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
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
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.