, water privatization is a very crucial issue. A lot of concern needs to be taken prior to coming with a lasting conclusion on this issue. In an attempt to highlight the water privatization question, it is vital to evaluate on the question of access and availability of water to all persons especially on persons of low income. If these water access and availability are left out, a lot of concerns will definitely be raised in the water sector. I take the stand that water needs not be privatized. So as to support this stand, focus will be shed on the quality of water and privatization, costs of privatized water, the divided interests in water privatization, how expensive privatization is, the loss of public control of privatized water from the locals and the fact that privatization may be permanent and irrevocable. These evidences will outdo the aspect that water should be privatized, simply because privatization has been seen to produce quality services, water privatization is an urbanization move, privatization of water saves lives and privatization also creates economies of scale. Privatization of water will automatically undermine the quality of water. As seen in the research conducted by Shiva, the motive of acquiring more profits in the water industry will outdo the need to serve the public; thus, water needs not be privatized (35). A closer analysis of this fact means that the wellbeing of the public will be put at danger and the profits will be considered. Barraqué states that the move to control water, a key resource, has indeed created a huge corporate attention (50). The author quotes that, “…to monopolize a key resource has attracted substantial corporate attention (Barraqué 50, par 1). This is to mean that water privatization will indeed create a crisis that will affect a huge percentage of the population. Water privatization is very expensive. Privatization of water means that the citizens will be forced to spend more to pay for water services. These sentiments are shared by Shiva who argues that privatization of water means that access to water will not be for all (23-24). It is this verity that leads to the author calling for a movement that will see access to water for all persons despite their affiliations. Additionally, the Shiva indicates that if water is privatized the common persons will be deprived of a universal good (19-28). It is then recommended that there be campaigns that champion for a global opposition against privatization of water. Barraqué asserts that privatization has created lots of profits (50). He quotes the example of Culligan’s bottled water industry that sold over 90 billion liters of water whose profits exceeded those of other industries (Barraqué 50). Even with multinational corporations such as International Monetary Fund championing for privatization, developing countries will be in huge debts to finance water. Indeed water privatization is expensive and making it compulsory will lead to disenfranchisement of the poor populations. In the course of water privatization divided interests automatically come into play. In the course of privatization, it is evident that the provider of the water services will have divided interests. The attention will be divided between the shareholders and the consumers. Evidently, a lot of interest will be put on the shareholders. As seen in the work of Solomon, privatization of water will automatically create a balance of interests between the consumers and the concerned operators (116). He quotes, “…regulation seeks to balance the interests of the consumers and private operators …while allowing firms to earn “fair” return on their investments…” (Solomon 116 par 3). These divided interests will definitely lead to the consumers suffering a great deal as the water provider companies will focus on their relations with the shareholders and the means to survive in the market full of numerous water company providers. It is also very imperative to note that the privatization of water will call for maintenance expenses, infrastructure, taxes and investment. For the privatized companies to earn profits they have to find ways of surviving in the market, offer tangible returns to its shareholders and all this ensues at the expense of the consumers. Water privatization is, without a doubt, not acceptable for today’s population. Privatization is more expensive over making it public. Privatization of water generates extra expenses as opposed to the service provision being made public. As Solomon argues privatization of water services will cost the citizens a great deal as the taxpayers will pay for the maintenance services of the water projects such as infrastructure, repairs amongst others (120). The author quotes that, “…a private firm will only invest funds via a contract if it … receive a reasonable return …” (Solomon 120 par 3). Funds in the private water sector will be raised through an increase in the taxes especially because the sector is difficult to regulate as opposed to the public sector that can be influenced in various ways. Public financing saves a huge percentage of funds due to transparency in the sector. Due to lack information on the private sector, the public is likely to incur more costs as they would have if they have had water services provided by the public. Clearly, the privatization of water services is extremely disadvantageous to the public. The local and public control of water is pulled down by water privatization. With the privatization of the water sector, it is perceptible that the public and the locals will lose control of the important basic need. Solomon writes that the privatization of the water sector means that private firms run the system (120). He quotes that, “...the contractor typically provides the working capital needed to carry out to routine operations …preventive maintenance …replacements and…capital improvements… (Solomon 120 par4). Since the operators are charged with receipting and collecting all the generated revenues, the entire water service sector will remain in the hands of the public. This fact also relates to the verity that the companies will continually maximize profits and not focus on the needs of its clients. Privatization is, therefore, not acceptable. Corruption and privatization of water go hand in hand. With privatization of the water provision services, corruption is bound to happen. As Solomon indicates, privatization will lead to corruption that will in reality disrupt the water sector (162). He quotes, “…concern exists about the motives of private… with some viewing profit motivated businesses as inherently suspect, if not corrupt…”(Solomon 162 par 3). A focus on the privatization sector also explains that there will be a mix to some extent with the public sector. The mix in accountability results in corruption. Barraqué also shares the same sentiments through his argument that the water private companies have had their share of corruption allegations (51). Among the noted companies states include Veolia that is among the largest water operating firms. Unfair business practices have also been indicated to be a characteristic of these water privatization companies as Barraqué quotes, “…allegations of corruption …regularly dog them (51 par1). With this in perspective, it is evident that the desires of the consumers will not be met as the firms’ management will struggle to retain their place in the company. Water ought to be free, selling