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WATER Issues

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Post  Roi on Sun Jan 06, 2013 11:19 am



Water is the most common substance on earth and constantly renews itself through evaporation and rainfall. Water from the tap looks like it won't run out as if you could provide water to every species if you just left it open forever. Just because water falls from the sky doesn't mean it should be free. A lot of the people who think this come from places where water is abundant and served/sanitized efficiently.

97% of the world's water is salt water and thus undrinkable, and the majority of the earth's freshwater is locked up in ice caps and glaciers, leaving just 1% of the world's water available for human consumption. This water must not only satisfy domestic use, but also industry and agriculture. Water is also the most important basic human need. People can go weeks without food, yet only days without water. One in eight, over 884 million, people on earth do not have access to safe drinking water and more than five million people, most of them children, die every year from illnesses caused by drinking poor-quality water. In fact, a child dies every 8 seconds from drinking contaminated water.

Without tackling these problems, little progress can be made on other development issues. When water is unavailable children are required by the family to collect it from several miles away and cannot attend school. These conditions cause a number of people to grow so sick that they cannot work, and infant mortality rises to very high levels. It is estimated that it will take $30 billion dollars to provide safe drinking water to everyone in the world.


Wikipedia definition of public utilities (don't know where else to put it for now so yeah)

A public utility (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies. (Common arguments in favor of regulation include the desire to control market power, facilitate competition, promote investment or system expansion, or stabilize markets. In general, though, regulation occurs when the government believes that the operator, left to his own devices, would behave in a way that is contrary to the community's best interests.)
The term utilities can also refer to the set of services provided by these organizations consumed by the public: electricity, natural gas, water, and sewage. Telephony may occasionally be included within the definition.

In many countries, governments have failed to champion fresh water access, and so multi-national corporations have moved in and begun providing water to those without it. It is controversial, however, because many cannot afford the water provided by companies. As the globe's population is only increasing, and more people are demanding water, something needs to be done.

What are the largest companies?

the French firm Veolia Environnement (Vivendi), serving 125.4 million in 2011;
the French firm Suez, serving 124.3 million people in 2011 with its US subsidiary United Water and its Spanish subsidiary Aguas de Barcelona;
the Spanish firm Fomento de Construcciones Y Contratas SA (FCC), serving 28.2 million people in 2011
the German firm RWE, serving 18.3 million people in 2011
the Italian firm ACEA, serving 18 million people in 2011
the British firm Thames Water, indirectly owned by Macquarie Group, an Australian investment bank;
the French firm SAUR, serving 12.4 million in 2011; and
the US firm American Water, serving 16.8 million in 2011
Domestic water operators have a strong presence in Brazil, Colombia, China, Malaysia, and the Philippines.

Is privatizing water the answer?
What is that? Water privatization is a short-hand for private sector participation in the provision of water services and sanitation, although sometimes it refers to privatization and sale of water resources themselves.

Right now, the water industry is a hybrid mixture of public and private control.

If you look across the spectrum of activity required to extract, treat, and deliver freshwater, you will find that usually some parts of the process are owned and/or managed by the public sector, some parts are contracted out to private companies and vendors, and some parts are an indistinguishable mix of subsidies, public-private investments, and market forces.
In some places the public sector (government) may have a monopoly because it controls treatment systems and pipes.
In other places, private industry may have a monopoly, as in areas where water vendors sell to households that are not reached by public utilities.

Usually, it is a mix. Incentives to invest in water are great for both the public and private sectors – for the public in terms of the large yield in human development from small improvements (see the Water, Health, and Nutrition section for more information), for the private in terms of money that can be made from distributing a valuable universally-used resource.

Some history:

Widespread privatization efforts grew in the late 20th Century when international financial institutions such as the World Bank and International Monetary Fund required countries seeking assistance to deregulate, abolish subsidies, and even sell much of their water systems and infrastructure to private investors.

The rationale was that privatization would result in more efficiency and less corruption. Private investors would have the wherewithal and the incentive to build, maintain, and upgrade expensive water facilities in order to turn a profit, whereas governments in many of these countries had been doing a poor job of stewarding their publicly-financed (and often starved) water industries.

