Water Privatisation Causes Deaths

[a_unique_person]

Interesting article on water privatisation.

http://www.theage.com.au/articles/2003/02/02/1044122259510.html

Note: This link will expire some time in the future, although you will still be able to pay to read it.



When cholera appeared on South Africa's Dolphin Coast in August, 2000, officials first assumed it was just another of the sporadic outbreaks that have long stricken the country's eastern seaboard. But as the epidemic spread, it turned out to be a chronicle of death foretold by blind ideology.

In 1998, local councils had begun taking steps to commercialise their waterworks by forcing residents to pay the full cost of drinking water. But many of the millions of people living in the tin-roof slums of the region could not afford the rates. Cut off at the tap, they were forced to find water in streams, ponds and lakes polluted with manure and human waste. By January, 2002, when the worst cholera epidemic in South Africa's history ended, it had infected more than 250,000 people and killed almost 300, spreading as far as Johannesburg, 500 kilometres away.

Making people pay the full cost of their water "was the direct cause of the cholera epidemic", David Hemson, a social scientist sent by the government to investigate the outbreak, said in an interview. "There is no doubt about that."





A year-long investigation by the International Consortium of Investigative Journalists (ICIJ), a project of the Centre for Public Integrity in Washington, showed that world's three largest water companies, Frances Suez and Vivendi Environnement, and British-based Thames Water, owned by Germany's RWE AG, have, since 1990, expanded into every region of the world.

Three other companies, Saur of France, and United Utilities of England, working in conjunction with Bechtel, of the United States, have also successfully secured international drinking water contracts. But their size pales in comparison with that of the big three.

The investigation shows that these companies have often worked closely with the World Bank, lobbying governments and international trade and standards organisations for changes in legislation and trade agreements to force the privatisation of public waterworks.

[shanek]

That's a joke! The article is littered with enough biased viewpoints to cause any skeptic to automatically dismiss it.

On the other hand, the EPA has found that in the 40+% municipalities in America that have privatized their water supply, costs are 30-50% lower, and the water is cleaner, as well as more plentiful during shortages.

I'm sure you can troll the world for biased articles that support your narrow little world-view, but the actual scientific studies say otherwise.

[a_unique_person]

Originally posted by shanek
That's a joke! The article is littered with enough biased viewpoints to cause any skeptic to automatically dismiss it.

On the other hand, the EPA has found that in the 40+% municipalities in America that have privatized their water supply, costs are 30-50% lower, and the water is cleaner, as well as more plentiful during shortages.

I'm sure you can troll the world for biased articles that support your narrow little world-view, but the actual scientific studies say otherwise.

so these people didn't die from drinking unclean water because they couldn't afford the privatised water?

[Patrickt]

In the first quote, town councils decided consumers would have to pay the cost of the water system. A cholera outbreak occurred subsequently, in an area where periodic outbreaks of cholera were common, and 300 people died.

A. Where's the privatization? A town council is scarcely a corporation.
B. One person said the 300 deaths were directly attributable to the decisions of the town councils to charge for the water. Why then were there cholera outbreaks before the town councils made their decision? If that decision was the causative factor then there were no previous outbreaks and no previous deaths.

The last quote doesn't seem to have anything to do with either the first or the topic.

[a_unique_person]

Originally posted by Patrickt
In the first quote, town councils decided consumers would have to pay the cost of the water system. A cholera outbreak occurred subsequently, in an area where periodic outbreaks of cholera were common, and 300 people died.

A. Where's the privatization? A town council is scarcely a corporation.
B. One person said the 300 deaths were directly attributable to the decisions of the town councils to charge for the water. Why then were there cholera outbreaks before the town councils made their decision? If that decision was the causative factor then there were no previous outbreaks and no previous deaths.

The last quote doesn't seem to have anything to do with either the first or the topic.

the basic steps or privatisation are, create a separate legal entity to be sold, run that entity as if it were sold, sell it. when the entity charged the going rate for the water, without any subsidies, the water was too expensive for many.

the whole privatisation process is being forced on countries by the World Bank as part of it's conditions for loans.

cholera can still be caught in areas with clean drinking water on tap, for example, thirsty people not close to a tap. in poorer areas, taps can be much scarcer than in rich, western countries.

