Privatize Water!
Toro @ Sun Nov 20, 2005 8:32 pm
$1:
NGOs should get over the 1970s
By Alex Singleton | 8 May 2005
When listening to some of the development NGOs, it is like listening to hard-line socialists from the 1970s. Extensive state ownership and controls were done away with in Britain, but it is those policies that brought Britain down to its knees in the 70s that these NGOs want to impose around the world.
Take water. Water companies are privately-owned in the UK like many countries. Before water privatization, there was massive underinvestment and Britain's water was failing meet the stringent European Union requirements. Now, water quality is significantly higher and the water industry is much more accountable than it was under state-ownership. No one in the mainstream political debate would seriously advocate renationalizing it - even though its privatization was widely opposed at the time.
The gains from water privatization in developing countries are very much higher, where water provision is heavily politicized. It is often the case that if you're in with the President, you get running water. If you're not, you don't. You will have seen the pictures of Africans travelling miles to get water: that's the legacy of nationalization of water. It has been a complete unmitigated disaster. So that politically well-connected groups get rewarded, they do not have to pay the cost of the water. This means that running water provision is a drain of central government. The consequence is that there is a huge incentive not to increase provision. Where water privatization has happened, companies have been putting in the investment and increasing provision.
But ideological NGOs do not see this. They still think in terms of "people before profits", and regard free water as a human right. Well, free water is all very well but communism didn't work and nor do communist ideas of water provision. Private water provision offers the best method for reaching universal running water provision. It is time for the NGOs to get over the collapse of the Soviet Union and the end of the 1970s and be a little more constructive.
By Alex Singleton | 8 May 2005
When listening to some of the development NGOs, it is like listening to hard-line socialists from the 1970s. Extensive state ownership and controls were done away with in Britain, but it is those policies that brought Britain down to its knees in the 70s that these NGOs want to impose around the world.
Take water. Water companies are privately-owned in the UK like many countries. Before water privatization, there was massive underinvestment and Britain's water was failing meet the stringent European Union requirements. Now, water quality is significantly higher and the water industry is much more accountable than it was under state-ownership. No one in the mainstream political debate would seriously advocate renationalizing it - even though its privatization was widely opposed at the time.
The gains from water privatization in developing countries are very much higher, where water provision is heavily politicized. It is often the case that if you're in with the President, you get running water. If you're not, you don't. You will have seen the pictures of Africans travelling miles to get water: that's the legacy of nationalization of water. It has been a complete unmitigated disaster. So that politically well-connected groups get rewarded, they do not have to pay the cost of the water. This means that running water provision is a drain of central government. The consequence is that there is a huge incentive not to increase provision. Where water privatization has happened, companies have been putting in the investment and increasing provision.
But ideological NGOs do not see this. They still think in terms of "people before profits", and regard free water as a human right. Well, free water is all very well but communism didn't work and nor do communist ideas of water provision. Private water provision offers the best method for reaching universal running water provision. It is time for the NGOs to get over the collapse of the Soviet Union and the end of the 1970s and be a little more constructive.
Link
Jaime_Souviens @ Sun Nov 20, 2005 8:34 pm
Dude, have you read any of my posts in the past year?
Why do you think I go after the left the way I do?
I've been watching it happen. People I know. For years.
Wake up, Blue_nose, what do you think people are all going on about?
Jaime_Souviens @ Sun Nov 20, 2005 8:37 pm
Blue_Nose @ Sun Nov 20, 2005 8:45 pm
$1:
Dude, have you read any of my posts in the past year?
Why do you think I go after the left the way I do?
Why do you think I go after the left the way I do?
To be honest, I stop reading as soon as anyone mentions "the Left" or "the Right"... the rational discussion has ended at that point, in my mind.
I'm willing to give this one a second chance, though.
$1:
I've been watching it happen. People I know. For years.
They may prevent the privatization, etc, for the sake of their own jobs, but I would hardly think they prevent it because they don't want to see the results... they just don't trust anything "private".