These privatization programs continue today in many heavily indebted countries which continue to seek loans and aid from international institutions. It is estimated that around 15% of the almost 4 billion people in the world who do have access to clean water and sanitation get it from a private industry.

In 2011, The NGO GRAIN published a report on Africa warning that large scale land grabs for export orientated agriculture will increase water stress on the continent. Land, and more importantly the water that comes with it, is being bought by companies and countries with financial muscle locals cant match. The result will be Africans being robbed of their access to fresh water. Oh and don't forget 2000 Cochobamba Water riots.

There has also been Flooding in wales and South East England which will mean that hosepipe bans as a result of drought are likely to be lifted. The drought conditions brought up questions of whether the UK needs a national water grid, something which would be expensive and might be very difficult to coordinate given the privatization of the water network.

These examples highlight some problems with water being considered to be just another commodity that can be bought and sold. The first is that privatization may be useful when everyone has relatively equal resources to spend on water but it can be very damaging when there are some who cant compete and may be denied water as a result. The second shows the problems created by natural monopolies – there is little incentive to invest and create a national grid especially as not all the companies cover areas where there have been water shortages.

GREECE IS CONSIDERING PRIVATIZING WATER (based on international herald tribune november 2012 article)


More and more communities have shifted control of public water utilities to private companies in recent decades. A combination of forces is at work: shrinking public revenue, looming costs for long-overdue capital improvements, and a widening perception that private operators run systems more efficiently.

Most Americans still get their household water from a public-owned-and-operated service. But nearly 73 million people now are served with help from a private company, according to a 2011 report by the National Association of Water Companies.

Many Gov't bodies already have put off necessary improvements for years due to insufficient public funding. And there is little chance of meaningful federal aid, given the national focus on debt reduction.

The root of the problem is the artificially low rates the public utilities have charged for years. These rates, kept low for political purposes, don't come close to supporting the long-range capital investment we would expect of any well-run business. Indeed, given the enormous backlog of investment needed, perhaps a little "gold-plating," is long overdue.

Broadly speaking, a privatized utility can be expected to charge rates that not only cover costs but also encourage investment, innovation and technological advancement. With privatized water, there is a new emphasis on fiscal responsibility—and measurable efficiency gains. This has been documented repeatedly in credible studies by objective academic researchers using real-world data.

Is privatization the solution in every case? Of course not. We must strive to find what works best for the customers in a specific situation. Mismanagement is not a problem limited to private operators, just as good management is not intrinsic to public systems.

But private management can be successful much more often than its critics would like to believe. Private-sector managers focus on the cost of service and return on capital. The new and innovative technologies in which they invest may have a higher initial cost, but they offer savings, too, which can be shared with customers while improving service and quality. Privatization offers economies of scale wherein a single company can provide the financial and human resources to serve many small systems in a far more cost-effective manner.

Government-owned enterprises, by contrast, often don't have rate structures that reflect the true cost of the service. Thus many small publicly owned water utilities lack the means not only to make capital investments but also to hire the professional staff needed to meet increasingly stringent water-quality standards.

Critics say private enterprise's desire for profits leads directly to overcharging (particularly of the poor), deterioration of service, and a loss of public input and transparency. In practice, however, this is not the case.

Years of Neglect

While it is true that rates often tend to rise following a privatization or the execution of a concession agreement, this is more often because the new operator must finally address decades of disinvestment. If the public operator had focused on efficiency and long-term financial responsibility as much as it focused on social and political goals, in most cases the rates likely would have risen already to much the same level.

The public interest is not well-served by keeping prices so low for everyone, including those who can well afford to pay, if it means there is insufficient revenue to support routine maintenance and renovation. On the contrary, a good system, public or private, keeps rates low for essential needs and increases consumption charges rapidly to discourage excessive use. The idea of asking commercial and industrial users to subsidize residential usage—as some privatization opponents suggest—only encourages wasteful practices such as watering expansive lawns, which disproportionately benefits the more affluent, not the poor.