[shanek]

Originally posted by a_unique_person
so these people didn't die from drinking unclean water because they couldn't afford the privatised water?

If you'd bother to do even a modicum of real research on the matter, you might turned up Public/Private Partnerships and the Poor: The Dolphin Coast Water Concession by David Hemson and Herbert Batidzirai:

By 1996, the reticulation system was in a state of decay with fairly high levels of waterloss. In Etete, the water pipe system was old having been laid in the 1950s. TheDolphin Coast municipality had inherited the water and sewerage services on 1 March 1996 with an ill-equipped staff complement of 22 members but with responsibilities
over bulk water distribution and sewerage treatment works. (p. 33)

So the system was much worse than it is now.

It is difficult at this stage to give a fair judgment of the performance of the concessionso far. Although there are complaints in particular from the communities, the project isoperational and, in its daily practice, management is becoming aware of these issues.Its success depends on the current assumptions remaining in place, and no adversechanges in the policy environment taking place. Despite criticism, the BoDC officialsfeel they have made the right decision. (p. 139)

So it's premature for people like your source (who didn't even have the decency to attach his name to his rant) to blame anything on anything.

In short, the Concession is regarded officially as a
public example of how other municipalities could move towards privatisation without
sacrificing delivery to the poor. (p. 141)

So the poor are actually getting adequate water, despite the claims of your own source, which says, "The issue is not water itself, but access to water."

Do some fscking research!

[shanek]

Originally posted by Patrickt
A. Where's the privatization? A town council is scarcely a corporation.

Right; according to the paper I cited, it's a public/private partnership.

And your other point is correct: The whole argument is a post hoc ergo propter hoc flipped around.

[The Don]

Experience in the UK is that water costs have increased considerably since privatisation. The justification is that waste water quality (specifically relating to sewage discharge) has improved considerably to the extent that some of the UK's beaches are considered suitable for use by bathers (if you ignore the water temperature).

The maintenance budgets have been reduced in a major way which means that bursts and interruptions to service are more frequent (though they do respond quickly to "highly vulnerable" groups such as senior citizens, dialysis patients and members of parliament) so it could be argued that service has declined.

In my opinion a large and inefficient public sector organsiation has been replaced by a large and inefficient private sector organisation.

[richardm]

That's certainly the case, Don. A few years ago, the supply situation in Yorkshire was so bad that they were having to hire fleets of tankers to carry water from Northumberland to reservoirs in Yorkshire.

In part, this was because in order to save money and increase profits, Yorkshire Water sacked a large number of maintenance staff who were deemed surplus to requirements.

Unfortunately, among these reduntant workers were the people whose job it was to walk the high moors and ensure that the tributary channels in the hills were kept clear, in order to feed the reservoirs. The channels choked, and the reservoirs dried up.

Other reasons include lack of investment in pipe replacement, again, in order to shore up the share price, and ensure that the chairman earned his nice bonus.

So while privatising water supplies might work in some cases, it's hardly the panacea it's often made out to be. There is bad management in all walks of life.

[Jon_in_london]

Heres why privatisation (British edition) doesnt work:

1: Give expensive franchise of essential public service to company to run for profit to company that made largest contribution to Labour party coffers.
2: Company cuts service, raises prices, chops safety and maintainance staff to mazimise profits
3: Company sucks all the money out of essential service and infastructure starts collpasing
4: Government awards £1m fine to company for pisspoor performance
5: Infrastructure collapses
6: Government bails out private company with £50m public money in order to ensure continuation of essential service to voters.
7: Company makes big profits.
8: Taxpayer gets shafted

Simple eh?

[BillyTK]

...except that the water utilities were privatised in 1989 towards the end of Our Lady of Grantham's reign.

By the way I love this quote from the Kelda Group website (http://www.keldagroup.com/) (who own Yorkshire Water):
Its principal subsidiary is Yorkshire Water - one of the ten largest water and sewerage companies in the world - which provides high quality services to approximately 4.5 million people and 140,000 businesses every day.