Any proof of intentional deprivation of, say, third world countries?
PJB @ Sun Nov 20, 2005 8:49 pm
Does privatization equal for profit? Does privatization skirt government mandated controls? Does privatization restrict access?
Answer these questions and then we might talk.
Jaime_Souviens @ Sun Nov 20, 2005 8:54 pm
Blue_Nose Blue_Nose:
$1:
I've been watching it happen. People I know. For years.
They may prevent the privatization, etc, for the sake of their own jobs, but I would hardly think they prevent it because they don't want to see the results... they just don't trust anything "private".
Any proof of intentional deprivation of, say, third world countries?
Intentional?
Perhaps you skipped a previous post of mine:
Jaime_Souviens Jaime_Souviens:
I doubt they consciously realize what they're doing.
And you'd be surprised how quickly people will blind themselves to the obvious in time of need.
And you'd be surprised how quickly people will blind themselves to the obvious in time of need.
But I'll leave you with one thought...
The members of the professional class don't all end up driving Volvo's and Lexus's by accident. Money doesn't just pool up at their feet by virtue of being so damn humanitarian.
Toro @ Sun Nov 20, 2005 8:54 pm
PJB PJB:
Does privatization equal for profit?
Of course it does! Why the heck would it not be if it were privatized?
PJB PJB:
Does privatization skirt government mandated controls?
Not in a proper regulatory environment. Besides, what should be compared is the privatized service to what is on offer from the public system, not focussing on minor issues that can be dealth with. In most cases, its better.
PJB PJB:
Does privatization restrict access?.
No, it increases access. That's the point. In many systems, the government does not have the funds to either better the system or have one at all. When there is no system, the cost of obtaining water is 12 times higher by various estimates cited above. Private water networks improves both the current infrastructure and builds new networks.
Blue_Nose @ Sun Nov 20, 2005 8:56 pm
edit - Toro beat me to the punch, but what the heck...
PJB PJB:
Does privatization equal for profit?
Someone would be profiting, yes... hense the privatization.
PJB PJB:
Does privatization skirt government mandated controls?
Controls on what? Quality? Some of these people are drinking sewer water, for Pete's sake.
PJB PJB:
Does privatization restrict access?
According to the articles Toro posted, it increases access, quite dramatically at times.
PJB PJB:
Answer these questions and then we might talk.
Gee, that'd be swell.
Blue_Nose @ Sun Nov 20, 2005 9:03 pm
Jaime_Souviens Jaime_Souviens:
Intentional?
Perhaps you skipped a previous post of mine:
Perhaps you skipped a previous post of mine:
Jaime_Souviens Jaime_Souviens:
I doubt they consciously realize what they're doing.
Yes, you said they didn't "consciously realize" what they were doing.
I asked,
$1:
You believe that, consciously or not, these organizations are intentionally preventing the betterment of millions of people for the sake of their jobs?
To which you replied,
$1:
I've been watching it happen.
So I'm asking for proof.
PJB @ Sun Nov 20, 2005 9:18 pm
Thanks to all who answered my questions. I am assuming that all those that answered live in Canada where we have an abundance of fresh, clean potable water. Does anyone know what percentage of fresh water in the world is in Canada?
Blue_Nose @ Sun Nov 20, 2005 9:31 pm
A quarter? No way...
$1:
The Web site of Environment Canada (http://www.ec.gc.ca/water) distinguishes between static volumes of lakes and the renewable supply; Environment Canada assigns us about 9 per cent of the world's share, a good estimate except that it is based on 1970s data.
The up-to-date numbers come from the publication World Resources 2000-2001 (produced co-operatively by the World Resources Institute, the UN development and environment Programs, and the World Bank). Until 1999, Canada ranked as No. 3 nation for renewable water supply, but China and Indonesia were close behind. New data for water flowing out of China moved it up to No. 3; Indonesia has also moved up and now Canada is in fifth place.
