Commentary

Reason.org
March 31, 2006

Getting Clean Water to the Rest of the World
Public-private partnerships can play vital role
By Geoffrey Segal

World Water Day has come and gone. Generally speaking most Americans don't think about water too often. We take for granted that by simply turning on the tap clean water will flow.

On a global scale, the world's water infrastructure is significantly lacking. The numbers of people who are without clean water or sanitary sewer systems are staggering. While our infrastructure isn't in the best of shape, it is far superior to that of the rest of the world. Our network or public and private utilities, coupled with more than 2,500 public-private partnerships helps keep our system running, our water clean, and our families safe.

The private sector has long had a role in the delivery of water and wastewater utilities in the developed world. Seeing these successes the World Bank has embraced and adopted the public-private partnership model to help developing countries develop water infrastructure. Worldwide access to clean water is part of the banks' Millennium Development Goals. More than 2,500 projects have been initiated world wide with glowing success and with a failure rate of less than 4 percent.

Much work remains—the real impetus behind World Water Day and the weeklong forum. Unfortunately, a relatively small but vocal group of activists protested the forum and its approach which has a large role for the private sector to play. The World Bank has used both public-private partnerships and private concession agreements to deliver water service to needed areas.

Instead of fighting against water access, what the protestors really are fighting is free trade, globalization, and the "corporatization of water." This puts politics and ideology over common sense and practicality. Perhaps most disturbing is that activists dismiss the vital role private water and wastewater companies play in the delivery of our vital infrastructure here at home, and how that can and should be a model for the rest of the world.

More than 40 percent of drinking water systems in the United States are private, regulated utilities—there are more than 25,000. To be fair many of these are small ancillary systems that the government has no interest in owning or running. Further, there are more than 2,500 partnerships where a private company is providing operational functions for local government. Nationally, the rate of private participation has been impressive in the last 15 years, growing by more than 85 percent.

Ever since new clean water regulations were put into place, many local governments turned to the private sector for much needed new technology and investment in their infrastructure. They did so to meet the new strict standards. Even still, the U.S. Environmental Protection Agency estimates that our infrastructure needs around $300 billion in investments over the next 20 years.

The protestors moved the debate away from the real issue—getting access to clean, safe water worldwide. They made it an issue of public vs. private blindly choosing public. Jamal Saghir, the World Bank's director for Energy and Water, sums it up best, "What is important is to identify who can provide this service in the most efficient manner and at the lowest cost." Not focus on ideology.

Lest we forget it was President Clinton's EPA that endorsed private participation as a means by which local governments can meet environmental standards and meet needs more efficiently as well, calling public-private partnerships a "classic win-win situation." Even the U.S. Conference of Mayors has endorsed public-private partnerships for water and sewer operations.

One argument often used against water and wastewater privatization is that water is too vital a resource that we can't trust private contractors with. This is a conceptual rather than a research question, but ignores basic facts about our lives in the United States and the world. Yes, water is vital, and along with most other vital things, we rely on the private sector to provide it. The closest example is food, which the market provides, as it does medicines and healthcare.

Anti private sector supporters have largely ignored experience, data, and the importance of competition. The private sector has demonstrated time and again that they have a role to play in the delivery of water and sewer services here at home and abroad. Their experience, innovation, and capital are vital pieces to ensuring access to clean safe drinking water worldwide. An open accountable service provider, regardless of public or private, is essential to success. Rather than hide behind the thin veil of ideology, the protestors should embrace the power and value of competition—it is what the data and experience tell us is needed.

Geoffrey Segal is director of government reform at Reason Foundation. An archive of Segal's work is here and Reason's water-related research and commentary is here.