Similarly, establishing a federal trust fund to maintain public water systems would leave communities with little incentive to pursue best practices for capital investment or financially sustainable rate structures. In essence it would penalize customers of well-run systems, public or private, and reward those of poorly managed ones—requiring federal assistance for whatever the local body chooses not to pay for.

Ultimately, the best water provider is the one that is best able to deliver safe, reliable and accessible service. If the provider can also make a profit, that should be of less concern than its ability to deliver safe and affordable drinking water.


Privatization is not the solution for deteriorating public water systems already feeling the double-pinch of dwindling local and federal funds.

Private water providers are businesses. They are motivated mainly by their bottom line. The pressure to deliver high rates of return for shareholders drives them to cut corners when they are operating under contracts, and to drive up costs when they are operating as regulated utilities. The latter is a well-established phenomenon known as the Averch-Johnson Effect, named for the economists who first modeled it in the 1960s. Under rate-of-return regulation, investor-owned water utilities make more money when they invest in infrastructure, giving them an incentive to "gold plate" systems. Yes, they are investing in improvements. But they may build an unnecessarily large treatment plant or choose a more capital-intensive treatment process, such as desalination.

Private companies that operate water systems have appalling track records of rate increases, poor system maintenance, faulty billing practices and other failures, sometimes even jeopardizing the health and safety of local residents.

Pulling Back

Some municipalities have taken their water systems back from private water providers. Indeed, some are realizing what cities like New York, Baltimore and Boston realized a century ago—that water is best controlled by an entity that is accountable to the public, not outside shareholders.

Water service isn't a business enterprise; it's a basic human right, and what privatization proponents refer to as "political pressure" is actually our democratic processes at work. Our elected leaders should absolutely respond to public concern about the affordability of their water service. The provision of water service is a natural monopoly, and the public can exercise choice only at the ballot box through the election of the officials who oversee the service. How government-run utilities decide to allocate costs among different users is a local decision that should be made in an open and democratic manner.

Those who advocate privatization say it's not in the public interest to keep rates low for everyone, thus hurting a system's ability to afford capital improvements. But it can be administratively cumbersome to design rates in an equitable way that charges higher-income households more while ensuring that water service is affordable for low-income households. It is especially difficult in dense urban areas where outdoor water use is minimal and lower-income households tend to use more water because of their older homes and larger household sizes.

Too Big

But while customers can and should provide some portion of the funding for water systems, it isn't possible for them to fully fund large capital-intensive infrastructure projects. Full cost pricing would disproportionately burden low-income households, possibly making water service unaffordable for many families.

Rather than privatizing water systems or asking household users to pay more, why not ask commercial and industrial water users to pay more for the services they profit from? We should also ask the federal government to establish a dedicated source of federal funding in the form of a clean-water trust fund, similar to the program that provides funding for highways. This would provide a guaranteed source of funding for replacing and maintaining public infrastructure systems, thereby alleviating communities of the burden of having to finance improvement projects on their own.

When it comes to efficiently and affordably providing water to our communities, public control trumps private profits.

Proponents of private sector participation argue that it has led to improvements in the efficiency and service quality of utilities. It is argued that it has increased investment and has contributed to expand access. Examples: Britain (undertaken during Margaret Thatchers time), Manila, Guayaquil in Ecuador, Bucharest, several cities in Colombia and Morocco, as well as Côte d'Ivoire and Senegal as success stories. Dubai is also starting to privatize their water and power sectors.

Biggest water company = suez. New Delhi’s water management authority Delhi Jal Board (DJB) has awarded a 12-year, 75 million euro contract to a consortium led by SUEZ ENVIRONNEMENT (74%) and Indian infrastructure company SPML (26%) to improve water distribution services in the Malviya Nagar district.
- will include renovation of 100 km of the current 200 km of pipeline, as well as construction of 26 km of extensions.
As part of the contract SUEZ ENVIRONNEMENT will:
- Enable the district residents to have a continuous water supply, 24 hours a day, seven days a week. Currently they only have water for three to eight hours a day
- Improve customer service by establishing a call center, perfecting the billing process, setting up customer agencies to ensure improved proximity and to manage requests and complaints more efficiently
- Increase network performance and increase water losses from current 77% down to 15%
- Replace all water meters and connect 50,000 people to the network during the first two years of the contract to enable them to finally have access to water.