Let's also bear in mind that about 60 per cent of Canadian yearly water flow goes north into the Arctic, according to Environment Canada's Web site. That water is largely unavailable for use in the southern part of the country, where most of us live, work and farm. The supply in southern Canada would only be about 2.6 per cent of the world's water supply.
The up-to-date numbers come from the publication World Resources 2000-2001 (produced co-operatively by the World Resources Institute, the UN development and environment Programs, and the World Bank). Until 1999, Canada ranked as No. 3 nation for renewable water supply, but China and Indonesia were close behind. New data for water flowing out of China moved it up to No. 3; Indonesia has also moved up and now Canada is in fifth place.
Let's also bear in mind that about 60 per cent of Canadian yearly water flow goes north into the Arctic, according to Environment Canada's Web site. That water is largely unavailable for use in the southern part of the country, where most of us live, work and farm. The supply in southern Canada would only be about 2.6 per cent of the world's water supply.
PJB @ Sun Nov 20, 2005 9:31 pm
lily lily:
$1:
Does anyone know what percentage of fresh water in the world is in Canada?
Nearly a quarter.
hmmm..nearly a quarter...I wonder what Canadians would think if some multi-national corporation decided to stake claim to all that water and charge us an arm and a leg to have access to it. Then they decide to increase the cost on that water and if we don't pay then 'it sucks being us' because they are out for profit. and as a cost cutting measure they decide to decrease the amount of chlorine that they put in the water because they don't have any standards to meet.
Blue_Nose @ Sun Nov 20, 2005 9:34 pm
Is this supposed to relate to the issue at hand, PJB?
Privatization isn't going to take water away from people and sell it back to them. It's giving people with no water a source of clean, potable water.
PJB @ Sun Nov 20, 2005 9:35 pm
BLue-nose...All is ask is at what cost? These private companies are not going to build new treatment plants and pipelines for nothing. Who is going to pay for them?
In Canada we are lucky but what about the less fortunate nations? Will they be able to afford it?
Thematic-Device @ Sun Nov 20, 2005 9:36 pm
Lets start with a basic assumptions about the general nature of markets:
-Water, like most utilities, is inherently a monopoly
-Companies always seek to maximize profit
-Monopolies suceed in maximizing profit, and where possible only produce to the point where marginal cost meets marginal revenue.
Western nations have long regulated electricity and water for the reason that they typically had no other choice. No house will have two seperate water mains running into it, and not everyone has the option of building a well for this reason water is considered to be a "natural monopoly", that is to say, through no action of its own the company is automatically a monopoly due to either geographical and market constraints (as is the case here) or due to the fact that the market is simply too small to support competition.
Under perfect competition it is assumed that every oppurtunity which will be profitable will be undertaken. For example, if it costs 3 cents per gallon to pump water to me, and I can afford 3 cents per gallon, then water will be supplied to me. In this case MC will equal the Demand for water. (note: demand relies upon ability to pay, not just upon desire to pay for it) This is for the reason that if there is any profit to be had a new company will spring up and fill the niche.
But water is not a case of perfect competition, it is not the total revenue that companies will look at, but rather the marginal revenue. Thus the point at which a monopoly will stop producing water won't be where MC=D but instead where MC=MR which is the point of maximum profitability.
But countries aren't satisfied with merely having the most profitable water system because it doesn't help them, it helps them to satisfy their citizens, and for their citizens to not have water, tends not to serve that purpose. And so governments either own the water company directly or subject it regulation and oversight to have the water company provide water to everyone, and thus maintains some pipelines which are profitable and others which are not.
Western nations get by with privatization because despite the companies becoming privatized they are still subject to regulation...
When water companies become privatized in the third world they take one of two courses of action. The first is to buy up the water company below costs, split the parts and strip it down sell all the assets and leave. The second choice is to shut down all the non-profitable pipelines and to only provide water to the cities and to the wealthy at higher prices then they were originally provided water at. Thereby reducing the number of people who have potable water.
When people oppose water privatization in the third world we do it because we have taken the time to look at the nature of the market rather then to make blanket statements that the private sector is necessarily good and that regulation is necessarily bad.