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Private role in delivering water raises questions

09 March 2012
Report by Food and Water Action
When the European Commission launched an investigation early this year into possible price fixing by French water utilities, the move added ammunition to campaign groups that oppose privatisation of a vital public resource. A new report challenges the notion that corporations can deliver better service, leading to calls to roll-back liberalisation of water services in Europe and beyond.

“Proponents of privatisation promised increased investment and efficiency, but privatisation has failed to meet these expectations,” says the report by Food & Water Europe, which claims that privatisation can lead to higher prices without corresponding improvements in service and infrastructure.

In the French case, EU antitrust authorities said they were investigating whether Veolia, Suez and Saur colluded to fix prices on water and sanitation services. Two years ago, EU authorities launched probes into alleged cooperation between the companies in public tenders.

Rethinking practices

While the cases may bolster campaign groups’ calls to reconsider liberalisation of the water market – with major pushes for private water management now under way in troubled Greece, Portugal and Spain - there is also concern about exporting privatisation to developing countries, where needs are enormous.

Mildred E. Warner, an academic who has analysed water services in rich and developing countries, says development aid donors and lenders like the World Bank that promote a private role in the management of water services to improve service and efficiency should rethink their practices.

“The experience worldwide with privatisation, even in developed countries, has not been very positive. There is no support for the notion of cost-saving,” she said in a telephone interview.

“The World Bank policy with regard to water privatisation is not smart, and I don’t understand why they continue to insist on [this] policy in the face of overwhelming evidence of its failure,” said Warner, a professor of city and regional planning at Cornell University in the United States.

Warner also said projects can be misdirected, with rich-world standards applied to developing countries where needs are different.

“The problem is that we have focused on high-energy intensive, sophisticated treatment plant models because we thought that was the better way to go. Well, it turns out that these are hard to manage and not environmentally sustainable, especially in the low-income context.”

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Read the interview with Mildred E. Warner

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