Environment / Politics / Society

The Price of Water Privatisation

Do you actually know what a cubic metre of water costs in your community? I suppose you do not – unless you live in one of the communities in Portugal which experienced a rise in water costs of up to four hundred per cent. Water services had been privatised in the affected communities and according to plans of the European Commission this price spiral could also affect your water bill in the future.

A few years ago the United Nations have recognised the human right to water. Access to drinking water as well as sanitation is a fundamental principle but it is not a principle recognised in the European Union, yet. One million supporters – that is the necessary number of supporters for a European Citizens’ Initiative. ECI’s as they are abbreviated, try to give EU citizens a voice. If one million people from at least seven different EU countries sign an ECI the issue has to be put on the EU’s political agenda. Right2water (www.right2water.eu) started in April 2012 and has already collected 873.000 signatures. One million must be reached by September 2013. The initiative’s aim is to implement the human right to water and sanitation on the EU’s political agenda. While many may ask why we need this in countries that are among the richest in the world, which have achieved the highest standards in sanitation and where everyone can safely drink water from the tap, current EU legislation plans could threaten the situation. In January 2013, the European Parliament’s Internal Market and Consumer Protection Committee has passed a directive aiming at privatising water services.

Many people perceive water as, and in many countries it actually is, a public good. In Germany for example, utilities such as water, electricity or gas have been in the hand of cities or communities since their foundation. So called “Stadtwerke” (public utility companies) have a long tradition, are reliable and even though there is of course misconduct many people would not want to live without them. After all they are locally attached. Thus many people fear they would loose “their” water if water services are privatised. The fears are increasing water prices and decreasing water quality. The fears are not arbitrary which the following examples show. The city government of Germany’s capital Berlin was forced to publish its public-private partnership contract with French water giant Veolia after a successful referendum. People were staggered by increasing water prices. Paris, the French capital has decided to return its water service back into public hands and the documentary “Water Makes Money” (www.watermakesmoney.org) shows what happens when a private company takes over the former public water service. Many French communities experienced a loss in drinking water quality because private companies did not invest in the costly maintenance of the service network but instead treat water with chlorine to comply with drinking water standards. This may not only cause health problems but is also ecologically disastrous because wastewater is usually discharged, after being treated, into rivers for example. Even minor traces of chemicals could have an effect on ecosystems.





Soon after the decision of the aforementioned committee the commissioner responsible for the EU Internal Market, Michel Barnier, was forced to release a press statement saying, the Directive on Concessions would not lead to forced privatisation of water services. Public authorities would at all times remain free to choose whether they provide the services directly or via private operators. So far so good. A few paragraphs later the press release says: “It is only insofar as a public authority has already chosen or wishes to externalise such services to private or semi-private operators the Directive requires that transparent and open procedures are followed.”


Full statement:



The commissioner emphasises transparency but what he hides is the fact that a few years ago the EU Commission asked cities and communities to privatise or at least semi-privatise public services under so called public-private partnerships in order to restore public budgets. Since many municipalities followed suit the proposed directive could mean they are forced to tender Europe wide and may have to give the concession to a private company. This loophole in the proposed directive seems to be the result of good lobbying by water giants such French Veolia. The German tageszeitung wrote: “It makes you think twice that the controversial directive was proposed by a French EU Commissioner.” (taz, 24/1/2013)

Now, one may ask what is so bad about a Europe wide tender? Proponents of privatisation claim that if water services are put on the market it will be to the good of everyone. Prices may fall and water is managed efficiently. Public companies are on the contrary known to be inefficient, corrupt and less innovative. Both cases can be true but as the examples above show it can also be the opposite. If in addition people start to have an interest in water one may also ask whether it is such a good idea to privatise water services if they can be kept in public hands and be put under better public control instead. This would be more transparent than privatising. In cases of privatisations contracts between a city and a private water company are not accessible to the public as the Berlin example shows.

The proposed directive is a good example of conflicting interests and lacking cooperation as well as coordination. Generally speaking the EU’s water legislation is good. The EU Water Framework Directive or the Drinking Water Directive set new standards in many ways. Though the water quality differs across the union rivers and lakes are on a good way and enhanced public participation has helped to bring water related issues to people’s minds. It is a positive sign if people become interested and aware in what we usually take for granted as water is abundant in most of parts of Europe. On the other hand we have a legislation proposed by the Internal Market Commissioner thinking in standard economic terms though we have seen so many examples that marketization is not a panacea. Of course he is right if he demands more transparency and open procedures but it is doubtful whether this can be achieved through marketization. Utilities such as water or electricity, especially as both become more and more expensive, could stay in public hands but could include actual water users in their planning and decision-making. This would lead as said above to more transparency but it would also raise awareness in terms of water prices and how they are calculated.

Kevin Grecksch

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