The Pros And Cons Of Water Privatization

The need for fresh water grows alongside the burgeoning global population; but with rising temperatures and varying climates, water’s dispersal is becoming less uniform and less predictable to the extent that even historical bodies of water like Lake Chad may become dry. With this sporadic access to water, questions rise as to the proper method of water distribution. Privatization is a proposed method that claims private companies ought to be tasked with the treatment and distribution of water, rather than the current system which employs the government as the main mechanism of distribution and holds that water is a public resource. While the number of people who receive their water from privatized sources increased globally by six fold …show more content…
In 1999, Atlanta engaged in an experiment involving the privatization of their water services. It signed a twenty year contract with United Waters that was subsequently terminated within the next five years, citing poor service and disproportionate prices as the main reasons for the divorce (Jehl). While in normal economics (particularly in the example of the wheat and rice markets) there is an ability to diversify or to shift from one provider to another, there is no such option in water privatization. This permits the providing of subpar performance. In a typical public model, the provisions are decided by the given administration and can be rearranged as necessary by administration and the typical term limits. Without a limitation to the extent of a contract along similar term lengths as the administrations, the mechanisms to protest poor service rise to necessitate citizens to embark upon major political action to cease multi-million dollar contracts. This is in stark contrast to the simple resisting of purchase in the examples of wheat and rice in an earlier example and posits an overly demanding obligation for the citizens of a society to accomplish the achievement of a basic good. To properly engage in a privatized system, a mechanism to ensure the caliber of the service must exist in conjunction to a designated limit of time that a contract may exist. …show more content…
Because the need for water is growing, it can be viewed as a limited resource and subject to comparison to the Tragedy of the Commons. In other realms of economics, rampant production—within financial soundness—is beneficial to an industry. The greater the amount of product, the greater the ability to sell. The same, however, is not true for items of constant amount, like water. Following the analogy of the Tragedy of the Commons, a business way do very well to extract as much water as possible to procure enough to sell profitably. While the business may soar, the natural resource it draws from may be irreparably damaged. To use a resource to extinction is to deprive the company or future people of potential profitability without reason. To ensure the future profitability of the resource, an agreement must be reached to maintain the nature of the source and its usefulness. For example, the water bottling company Nestle continues to extract from Californian water sources, despite an ongoing drought. While questions may be raised as to the financial repercussions for extraction by corporations in comparison to those encumbered by Californian residents, the overall detriment to the water supply as a result of Nestle and other companies’ involvement is miniscule in comparison to the usage of citizens, totaling less than one percent of residential usage (Lobosco). Because the amount of water assumed by