Drivers of public-private partnerships in the water sector
Contents
Introduction
The debate surrounding water governance (Drivers of public-private partnerships in the water sector) is highly contentious and ideologically charged. Before proceeding to the current debate surrounding water governance, an overview of the physical, ideological, and international forces prevalent in the 1990s will provide a context for the debate.
Physical drivers
Despite intensive efforts in the 1980s and early 1990s, more than 1.2 billion people still lack access to clean drinking water and nearly 2.5 billion do not have adequate sanitation services (Gleick, 2002). This failure on the part of governments prompted concern and a call for change in the water sector. In many regions failure to provide universal coverage, failure to treat wastewater, and failure to reduce water losses has led to governments seeking private sector involvement. Moreover, with the prediction that the world population’s will exponentially increase, water managers have realized that adequate water services cannot be provided without enormous new investments in water capture, storage, distribution, and use. Water projects are extremely capital-intensive and require a high level of initial investment. The World Bank predicts that over the next decade the developing world will need about $60 billion per year or more to meet water needs (Gleick, 2002). Also, old decaying infrastructure in many developed countries has prompted private sector involvement. In the United States, the Environmental Protection Agency (EPA) recently estimated that the nation’s decaying drinking water systems will require a $150 billion investment over the next 20 years (ITT, 2003). Lack of pubic funds to meet demands, as a result of budget deficits or high indebtedness, prompted governments to seek private sector involvements as in the cases of the United States, Britain, and Argentina.
Ideological drivers
An ideological shift among the world’s governments throughout the 1990s also led changes in water governance. This shift began in the late 1970s as governments in the developed world moved from a statist policy approach towards a neoliberal one. The principle ‘belief’ drivers (Gleick, 2002), which led to neoliberal changes in water governance in the 1990s, included the beliefs that:
- Privatization can help satisfy unmet basic water needs
- More business is better
- The private sector can mobilize capital faster and cheaper than the public sector
- Smaller government is better
- Competent, efficient water-system operations require private participation
The complexity of large water systems and the poor historical performance of government water services encouraged the belief that the private sector could improve the water supply due to its superior technical and managerial skills. In many regions, such as Europe, water privatization efforts were ideologically driven at first. Thus, the broader ideological context also drove changes in water governance.
International drivers
Table 1. Population Served by Vivendi Water and Wastewater. (Source: Gleick, 2002) Finally, these physical and ideological forces were complemented by changes in the international political context. Notably, the 1992 summary report from the water conference in Dublin set forth four principles one of which included the concept that water should be treated “as an economic good”. In addition, it was clearly recognized that economics must play a part in efficient water management: “integrated water resources management is based on the perception of water as an integral part of the ecosystem, a natural resource, and a social and economic good” (Gleick, 2002). In the years following Dublin, theses concepts have been used to challenge traditional public provisions of water services and to encourage public-private partnerships. Similarity, in 1994 the World Bank Annual Report advocated for an increased role for the private sector in the provision of public goods. The World Bank, international aid agencies, and water organizations such as the World Water Council are increasingly pushing privatization in their efforts. Until very recently, governments, aid agencies, and international financial organizations, like the World Bank, subsidized dams or other water-related projects (Gleick, 2002). However, having seen and borne the costs of the ineffective development of the past, international finance organizations increasingly promote the mobilization of private capital to invest in infrastructure. Thus, international financial institutions packaged reforms to the water sector within wider neoliberal policies such as structural adjustment programmes. Bilateral development agencies such as United Kingdom Department for International Development (DFID) and United States Agency for International Development (USAID) also promoted private sector participation for recipient countries (Budds, 2003). These major international efforts to privatize water systems and markets are recent, with major transfers taking place only over the past ten to fifteen years. By the end of 2000, at least 93 countries had partially privatized water or wastewater services—including Argentina, Chile, China, Colombia, the Philippines, South Africa, Australia, the United Kingdom, and Central Europe—but less than ten percent of all water is currently managed by the private sector (Gleick, 2002; LeClerc and Raes, 2001). A growing number of the world population’s water needs are being served by the private sector. Table 1 exemplifies this trend.
Despite the need for change in governance in the water sector, there has been growing opposition to private participation. Local community groups, unions, human right organizations, private companies, international institutions, and public water providers continue to debate over public-private participation. Protests, some of which have been violent, have occurred in many places, including Bolivia, Paraguay, South Africa, the Philippines, and at various globalization conferences. The cause for disagreement lies in differing opinions and evidence regarding private participation, discussed in the article "Support and opposition of public-private partnerships".
Further Reading
- Budds, J. and McGranaha G. 2003. “Are the Debates on Water Privatization Missing the Point? Experiences from Africa, Asia and Latin America”. Environment and Urbanization. Vol 15, pp, 87-113
- Gleik, P.H., Wolff, G., Chalecki, E.L., Reyes, R. 2002. The New Economy of Water: The Risks and Benefits of Globalization and the Privatization of Fresh Water. Pacific Institute. Oakland, California.
- ITT Industries. 2003. Guidebook to Global Water Issues. ITT Industries.
- LeClerc, G. and Raes, T. 2001. Water a World Financial Issue. PriceWatehouseCoopers. Sustainable Development Series. Paris, France.