Critics however, contend that private sector participation led to tariff increases and has turned a public good into a private good. They quote the aborted privatizations in Cochamamba, Bolivia, and Dar es-Salaam, Tanzania, as well as the still privately managed water systems in Jakarta and Berlin as failures. Water privatization in Buenos Aires, Argentina and in England is cited by both supporters and opponents, each emphasizing different aspects of these cases. Statistical studies comparing public and private utilities show little difference in performance between them.

3/4ths debatepedia 1/4 from one of the other sources above.

Private sector = counter balance to bad government.

Some governments are negligent, and there needs to be a solution to give citizens access to clean water without government provision. This problem has only been exacerbated by the shrinking budgets of most countries due to the economic crisis of 2009. Current regimes in developing countries often provide a state subsidy to the rich, with water provided to middle-class areas and wealthy farmers at a fraction of its true cost, while poorer areas have no supply at all. Many governments are unfair to poor people etc. and corrupt. On the other hand, private providers have no reason to pick favorites. The poor are already paying for their water, either directly to entrepreneurs who carry it in tubs and cans up to the shanty towns, or with their time as they spend a large proportion of the family's labor fetching poor quality water from miles away. To profit, corporations can't discriminate between race/class etc. Government isn't necessarily better off since they are only accountable to voters unlike corporations which need to care about their practices if they want to profit. If its a non-profit corporation if ever, then it's a good corporation anyway. 3. Water privatization will charge for water, however it will be more fair to the poor and provide them with more options to accessing water that the government is not providing. It is difficult to force governments to improve water access, but companies and Public-Private Partnerships (where private companies pay for most of the infrastructure, but partner with public entities) can be used to achieve this goal. Government = monopoly. Unlike privatization...

Private = efficient and sanitary

Water would ideally be a universally accessible and affordable substance, but governments cannot necessarily be trusted to provide water to all of their citizens. 90% of water is publicly provided, yet 1 billion people don't have water. Clearly this isn't working. Many public utilities have shown themselves incapable of delivering water and sanitation satisfactorily, so private companies should be given the opportunity to do better. There are some who argue that one way to increase the efficiency of water use is to put it under private (for-profit) control, so that markets determine where it goes, in what amounts, and what it will cost.


On one hand, many would say privatization has produced the intended benefits. BUT 1. Water should be provided by the government, because the proper incentives will drive it to solve the crisis. 2. Water companies are accountable to their shareholders, not to society, and so they will not seek to provide water to all citizens. 3. Privatizing water would harm the poor.
4.Water is a universal right and therefore cannot be owned and sold.

Many water systems in poor countries would not exist but for the private funding mandated by international lending institutions. Cash-strapped governments simply had no choice but to outsource expensive up-front costs of providing water to their citizens. Governments overwhelmed by development needs are often unable to efficiently manage the complexity of water extraction, treatment, delivery, and finance.
When people must purchase their water through the private market, cost serves an important conservation function. People are less likely to waste a resource for which they are paying a market rate, as opposed to a rate heavily subsidized by the government.
On the other hand, privatization is often seen as having failed much of the world’s poor.

