Water privatization refers to private entities controlling or maintaining water systems and resources. It can be controversial, with opponents arguing that private companies prioritize profits over long-term environmental costs. Proponents argue that private involvement can improve quality and availability of water. Water contracts include asset sales and management contracts.
Most of the time, water resources are owned and maintained by public organizations such as local governments. When these public resources are transferred to private companies, it is referred to as privatization. Broadly speaking, water privatization usually refers to the control or maintenance of water systems and water resources by private entities. For example, a business might work with a local municipality to build and maintain a water treatment plant or wastewater facility. In a more controversial example, a private company might source and bottle water from a public source with the intent of making a profit.
Water is such an important public resource and has been maintained by the public sector for so long that the concept of water privatization can be controversial. In some countries, laws could be put in place to ensure that citizens have a right to water by limiting the water rights of companies. On the other hand, private companies could lobby for expanded water rights to include private companies regardless of size.
Opponents of water privatization could argue that private companies will only be concerned with making a profit and ignore the long-term and environmental costs of private water practices. Private companies usually care about profits, so they might focus on short-term benefits. As with electricity privatization, opponents of water privatization could argue that allowing private entities to control the essential ingredients of life would be disastrous.
Proponents of water privatization could argue that private companies can improve the quality and availability of water and related services. Especially in developing countries, it could be argued that private involvement may be the only way to rapidly develop strong water resources. Private companies could also point out that they can increase efficiency, improve quality and sustain operations over a long period.
“Privatisation” is a broad term and there are more specific classifications relating to water contracts. The most direct type of water contract is the sale of assets. In an asset sale, a private company could buy the entire water system from a government entity or establish that system. Another possible water contract is a management contract, where a private company is responsible only for the operation of the system. The public sector would still control access to water and infrastructure, but a private company would manage the operation and maintenance of the system.
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