, ,

Water privatization, some condoning views

Sunday, May 20, 2007

My JP article on the legal risks of water privatization gets a mixed response and was quoted in blogosphere and other sites. I feel the need to bring a balancing view.

What I said on that article was that privatization carries legal risks, in simpler terms, the state's controlling power toward water will significantly reduces if water services is privatized. The article did not lead to the conclusion of whether privatization should be rejected or not, it only warns the government on the risks.

Is water privatization all bad?

I am not an economist so I do not have the competency to argue. But here's some view:

Privatization is not a panacea, but Segerfeldt shows that, when properly done, it can play a huge role in bringing safe clean drinking water to the hundreds of millions of people who still lack it. In the meantime, Segerfeldt wonders, "why anti-privatization activists do not expend as much energy on accusing governments of violating the rights of 1.1 billion people who do not have access to water as they do on trying to stop its commercialization." Good question.

There are some who argues that it helps to reduce waterborne diseases:

In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas.

Im not really sure on privatizing an already established regional waterwork service like the Argentina case above. As far as I know, the impact of privatization on water price, water quality and availability mixes between good and bad (with the majority suggesting "bad").

But, on the other hand, I tend to agree with Segerfeldt's approach. Why not blame the government for not providing water services to the needy people and why blame corporation instead? However the focus here is the provision of new water network. I'd say, privatization should be OK if the aim is to establish new water network. From what I've heard, privatization mostly occurs on extending existing network. Privatization which is aimed solely at establishing new network is quite rare.

Thus, the regulation must support and provide benefits of privatization which are aimed at providing completely new water services.