Water Privatization

Since 1990, water privatization -- turning over some or all of the assets of a public system to a private company -- has been growing rapidly. Although privatization can be beneficial in some circumstances, we believe that strong government oversight is needed to protect the public interest.

To help improve this oversight, our water and privatization work has developed a set of standards to guide privatization and public/private agreements. Described by the Financial Times Global Water Report as “The Pacific Institute Principles,” these principles are described in detail in “The New Economy of Water” and call for: protecting public ownership of water rights, including marginalized communities in decision-making, taking into account the impacts on downstream communities and the environment, and to ensuring that water quality is protected.

The Pacific Institute has also conducted reviews of proposed privatization deals, most recently looking at Stockton, California’s agreement. What we found in Stockton was a rushed effort to push through an unpopular proposal. After citizens groups sued the city, the Judge in the case concurred with our view: You can't rebuild a major wastewater-treatment plant, use new technology, and change plant operators without proper review.

The Institute has found that privatization is not the bright line dividing success and failure in municipal water systems. To learn more about the Institute's research on the factors that do improve cost-effectiveness and efficiency, see "Beyond Privatization: Restructuring Water Systems to Improve Performance."

Privatization or public-private partnerships can play a role in bringing water services to those without or improving service in areas that need capitol investment. But, we must ensure that any agreements don’t undercut the public interest, harm the environment or lock municipalities into unfair and unsafe deals.