In their efforts to recoup often significant investments, private water companies usually increase prices on the water they provide. In some cases, these price increases have been so hefty as to knock poor consumers out of the market entirely, leaving them, again, with no access to water because they cannot afford it even when it is physically accessible.
The UN Development Program notes that privatization has hurt many in the developing world, where poor people pay some of the highest prices for water. For example, the poorest 20% of households in El Salvador, Jamaica, and Nicaragua spend up to 10% of their income on water.
Privatization schemes often appear undemocratic in that they exclude the citizenry from the decision-making processes in what was formerly a public utility.
Privatization often results in local job losses as multinational corporations and conglomerates both reduce work forces through improved efficiencies and transfer jobs to workers in other countries.
When profit is a motive in water provision, less lucrative services often suffer. Efficiency dictates that resources go where they produce the highest return – this means poor rural areas and other hard-to-serve customer bases get lower priority.
In some cases, private companies have retreated from particularly poor areas where returns on investment have been low or from areas where local resistance and protests against privatization have made for bad public relations – see below. In these cases, the cost of picking up the pieces is often higher for local governments than it might have been had the private companies not been there in the first place.
Cases in which privatization has worked well usually include special voucher programs whereby purchases for those unable to afford water are subsidized by the government or aid organizations.
Many argue that water is a human right and as such, it should not be treated like a commodity. However, a number of sophisticated investors believe that water could become the “new oil,” and this view is spurring considerable investment in the industry.

Going forward, it is unlikely that entire water systems will reflect a pure form of either private or public ownership. Governments at all levels will likely still maintain a role in water regulation and management, no matter how the industry itself is funded. The challenge is integrating all of the stakeholders so that water quality and access are maximized.

Case Study: Privatization of Water in Bolivia

Bolivia is South America’s poorest country and the site of one of the world’s most notorious and controversial water privatization programs.

In the 1990s, under World Bank guidance, the water systems of some of Bolivia’s poorest regions were put up for sale to private investors. In the area of Cochabamba, the winner of an uncontested bidding process was a subsidiary of the US company Bechtel. The immediate effect of Bechtel’s water investment and management was, as promised, expanded access to water by many previously unserved communities. However, when the company took over local wells and informal pumps as well as the public system infrastructure, many consumers were priced out of the market, unable to pay the increased water rates, which in some cases had doubled.

In 2000, riots broke out in Cochabamba as protestors filled the streets. Violence shook the confidence of the local government and international investors. Bechtel was forced out, resulting not only in chaos in water delivery in the area, but dealing a serious blow to foreign investment in the country. After seven days of civil disobedience and angry protest in the streets, the president of Bolivia was forced to terminate the 40-year water privatization contract granted to Aguas del Tunari, subsidiary of Bechtel Corp. Water rates increased immediately after the contract signing - by 100 to 200 percent in some cases. In a country where the minimum wage is less than $100 per month, many families were paying water bills of $20 or higher. Bechtel and the British-led consortium of investors invested less than $20,000 of up-front capital for a water system worth millions."

Undeterred, the French water giant Suez Company picked up a lucrative concession to provide water to the El Alto area of the Bolivian capital La Paz. In 2005, however, residents of El Alto also took to the streets to protest high water rates, forcing the government to cancel the Suez contract. In the wake of the ouster, tens of thousands of households were left with no water while the local government attempted to regroup on water delivery.

The Nation magazine featured the El Alto Water Revolt as a quintessential “consumer rebellion” – against the principle of water privatization, against the results of water privatization (high prices), and against the anti-democratic nature of water privatization.

Bolivia’s example illustrates the complex problems inherent in applying private market solutions to what are essentially public sector problems. The most successful solutions as water stress spreads globally will probably be those to which the public and private sectors both contribute.

Rebuttal from Economist:

In Bolivia, three big cities, La Paz, Santa Cruz and Cochabamba, all devised schemes to improve chronically deficient water supplies (in a country with above-average rainfall). La Paz awarded a contract to a Suez subsidiary; this has extended supply to the poorer El Alto region of the city. Santa Cruz chose to improve the municipal water utility instead, using World Bank loans, as La Paz had done (and so disproving the myth that the Bank lends only to privatised schemes).

Cochabamba had bigger ambitions. The local mayor wanted to build a large dam and tunnel to tap another watershed. Again the World Bank was asked to help, but refused on the ground that the scheme was too costly and unnecessary. The Bolivian government went ahead anyway and gave a contract to a consortium in which Bechtel, an American construction firm, was the lead partner. But when the consortium doubled water tariffs to pay for the investment, and some people found themselves spending one-third of their income on water, protests erupted, culminating in mass demonstrations in the main square in early 2000 during which a 17-year-old boy was shot dead by a soldier. The government panicked, the project was scrapped and the water contract was torn up. The Bechtel-led consortium is now suing for $25m in damages.

