What are the benefits of water privatization

Privatization: The Struggle for Water

The privatization of the water supply has been an issue in Europe for a long time. Due to the increasing scarcity of water, the question of the operators - state or private companies - is becoming more and more important.

In 2010 the UN recognized access to clean water as a human right. Water is needed all the time: for drinking, for washing, for cooking - for living. Water is life. And that sells well.

In recent years, attempts have been made in various regions in Germany, France, Portugal, Ireland and Greece to privatize the water supply. Partly successful. The majority of the population is in favor of government provision. What are the interests behind this?

Advantages of privatization?

The reason given for the privatization of the water supply is usually greater effectiveness. Private companies claim that they guarantee the best quality and environmental friendliness and that they work more economically.

Christa Hecht, managing director of the Alliance of Public Water Management (AöW), has a different opinion: "The promises that private companies generally work more effectively than public companies were believed for a long time. The argument has now been refuted," she reports in an interview with our portal.

Well-run public companies would be able to work at least as effectively and with cost-covering prices as private ones.

The emeritus professor for regional economics at the Bremen University of Applied Sciences Ernst Mönnich also says: "If you compare it internationally, you can see that at least in Germany we are dominated by municipal companies and that our water supply is undoubtedly of good quality."

Disadvantages of privatization

According to Hecht, one of the major disadvantages of a private water supply is that private companies have to generate profits, which makes the supply more expensive.

"The quality could drop," says Hecht. "At least that's the experience around the world."

Population defends itself

Then why does a city give water supplies into private hands at all? The managing director of the AöW says: "This is often done by cities or states that are heavily indebted. This is supposed to generate income quickly."

An example is Greece. In view of the debt crisis, the Troika, a cooperation between the European Central Bank, the International Monetary Fund and the European Commission, demanded that further parts of the shares in the water supply of Athens and Thessaloniki be sold.

"The EU Commission still believes in the legends of the great efficiency of the private sector and of solving the financial problems of indebted states. The large private corporations, especially for water, have great influence in the EU and in some EU member states," said Hecht .

The example of Berlin

Germany, too, has already had experience with private supply: In 1999, water utilities were partially privatized in Berlin. The result was rising prices.

In a referendum in 2011, the majority of citizens voted for remunicipalisation. In the following years, the State of Berlin bought back the shares in Wasserbetriebe from the companies RWE and Veolia. Since 2014, the supply has been in public hands again.

Mönnich says: "Since the beginning of the 1990s, the EU has tried to open up service sectors, in particular public services, to the market. French companies in particular have also tried to gain a foothold here in Germany. However, that is not the case in the water / wastewater sector been particularly successful. "

"Water degenerates into a means of profit maximization"

So what are the consequences of privatization? "Through privatization, water degenerates into a commodity, into commerce, into a means of profit maximization," says Hecht. "There is huge potential for blackmail behind this."

This would give private corporations an enormous position of power over states, municipalities and consumers in order to enforce higher prices and profits.

"If the individual citizen can no longer pay high prices for water, he would find himself in dire straits," said Hecht.

What would privatization of the water supply mean in the long term?

According to Mönnich, if privatization takes off, there is a risk of monopoly formation. "In a situation in which competition from different producers is not possible, I need a public guarantee for quality control as well as price control, otherwise a monopoly will be exploited," he says.

The question would be to what extent antitrust authorities are able to do this and to what extent political interests also play a role.

"Abuse of a monopoly can never be ruled out"

But are there any risks to quality under the prevailing conditions in Germany? "I wouldn't be so pessimistic about that," says the former university professor. The abuse of a monopoly can never be ruled out.

Hecht is of the opinion that water should not be taken out of your hands: "All people need clean water to survive, which is why no one should be denied access to drinking water. That is why the United Nations has access to clean water as a human right explained. The task of supplying water at affordable costs can only be guaranteed by the public sector. "

In order to prevent privatization, the people could exert influence through the elections and democratic bodies as well as greater citizen participation, said Hecht.

Mönnich is of the opinion: "I think that the citizens are quite satisfied with our current municipal system. Since it can be operated economically, the municipalities are interested in keeping this story going."