England is mentioned here Keith. Accurately?
Brian McAndrews
PRINT EDITION
Don't tap into the private sector
space
Publicly owned is wiser than flush with profits, say academics KAREN
BAKKER and DAVID CAMERON, and ADELE HURLEY, a former International
Joint Commission co-chair
space
space
By KAREN BAKKER, DAVID CAMERON AND ADELE HURLEY
Thursday, February 6, 2003 - Page A17 The Globe and Mail
Since the release of Ontario's Walkerton inquiry report, the need to
address the security of Canada's drinking water has become more
obvious and urgent. Cities such as Halifax and Moncton have already
privatized the operation of their water systems. Is this the solution?
The multinational water-service firms that dominate the global
water-supply contract market actively seek such contracts. Two French
companies, Lyonnaise des Eaux and Vivendi, are among the largest in
the world, with tens of millions of customers. But most water-supply
systems around the world, and in Canada, remain in public hands.
Tapping into multinational expertise brings clear advantages, but
also higher risks. Hamilton, Ont., signed a 10-year contract in 1994
with Philip Services, which ran into financial difficulty. So did the
next owner, an Enron subsidiary. Hamilton has dealt with four
operators of its water-supply system in eight years.
Municipal debates about water-supply management focus on the need for
accountability and oversight -- which is why citizens opposed
Vancouver's plans to involve private companies in building and
operating a water filtration plant. Accountability was also a factor
in Toronto City Council's recent decision to retain direct control of
its water-supply system through a council committee, rather than an
autonomous municipal services board or stand-alone municipal
corporation.
One real fear is that private companies will promise optimistic
savings, and then try to renegotiate once the contract is under way.
Last month, Atlanta, Ga., cancelled its 20-year contract with United
Water, a subsidiary of Suez-Lyonnaise des Eaux, citing failure to
deliver on promised cost savings.
So how should citizens, governments and private corporations
participate in water-supply management decisions? The University of
Toronto Munk Centre's Program on Water Issues has identified seven
models: direct-managed municipal service; autonomous board or
commission; co-operative management; Crown corporation; a private
corporation, government-owned; delegated management; and a private
company.
After considering its options, Washington, D.C., retained public
ownership and developed a system to increase efficiency and match
private-sector performance standards. A Welsh water and wastewater
company, privatized in 1989, was restructured in 2001 as a
not-for-profit corporation. Now owned by "members" and prohibited
from diversifying, the company's risk rating has dropped and its
credit rating has improved, giving consumers lower water bills.
Other municipalities combine commercial management practices and
public ownership.
Dutch public water companies operate with no subsidies, widespread
metering and full cost-recovery pricing. The Dutch system uses
incentives rather than ownership to manage water, supported by
stringent regulation.
Private companies want to maximize profit; if effectively regulated,
they may also increase efficiency -- but not necessarily at a lower
cost to consumers. After the 1989 water privatization in England and
Wales, water prices increased substantially. So did disconnections of
residences for non-payment of bills, raising fears about public
health. Concerned about dysentery and other water-related illnesses,
the government banned residential disconnections.
The English case shows how involving private companies in water
supply without effective regulation may have an environmental impact.
The English also found increased leakage from water-supply pipes.
When questioned, company managers argued that to go below an
"economic level of leakage" would reduce their profits. To protect
the infrastructure, the government had to impose leakage limits.
The English experience underlines the importance of strict regulation
for effective water management. But private companies aren't keen on
strict regulation. English regulators have found it difficult to
maintain affordable prices and high environmental standards, while
ensuring levels of profit acceptable to private companies and their
shareholders. The world's largest water-supply company,
Suez-Lyonnaise des Eaux, recently told the Philippine government that
it wanted to end a 25-year contract only five years after it was
signed because of disputes with regulators.
As the Walkerton tragedy reminded us, robust regulation is necessary
for effective water-supply management, whether it is under public or
private ownership. Experience shows that when private companies
cannot earn a healthy profit, they retreat. The resulting ownership
changes and contract cancellations can be prolonged and expensive,
with risks to public health. When it comes to a resource that is
essential for life and health, why expose Canadians to such risks?
Karen Bakker is an environmental geography professor at the
University of British Columbia. David Cameron, a political science
professor at the University of Toronto, was an author of Report of
the Walkerton Inquiry: A Strategy for Safe Drinking Water Part II.
Adèle Hurley is a former Canadian co-chair of the International Joint
Commission.
© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page
_______________________________________________
Futurework mailing list
[EMAIL PROTECTED]
http://scribe.uwaterloo.ca/mailman/listinfo/futurework
