In July 2001, a major public debate erupted in New Orleans when the city’s sewage and water board voted on a motion to privatize the public water system. Forprofit water companies were invited to submit their bids for operating, maintaining and managing the city’s water system. A fast track timetable was also put in place for accelerating decision making on the proposed water privatization.

If implemented, the project was billed as the largest public works water privatization in the U.S. – worth about $1billion over a 20 year period. But, in October 2002, New Orleans decided to shelve plans to proceed with the privatization of their public water system. The New Orleans case is merely indicative of an emerging public policy debate in the U.S. and Canada regarding the takeover of public water systems by for-profit corporations. In March 2002, Indianapolis announced a US $1.5 billion private water contract, becoming the largest U.S. privatization to date. A few months later, the city of Atlanta announced that it was launching a review of the water service contract it had with United Water, the U.S. subsidiary of the French water giant, Suez, citing several deficiencies in the company’s performance. Meanwhile, in Canada, the major corporate players in the global water industry have set their sites on Montreal and Toronto.

In effect, North America has recently become a prime target for turning public water systems into lucrative markets for private water companies. In the U.S., 85 percent of water service delivery remains in public hands while the public sector accounts for close to 95 percent of water service delivery.

During the past five years, however, European based water corporations have been aggressively moving into North American cities, taking advantage of cash-starved municipal governments in making their bid for privatization. What’s more, new tax rules that allow these firms to obtain longer tax free water contracts.

Today, the global multi-billion dollar industry specializing in the privatization of water services is dominated by two titans, Vivendi Universal and Suez (formerly Suez Lyonnaise des Eaux), both based in France. Often labeled the General Motors and Ford Motor companies of the global water industry, Vivendi and Suez have monopoly control over 70 percent of the existing world water service market where public water systems have been privatized. The third big player in the global water market now is RWE, a German based electricity company that recently purchased Thames Water International and American Water Works.

Around the world, these three water giants have been opening-up markets and reaping guaranteed profits through long-term contracts with cities that average around 25 years. Suez has water concessions in at least 130 countries while Vivendi is operating in over 90 countries. In both Canada and the United States, the Big-3 have established a beachhead through their North American subsidiaries. Suez, for example, has opened up a market niche through its subsidiary United Water; Vivendi has done the same through its subsidiary, U.S. Filter; and RWE has recently gained a toe hold through its new subsidiary, American Water Works.

The main strategy for the privatization of water services is the so-called P-3 formula of ‘public-private partnerships.’ To date, there have been at least three variations of this formula: [a] the complete sell off by governments of public water delivery and treatment systems to private corporations [which took place in Britain]; the granting of long term leases or concessions allowing corporations to takeover the delivery of water services and the collection of revenues [which has been the French model]; and [c] the more restricted approach whereby corporations are contracted by governments to manage water services for an administration fee. For the critics of privatization, water should not simply be treated as a commodity that is bought and sold on the market. Water is synonymous with both life and Cross Border Perspectives

Water Privatization

November 21, 2002 Supported by the Canadian Consulate General, Buffalo

Priming the Pump: The Emerging Debate over Water Privatization in North America Tony Clarke, Director, Polaris Institute, Ottawa, Canada nature. Neither humans, animals, plants or the planet itself can survive without access to adequate sources of water. As a vital resource, water belongs to both people and nature. What’s more, water is a fundamental human right and a public good that should not be entrusted to for-profit corporations. After all, the prime objective of any corporation is to maximize profits for its shareholders, not serve the basic needs of people, let alone the environment itself.

No matter how responsibly a transnational corporation attempts to carry out its business, such commercial enterprises are not designed, first and foremost, to provide public services to all people on an equitable basis. Indeed, market delivery is based on the ‘ability to pay,’ which means that poor communities frequently end-up without adequate services. Nor are corporations organized as sustainable enterprises to conserve natural resources like water. Since maximizing profits often means encouraging increased consumption, it is not in the interest of water corporations to work for the reduction of water consumption.

At the dawn of the 21st century, the question of water privatization promises to become one of the central issues of public policy debate and democratic social struggle that will shape the future of Urban America.

Tony Clarke is the director of the Polaris Institute in Ottawa, Canada, and co-author of Blue Gold: The Battle Against the Corporate Theft of the World’s Water.