Drinking the invisible hand

The global water industry sees a profitable opportunity in drought and global warming.

Published April 4, 2007 4:53PM (EDT)

Don't blame overpopulation or climate change or environmental degradation for global water shortages, says the Financial Times; the real villains are government bureaucrats.

"The question is how to overcome political resistance to the involvement of the private sector," [said David Lloyd Owen, a British consultant].

"The water industry is one of the most conservative in the world. By and large, it is still run by bureaucrats and engineers," Mr Owen said. "There is also a passionate and well-organized lobby against privatization."

The thesis of the article is that an era of increasing drinking-water scarcity is a terrific business opportunity for companies that specialize in water treatment and desalination. Algeria, for example, is spending billions of dollars on desalination plants, "after suffering acute water shortages five years ago." Global warming, in this formulation, is just more good news for the private water sector. If only governments would get out of the way and let them serve the people.

In the U.S., where most water utilities are municipally owned, the resistance to privatization is particularly strong. Citizens appear to be laboring under some kind of bizarre fantasy where they expect government to ensure their access to clean, safe, cheap water, rather than the private sector.

I can't speak for the rest of the nation, but here in California, where we just had our first significantly dry winter in almost a decade, and some cities have already begun water rationing, we have some good reasons to be suspicious of the invisible hand of water capitalism. We remember how Enron (a company, incidentally, that at one time had ambitious plans to become a big player in the water business) rigged deregulated electricity markets so it could make a killing off of price spikes.

So -- drought hits, and an Enron wannabe controls the water spigot, because government has been convinced that the private sector can do the job better. What an excellent idea!

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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