Water Privatization: Private vs. Public

Water is a very controversial issue in the United States and around the world. As population increases and resources decrease, ways to maintain the use of our resources and population stability become increasingly important. About 1 billion people worldwide can not access clean drinking water. 5 The majority of this one billion people live in poor areas and there is no financial resources to build the infrastructure necessary to supply water to citizens.

More generally, there is no persuasive economic justification that local governments are the only water producers. Andrei Shriver, an economist at Harvard University, has written numerous articles on private ownership and public ownership, but even when signing it, it can not be completely avoided. When the possibility of quality degradation is very high As an example, Mr. Schreifer gave a prison. In order to increase the profits, private prison operators can replace trained low cost prisoners with frequently trained and expensive prison guards who abuse prisoners. It is difficult to determine appropriate training and it is difficult to guarantee that security guards always follow the appropriate standards, so contracts are difficult to prevent degradation of quality.

Roughly speaking, the private sector has two forms of participation in water supply and sanitation. In full privatization, assets are permanently sold to individual investors. In public and private partnerships, ownership of assets is still open, and only functions limited to a specific period are delegated to private companies. Today, complete privatization of water and sanitation is an exception, limited to several cities in the UK, Chile, and the United States. Public-Private Partnership (PPP) is the most common form of private sector involvement in today's water and sanitation.

In that case, privatization reform is not just a matter of public or private provision. This is also a more general democratic issue in Mexico. As water was transferred to the private sector, the poorest people in Mexico lost a lot of bargaining power. They will have to negotiate based on pesos as they can not negotiate according to protests. As hard as state aid, slum dwellers such as Larus may find it more difficult to meet their needs in the context of privatization reform.