Global Water Forum Examines Water Privatization in Times of Economic Crisis

The Global Water Forum (GWF) has released an article that questions whether water privatization makes sense during times of economic crisis, and outlines some of the formal and informal institutional challenges involved in the private management of water utilities.

The article, authored by Aleksandra Peeroo, University of Paris 1 Panthéon-Sorbonne, France, is titled "Privatisation in times of economic crisis: Shalt thou covet thy people’s water?" It notes that the European Central Bank and the European Commission have invited certain countries, including Greece, Portugal and Italy, to sell their water utilities to private companies in hopes of decreasing public budget pressures and increasing the reliability of water utilities. Peeroo argues that this approach to water management creates potential problems related to “tariff increases; the deterioration of the networks due to under-investment; a reluctance of the operator to extend the network to less profitable regions in developing countries; and risks for the security of water supply due to a trade-off between quality and cost-cutting.”

The author recommends that policy makers consider privatization from various institutional perspectives, particularly with regards to growing public resistance to water privatization and the trend of certain countries returning to municipal water management after a privatization attempt. In conclusion, Peeroo stresses that “public management is possible without ruining public budgets,” not only in rich but also developing countries, and suggests that researchers study successful cases of the public management of water utilities in order to propose reforms that consider “not merely for formal institutional settings,” but also “informal ones such as the feelings and values of the people.”

GWF was established in 2010 as an initiative of the UN Educational, Scientific and Cultural Organization (UNESCO) Chair in Water Economics and Transboundary Water Governance in order to present knowledge and insight from leading water researchers and practitioners.