Water is the backbone of economic development, yet it continues to deplete at alarming rates around the world. The finite nature of water has long been a challenge for governments, as every continent is affected by water scarcity to some degree. Mismanagement and poor governance in the face of water shortages will prove to be one of the greatest economic — and social justice — challenges of this century, as water shortages can also greatly deplete food supply since agriculture becomes impossible without fresh water resources. As water becomes less plentiful, the management of this valuable resource must be organized and equitable.
Currently, 90% of the remaining freshwater stock is under public control. However, there has been an fascinating increase in water privatization over the last 30 years in response to governmental failures in the oversight of this invaluable resource. This article will investigate the current public and private sector models of water governance and recommend both that the public and private governance models and the participation of non-governmental organizations ought to amend current and future shortcomings in water governance.
Water privatization is the process by which water supplies — and their provision — are administered by private companies rather than by federal governments. This is often referred to as a public-private partnership. In economic terms, water privatization appears to be a very appealing strategy to address the cost and oversight needed to provision water. The cost of meeting regulatory requirements on the quality of water, environmental directives, and maintenance is no longer a governmental responsibility if water management is privatized.
In 1992, the World Bank published the report “Improving Water Resources Management” in which they asserted that governments providing water as a free public good was economically inefficient and did not contribute to the economy enough to justify its high cost. The logic provided in this report in support of water privatization was rooted in the failure and inefficiency governments throughout the world demonstrated in providing water. The report cited that governments lost 40 to 50% of their water supply from leaks and theft, and argued that more oversight from private companies could ameliorate this failure.
The economic benefits of privatization led to one of the most wide-scale water privatization efforts in Britain and Wales in 1989. Today, governance of water globally continues to trend towards privatization.
When moving away from the economic efficiency perspective, it becomes clear that the classification of water primarily as an economic good and the privatization of water poses a number of ethical challenges. The economic framework classifies water as a human need, rather than a human right. In the book Blue Gold: The Fight to Stop the Corporate Theft of the World’s Water, water activist Maude Barlow argues that the classification of water as an economic good creates class inequities to water access and neglects the environmental need for water. She writes: “If water is privatized, who will buy it for Nature?”
Water privatization also raises the concern of the tragedy of the commons, as private companies have no incentive to prioritize the long-term security of the resource because they focus on short-term economic gains from selling the supply. Water privatization can exclude large portions of society from accessing water as rising prices create price barriers in society. In a compilation of water privatization services created by the NGO Food & Water Watch, they found that privately owned water utility services cost the average household 59% more than public water service. Price increases will impact the poor the most and present roadblocks to addressing widespread poverty — making water scarcity and governance an inherent issue of social justice and economic equity.
Classifying water as a human right mandates that all people, regardless of economic status, have a right to its safe and consistent supply, as well as a right to sanitation services — something that has become essential to survival amid the ongoing COVID-19 pandemic. Without water, basic sanitation processes like washing hands becomes difficult to do.
Clearly, the dilemma is significant. Should water, the basis of life, be privatized?
The privatization of water was originally proposed as a solution to governmental failure. Knowing this, it seems that the government is not the best agent to fill this gap. However, a public-public water governance system can advance accountability in the security of water through introducing the niche expertise on water governance from NGO. These partnerships involve governance models devised by NGOs and local governments with support and funding from the country’s government. The current gap being filled by private companies in managing water would instead become a responsibility of local governments, municipalities and NGOs. These partnerships can bring support and funding to federal governments, as well as support the capacity of local governments to create locally specific, long-term water governance models. When you introduce local field knowledge, solutions become easier to ideate and implement.
Developing and lower income countries, which are the most threatened by water shortages, can especially benefit from this partnership model to secure water access for citizens and spur economic development. Countries that are in the International Monetary Fund (which is all but seven) can receive support and funding from the IMF when they make considerable progress towards one of the United Nations Sustainable Development Goals (SDGs), such as goal 6: clean water and sanitation. The IMF provides economic incentives for the world’s governments to get involved in the management of clean water, while also stimulating the economy.
Globally, NGOs have already been extremely successful in enabling local governments to provide clean and sustainable water access to those experiencing water scarcity and implement infrastructure in support of future water security. In water governance, NGOs can step in where federal governments have failed by providing greater accountability on the delivery of water services and niche expertise on water scarcities.
In a review of the thirty largest water NGOs, the success numbers are astonishing. With an impact across 100 countries, millions of people, and comprehensive strategies with local governments, NGOs have the experience and expertise necessary to make public-public partnerships successful. For instance, the Amsterdam-based NGO Both Ends works in lower income countries to help implement long-term sustainable local governance models of water and other common shared resources.
Ultimately, water is a human right, and the private sector classification of it as an economic good will harm the most vulnerable and deny them access to the very thing that makes life possible on this planet. Private ownership results in unequal access to water, and governments alone are ill-equipped to handle the very real challenges water shortages will present. But a public-public governance model must be further explored and championed as an avenue to addressing current and future water shortages.