The Privatization of Water

This is a picture of the well head, from where our public water flows.

Fortune Magazine has touted water as the "best investment sector for the century." The European Bank for Reconstruction and Development has said that "water is the last infrastructure frontier for private investors." The Toronto Globe & Mail has stated that "water is fast becoming a globalized corporate industry." This news should send shivers down the spine of any concerned human being.

I know that it certainly stops me in my tracks. Could our water supply be privatized? Could yours? The answer is a resounding yes. Recent laws have paved the way for for a larger private sector presence in our water supply. Whereas small or local public sector operators, such as city or county utility companies, used to control the market, now the big players of world business are getting involved.

The magnitude of investments that will be required to continue to provide high-quality, reliable drinking water and wastewater treatment services to the nation is huge. A recent report from the American Water Works Association (AWWA) estimated the necessary investments in replacement of the nation's water infrastructure to be $250 billion over the next 30 years (AWWA, 2001a; this estimate is based on a water utility survey). Public officials with limited financial and technical resources are interested in alternatives that may help meet these needs.

For the past two years, the small town of Felton, California has been fighting a battle to gain control of its water supply after it was acquired by American Water Works in Janaury 2002. Shortly after that acquisition, the German company RWE Aktiengesellschaft (RWE) the world's third largest international water provider acquired American Water Works and its subsidiary California American (Cal Am). When that acquisition was approved by the Public Utility Commission in December 2002, American Water Works (RWE) controlled water service for 2.6 million North American customers, including the 1352 customers in Felton who wanted control of their water supply. And so the battle began.

The residents of Felton have learned that it is not easy to take back control of water supply, even with the neighboring water districts and the county Board of Supervisors on your side. As recently as March 16th, Felton's efforts were rewarded when the county Board of Supervisors unanimously voted to begin establishing a special tax district to pay for buying the system owned by California American Water Co. and approved a preliminary plan that would issue about $11 million in bond debt to do it.

Cal-Am officials had a succinct response.

"The Felton water system is not for sale," said Steve Leonard, manager of Cal-Am’s coastal division, who called the move a potentially "costly blunder." They estimate the cost of Felton's water supply to be between $15 and $46 million.

The Board of Supervisor will vote on April 26th to decide whether to continue with the battle.

Why is any of this important? And what does it have to do with Paul Wolfowitz and the World Bank? Just this:

"The wars of the next century will be about water." This a quote from Ismail Serageldin, former Vice President of the World Bank, in 1999. The same World Bank that encourages the privatization of the world's water supply. Imagine if the Enron scenario happened with water. Water corporations exist to make profits-- not to preserve water's quality or affordability. The World Bank does not think that water is a basic human right, but a human need that can be fulfilled at a profit and allocated by the market. Paul Wolfowitz at the helm of the World Bank does not bode well for those of us who drink water and see it as a basic human right.