How Felton, Calif., Achieved Water Independence
Food & Water Watch has studied the effects of water-system privatization and has helped Felton and other communities turn—or return—to public control. In a 2009 report that examined nearly 5,000 water utilities and 1,900 sewer utilities, the organization found that the private entities—which have a fiduciary obligation to shareholders—charge up to 80 percent more for water and 100 percent more for sewer services. Privately owned utilities cost more to operate, too: They typically have to pay income and property taxes, while public utilities are exempt. In all, according to Food & Water Watch, operation and maintenance costs of privatized water systems can spike 20 to 30 percent, when dividends, taxes, and profits are factored in. It follows that corporations make more money if more water is used; conservation and repairs, then, can fall off the priority list. When Stockton, Calif., privatized its wastewater system, higher-than-promised rate hikes, poor maintenance, and sewage overflows followed. When 8 million gallons discharged into the San Joaquin River, the spill went unnoticed for 10 hours and unreported to the public for three days.
According to a 2002 Century Foundation survey of 245 municipalities, 73 percent of them ended private water contracts because of poor service. In Lee County, Fla., officials realized that after five years of control by Severn Trent Services, a British multinational corporation, the county needed $8 million to repair improperly maintained systems, which could have jeopardized environmental and public health. The county lost money on the deal and didn’t renew the five-year contract once it ended. Other cities that privatized sewer systems—including Woonsocket, R.I., and Wilmington, Del.—have discovered chronic pollution problems.
Meanwhile, some cities turn to water-system leases. But under a lease, the city retains control of the infrastructure, so the corporation has even less incentive to perform proper maintenance. If spills or overflows result in environmental damage, it is often the municipality that has to pick up the tab on any fines.
In 2008, the city of Milwaukee was looking for solutions to an impending $100 million shortfall when the city’s comptroller recommended a lease of the Milwaukee Water Works. He hoped a private company would pay the city $500 million for the right to lease the utility for 99 years. “The driving reason wasn’t that our water system was falling apart or in need of maintenance,” said Deputy Comptroller Mike Daun. “We wanted a public-private partnership that would result in a very large transfer of funds to the city up front, which we’d use to create an endowment and address the deficit.”
Take Back Your Water
To learn more about one community's fight against privatized water, visit Felton Friends of Locally Owned Water (FLOW).
Food & Water Watch advocates for healthy food and water through a variety of programs. The nonprofit also helps communities gain—or regain—public control of their water systems.
Join the movement of individuals, communities, and businesses who are promoting public water over private profits. You can find out more at Corporate Accountability International's Campaign, "Think Outside the Bottle."
But not everyone shared that vision. Research by Food & Water Watch revealed that for every dollar the city received from the lease, residents would end up paying $1.60 to $5.40.The organization aided a grassroots effort in Milwaukee that helped defeat the privatization plan, at least for now.
Cities such as Chicago continue to contemplate privatization, while many others are reverting to public control or fighting privatization at the outset.
Wenonah Hauter, executive director of Food & Water Watch, says that her organization advises communities to focus on who is able to stop the privatization threat, usually the city council or water board. That means doorbelling, working with the media, releasing reports that challenge the company’s claims, and working closely with labor groups and community groups. If cities need to make improvements to ailing systems, municipal bonds are usually a cheaper option than private financing, and they can seek public-public partnerships (PUPs), an alternative to public-private partnerships. PUPs, according to the Transnational Institute, are “a collaboration between two or more public authorities or organizations based on solidarity to improve the capacity and effectiveness of one partner in providing public water or sanitation services.” Essentially those communities with well-run systems offer their expertise to managers of utilities in need of some help.
But for many, the issue of water privatization isn’t just about money. Felton FLOW member Barbara Sprenger said she was motivated to act primarily “because it was water.” Private ownership, she said, meant extra costs without the necessary monitoring and transparency.
“The people on our water board manage our water as part of a watershed,” she said. “They care, and they are local—we see them at the grocery store. You really have to have local control over something so vital.”
- Protecting Our Commons: Keeping the air, the water, the Internet and other commons out of corporate hands and in our own. A YES! Magazine interactive graphic.
- How to Get Local Control: Taught by people who've done it.
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