Beware the privatization of your town’s water

People often assume private providers will be cheaper and more efficient; often the opposite is true.

 

Karen Knudsen is a contributor to Writers on the Range, the opinion service of High Country News. She is the director of the Clark Coalition, based in Missoula, Montana.


President Donald Trump has unveiled a $1.5 trillion plan to rebuild our nation’s crumbling infrastructure, including the pipes and treatment plants that keep clean water flowing from our taps. But if you read the fine print, his plan offers just $200 billion in federal funds; the remaining $1.3 trillion is expected to come from other sources, including private investors.

Private investment in water systems might look like a good deal to those who want to limit federal spending; it certainly appeals to cash-strapped cities and towns. And the need is great: The American Society of Civil Engineers gives our nation’s drinking water facilities a “D” grade, and says $1 trillion will be needed to fix them over the next 25 years. 

But private investment comes at a cost. Fundamentally, it means handing over our most essential resource to those who put profits before the public interest. That’s what we learned here in Missoula, Montana, where we recently wrested control of our water system away from a multinational corporation.

Missoula is unusual in that our water system was privately owned since the town’s founding in the 1870s. Our first water entrepreneur was “One-Eyed Riley,” whose delivery method involved a yoke and two buckets. Since then, the system passed through many hands, but was never well managed. Compared to neighboring towns with public utilities, Missoulians endured high rates and poor service. Necessary capital improvements were not made, and the system steadily deteriorated.

Kayakers enjoy the Clark Fork River next to downtown Missoula, Montana.

When the Carlyle Group purchased our water system in 2011, we hoped the situation would improve. But we soon realized the fundamental tension that lay between Carlyle’s goal of generating a short-term profit and Missoulians’ need for safe, clean water over the long haul. After a four-year court battle, we purchased our water system from Carlyle for $84 million. Now, for the first time in our town’s history, ownership of our water system — its pipes, pumps, wells, water rights, wilderness lakes and dams — has landed where it belongs, in the hands of the people, where it can be managed for the public good, for all time.

Unfortunately, other cities seem headed the other way, seeking private financing as the answer to their water woes. Many will be disappointed: Private investors require high rates of return, so they are unlikely to support projects that won’t pay off sufficiently.

If there is money to be made from water, look out. Population, pollution and climate change are squeezing global drinking water supplies, so investors — including commercial bottling plants — are rushing in. There are disturbing accounts of bottling plants targeting a town’s good water source, only to deplete local water wells, dry up wetlands and drain streams.

Some people assume that private management means greater efficiency and lower rates. Yet the reverse is often true. The New York Times analyzed three communities where private equity firms manage water or sewer services. In all three places — Bayonne, New Jersey, and Rialto and Santa Paula in California — rates rose more quickly than in comparable towns. In Bayonne, the price of water skyrocketed by nearly 28 percent after the private equity giant Kohlberg Kravis Roberts took charge of the city’s system.

That’s why some cities that had gone private — from Ojai, California to Fort Wayne, Indiana — have seized their water systems back from private ownership.

While the price tag can be daunting, public investment is the better option. State and local governments already provide the lion’s share of money for water infrastructure, and federal funding is available through the Clean Water and Drinking Water State Revolving Funds (though those funds are flat-lined in the president’s proposed 2019 budget). There are also collateral benefits from public investment. The Economic Policy Institute found that spending $188.4 billion on water infrastructure would yield $265 billion in economic activity and create 1.9 million jobs.

In Missoula, we are reaping the benefits from public ownership of our priceless water assets. Decisions about our water are made right here in town, not in a distant boardroom. Instead of short-term profits, our priority is long-term water security, a critical concern in the era of climate change. We don’t have to worry about rates going up to fatten investors’ wallets, and there are less tangible benefits, including a more intimate connection to the resource on which all life depends.

So here’s our advice: If your community hopes Trump’s infrastructure bill will fix your water system, be sure to read the fine print. And if you’re lucky enough to control your own water, never give it up without a fight.

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