and buying will deny the poor this need (Shiva 35). Water privatization may be permanent and may take too long to revoke the signed contracts. Water privatization could be a permanent move that may not be reversed easily. In the event that a municipality signs up with a private industry, they may find themselves at pains to break the contract if the private company does not deliver the required services. Private companies have been known to have protection from outside forces and it may take too long to reverse the contracts. This explains why Borzutzky & Madden advocate that recommendations be proposed to improve the distribution of water (253-60). Robinson also indicates that water privatization proponents have had mixed feelings for the longest time (122). The mixed feelings result from issues of costs especially when it comes to the expenses that will see to a success of this sector. However, in the US, citizens have a choice to make when it comes making amendments in terms of policy (Robinson 122). Caution must be taken to water issues especially that privatization may have more adverse consequences than one would expect. Water privatization will create efficiency and quality in terms of service provision. Borzutzky & Madden indicate that through establishing fees and charges on water services, the execution of water provision will be more efficient (260-75). The authors give an example of the Chilean market that created an active water rights’ market. The reforms that have come with the privatization have improved the provision of water services. Stringent measures have also been put on the providers of water. Ultimately, the environment has been protected while distribution of water has been regulated (Borzutzky & Madden 260-75). As opposed to the public provision of water, the private sector is evidently more regulated and efficient; thus, fit for the provision of water services to the public. Water privatization is viewed as an urbanization move. Privatization of the water sector is one of the urban moves that many cities have adopted. As seen in the work of Bernt, Grell & Holm, Berlin was on the verge to adopt measures that would lead to the privatization of water service (189-203). However, the Berlin Water Co. has been faced with numerous challenges in an attempt to privatize this sector. Nevertheless, urban development has been characterized by transformation in the water sector. In the case of Turkey, the country also went ahead to private its sectors such as the water sector so as to improve service provision. Karatas assesses the privatization process that took place from the late 1980s to the early 2000 to evaluate the successes and minuses of the same (94-119). One would argue that the privatization process is linked with success and efficiency (Budds & McGranahan 91-94). Privatization of water creates economies of scale. Through privatization of the water sector, economies of scale will be achieved. Little indicates that privatization is way to go for the present day century (1). In the thought of Little, the private sector offers the most appropriate solutions to water issues despite the existing controversies that exist on the matter (1). Through the private sector, the managers will put more emphasis on costs that are put on the service provision and profits on their capital. This is to mean that the companies will continually improve the services they provide. With the fact that mismanagement has been a characteristic of the public sector for a long time, the private sector offers more solutions than expected. Privatization will create economies of scale; thus, serve many systems effectively (Little 1). Privatization is, therefore, the best measure for today’s century. Privatization of water saves lives. Over the years, privatization of water has been linked with saving lives. Segerfeldt says that privatization of water has resulted to saving lots of lives (1). Through privatization, the author indicates that access to clean and safe water will be a characteristic of the present society (Segerfeldt 1). The public sector has experienced bad policies that have led to many reports of water shortages and consequently access to unsafe water. In fact the author argues that various governments have resulted to asking private companies to run the water sector in an attempt to get good results (Segerfeldt 1). The scope of water provision improved a great deal despite the various protests staged to stop this process. The issue of prices, as the author indicates, needs to be overlooked as the areas linked with privatized water have continued to benefit greatly from the efforts (Segerfeldt 1). Notable examples include Chile, Guinea, Argentina and Philippines amongst others that have benefited from the privatization process through saving its citizens (Segerfeldt 1). Conclusion The debate on the privatization of the waters sector is indeed a contentious one. However, as seen in the essay, the arguments opposing privatization of water services outdo the arguments on privatization. This is to mean that water should be publicized and made available to all. The arguments of Shiva in her work, Water Wars: Privatization, Pollution and Profit not only make complete sense, but also create a humane notion on this fact. Water is a basic want that all persons need to access. In the event that this resource is privatized, what happens to the poor populace? Bottled water for instance is extremely expensive and not all persons can afford the same. Privatization simply means that the poor will be left out and too much commoditization of water will take place. How about water being looked at on an economic point of view as opposed to social viewpoints? Evidently, the society will suffer a great deal in the hands of few proprietors who want to make huge profits from commoditizing water. Water is a natural resource. Privatizing it is wrong, no doubt about this issue. Works Cited Barraqué, Bernard. Urban Water Conflicts. New York: UNESCO, 2010. Print. Bernt, Matthias. Grell, Britta & Holm, Andrej. “The Berlin Water Company. From "Inevitable" Privatization to "Impossible" Remunicipalization.” In The Berlin Reader. A Compendium on Urban Change and Activism, pp.189-203. Munich: Transcript Verlag, 2013. Print. Borzutzky, Silvia & Madden, Elisabeth. “Markets Awash: The Privatization Of Chilean Water Markets.” Journal of International Development, 25.2(2013): 251–275. DOI: 10.1002/jid.1802. Budds, Jessica & McGranahan, Gordon. “Are the debates on water privatization missing the point? Experiences from Africa, Asia and Latin America.” Environment and Urbanization 15(2003): 87 -114. Karatas, Cevat. “Privatization in Turkey: Implementation. Politics of Privatization and Performance Results. ” Journal of International Development, 13.1(2001): 93-121. DOI: 10.1002/jid.759. Little, Richard G. “Are We Better Off Privatizing Water?” The Wall Street Journal 8th October, 2012. Web. 9 Aug. 2014 Robinson, Joanna. Contested Water: The Struggle Against Water Privatization in the United States and Canada. Cambridge, Massachusetts: MIT Press, 2013. Print. Segerfeldt, Fredrik. Private Water Saves Lives. Massachusetts: Cato Institute. N.d. Web. 9 Aug. 2014. Shiva, Vandana. Water Wars: Privatization, Pollution and Profit. London: Pluto Press, 2002. Print. Solomon, Lewis D. Americas Water and Wastewater Crisis: The Role of Private Enterprise. New Jersey: Transaction Publishers, 2012. Print. Read More