31 Jan 2011

The private-public cycle

It's common to hear that investor-owned companies taking over water systems raise prices to pay for deferred maintenance (and also because they get "automatic" profits from capital spending), as Food and Water Watch will claim to anyone.

It's also common to hear that municipalities taking over water systems lower prices to better serve citizens, thereby reducing funds available for maintenance and capital spending, as happened recently in Paris.

IOUs spend too much on gold-plated systems, until politicians take them over and spend too little, until deferred maintenance and lack of funds forces privatization again. See the pattern?

Bottom Line: Both private and public water providers pursue goals that may not suit customers.