Don't do as the Cochabambans did

What are the lessons from Cochabamba? It has become the poster child for the anti-privatisation brigade. In this, most NGOs, as well as the media, have taken their lead from Oscar Olivera, a quietly spoken but forceful shoemaker and union leader who found himself leading the protests. Mr Olivera is firmly against any privatisation of water. He proudly declares that, now that the consortium has been seen off, water tariffs are back where they were before it arrived; and that Semapa, the local utility, has been restructured and improved with the help of a some cash lent by the Inter-American Development Bank. Yet the fact is that 40% of Cochabambans today still lack access to water—just as many as did before the private contract was let.

The correct conclusion from the Cochabamba fiasco has little to do with privatisation. The mayor and the Bolivian government were wrong to insist on an expensive and unnecessary dam. But the bigger problem was that Semapa's water tariffs had been too low for too long, starving the system of investment. Had the tariffs been raised earlier, more cash would have been available to improve service. These twin failings meant that any new contract, public or private, was bound to lead to unacceptable price rises.

One observer of privatisation projects, Michael Rouse of the International Water Association, sums up the issue: “There have been successes with public/private partnerships, and there have been failures. The key requirement is good governance and the right institutional framework, notably effective regulation.” Unless this requirement is met more often, private companies may continue to be unenthusiastic about projects in developing countries (see chart 6). One way forward could be more creativeness in the use made of the private sector. The companies have much to offer in services, operations, maintenance and billing. But they cannot be substitutes for good local government; nor, as Suez's Mr Mestrallet laments after the Argentine mess, are they bankers.

Jeremy Pelczer of Thames Water talks of developing new kinds of partnerships between the public and the private sector, with companies such as Thames taking only a 20-25% equity stake in special-purpose vehicles. Thames also works on joint projects with NGOs such as WaterAid. Mr Pelczer says his ambition is to be “the easyJet of the water business”, supplying know-how and management skills, but in conjunction with other bodies. This also offers a way to harness private-sector expertise for water and sanitation in rural and small-town areas: on their own, the big companies will never be interested in anything much smaller than a city of 500,000 people.

Last edited by Roi on Sat Jan 12, 2013 4:26 pm; edited 6 times in total


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WATER Issues  Empty Bottled Water and the Environment

Post  Roi on Sun Jan 06, 2013 11:21 am

Idk if this is debatable but seems interesting XD

Last January 3 2013....

Concord, a town in Massachusetts, which is in the US, passed a law that went into effect with the New Year, making single-serving Polyethylene terephthalate (PET) bottles of water which are also known as plastic bottles... illegal. There are videos out there such as The Story of Bottled Water about how allowing people to sell plastic bottles and buying them is bad. Are they really so bad that we need to stop using plastic bottles? Or are they wrong? (they aren't banning plastic bottles for other drinks though)


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WATER Issues  Empty Public Good (just in case I accidentally think that water's a public good)

Post  Roi on Sun Jan 13, 2013 10:54 am

In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others. Examples of public goods include roads, fresh air, knowledge, lighthouses, national defence, flood control systems and street lighting. (not food, water or education, Law enforcement, streets, libraries, museums). Public goods that are available everywhere are sometimes referred to as global public goods. A fireworks display is a public good since non-excludable (impossible to prevent people from using it) and non-rivalrous (one individual's use does not reduce availability to others).

Many public goods may at times be subject to excessive use resulting in negative externalities affecting all users; for example air pollution and traffic congestion. Public goods problems are often closely related to the "free-rider" problem or the tragedy of the commons, in which people not paying for the good may continue to access it. Thus, the good may be under-produced, overused or degraded. Public goods may also become subject to restrictions on access and may then be considered to be club goods or private goods; exclusion mechanisms include copyright, patents, congestion pricing, and pay television.

Uncoordinated markets driven by self-interested parties may be unable to provide these goods. There is a good deal of debate and literature on how to measure the significance of public goods problems in an economy, and to identify the best remedies.


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