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Water Privatization

When for-profit corporations, independent investors or other segments of the private sector provide and manage water resources, water is 'privatized.' This includes public-private partnerships (PPPs) or fully private ownership, as in the publicly traded SJW Group in San Jose, California. 


According to the U.S. Government Accountability Office (GAO), more than 10% of Americans now get drinking water from for-profit, private utilities across 19 states. The scale of privatization varies by geographic area. By 2016, among the 10 Environmental Protection Agency regions, three, including most of New England and much of the West Coast, had more private than public water systems. 


Some see the rising trend of water privatization as a cure for municipal financial problems. Cities can derive significant revenues from selling water assets. They can also reduce costs by handing utilities over to private groups, fostering contractual competition among private utility managers. Between 2006 and 2015, 90.4% of all government contracts with private water companies were renewed, suggesting a high level of satisfaction. 


Others argue that water privatization leads to a loss of accountability and incurs greater financial costs. Food & Water Watch finds that investor-owned utilities charge 59% more for water services than their public counterparts at $501 per household annually. This disparity is caused in part by contractual mismanagement, which reduces private competition rather than encouraging it, fostering monopolies. Private water companies also have to generate profits and dividends for their shareholders, which can increase utilities' operational costs by 20-30%.


The impact of water privatization depends heavily on contract management and local regulations. 


Zhengmao Sheng graduated from Brandeis University with a BA in History and Economics and minors in Legal Studies and Politics. He volunteered at The Right to Immigration Institute as an undergraduate and enjoys reading and hiking. He was an Infrastructure Policy Intern at Our National Conversation.

Sources:Fierro, Demitri. “Water — A Public Resource: How Privatization Happens.” Sierra Club, Los Angeles Chapter, 31 July 2020. https://angeles.sierraclub.org/news_conservation/blog/2020/07/water_a_public_resource_how_privatization_happens.

Heller, Léo. “Privatization and the Human Rights to Water and Sanitation.” United Nations, Office of the High Commissioner for Human Rights, 21 July 2020. https://digitallibrary.un.org/record/3878974?ln=en#record-files-collapse-header.

Kopaskie, Andrea. “Public vs Private: A National Overview of Water Systems.” University of North Carolina, School of Government, Environmental Finance Center, 19 Oct. 2016. https://efc.web.unc.edu/2016/10/19/public-vs-private-a-national-overview-of-water-systems/.

Millsap, Adam A. “Privatizing Water Facilities Can Help Cash-Strapped Municipalities,” Forbes, 5 Oct. 2016. https://www.forbes.com/sites/adammillsap/2016/10/05/privatizing-water-facilities-can-help-cash-strapped-municipalities/amp/.

”Private Water Utilities: Actions Needed to Enhance Ownership Data.” U.S. Government Accountability Office, March 2021. https://www.gao.gov/products/gao-21-291.

“Water Privatization: Facts and Figures.” Food and Water Watch, updated 11 Aug. 2022. https://www.foodandwaterwatch.org/2015/08/02/water-privatization-facts-and-figures/.

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