My emphasis

Well, admittedly they're finally getting the hang of telling us when the water will be turned off before they actually do it...

[shanek]

Originally posted by The Don
Experience in the UK is that water costs have increased considerably since privatisation...The maintenance budgets have been reduced

Asking only out of confusion, since I know nothing about the British setup, but if it's been privatized, then whose budget are we talking about and who reduced it?

In my opinion a large and inefficient public sector organsiation has been replaced by a large and inefficient private sector organisation.

I think your use of the singular may hold the key here: Does this private organization hold a government-sponsored monopoly on water services? If so, then it's not fully privatized.

[shanek]

Originally posted by richardm
So while privatising water supplies might work in some cases, it's hardly the panacea it's often made out to be. There is bad management in all walks of life.

Of course there is. But with full privatization, you have competition acting as a sort of Darwinian selection. Those suppliers who are badly managed tend to give way to other suppliers who are better managed (or the suppliers who are badly managed improve their management). If this is a government-sponsored monopoly as I suspect it is, then that aspect is gone.

[shanek]

Originally posted by Jon_in_london
1: Give expensive franchise of essential public service to company to run for profit to company that made largest contribution to Labour party coffers.

Franchise...That usually means "government-sponsored monopoly." Like the reason cable TV here raises their prices year after year at several times the rate of inflation while the satellite companies' price hikes are few and far between, and aren't even at the level of inflation.

2: Company cuts service, raises prices, chops safety and maintainance staff to mazimise profits

They couldn't do this if there were competition, or even the threat of competition.

4: Government awards £1m fine to company for pisspoor performance

So their profits aren't even based on performance.

6: Government bails out private company with £50m public money in order to ensure continuation of essential service to voters.

Ditto here. So what incentive do they have to improve service and lower prices?

[The Don]

The company with the local water franchise has reduced budgets. The equation is relatively straightforward, income is capped by a regulator, the only ways to increase profitability are to undertake unregulated activity (develop new/international business streams - hard to do) or to reduce costs (easy to do in the short to medium term).

Don't get me wrong, in the bad old days there was a great deal of maintenance for mainenance sake, there is however a point at which quick fixes are being done which will prove more expensive in the long term. Thing is that the large project to fix the years of poor maintenance counts are a capital project for which the regulator will oftentimes allow additional revenue to be raised (from customers) whereas the ongoing maintenance won't.

Privatisation was undertaken on a local monopoly basis so that as a resident of xxxxxx I have to get my water from supplier yyyyyy. Because water is a non-homogeneous commodity (unlike electricity) there's less chance to pool supply.

The opportunities may be in areas of water trading (I buy in bulk and sell the right to supply to householders) but I am beholden to the water supply company produce and distribute the product

[Drooper]

Originally posted by a_unique_person
Interesting article on water privatisation.

http://www.theage.com.au/articles/2003/02/02/1044122259510.html

Note: This link will expire some time in the future, although you will still be able to pay to read it.





Typical nonsense. It wasn't privatisation, but the decision to end free provision that created the problem.

[richardm]

Originally posted by shanek


Of course there is. But with full privatization, you have competition acting as a sort of Darwinian selection. Those suppliers who are badly managed tend to give way to other suppliers who are better managed (or the suppliers who are badly managed improve their management). If this is a government-sponsored monopoly as I suspect it is, then that aspect is gone.

But in this particular case, how can it ever be fully competitive? After all, all the water companies have to use the same set of pipes, so if the problem is lack of investment in infrastructure, then moving to Supplier B isn't going to help.

How would this scenario work in real life: Suppose that I get my water from Supplier A. My water supply sucks, with hosepipe bans every summer, and funny tasting water. So I change to Supplier B. Nothing changes initially, but eventually a number of my neighbours switch to Supplier B as well, because they're all fed up too.

So it now becomes worth Supplier B's while to upgrade the infrastructure in my area, and water quantity and quality improves. Woohoo!

But unless Supplier B lays pipes for their exclusive use, Supplier A is going to use them as well, and get the benefit without the expense. They can keep prices lower, since they don't have to pay for the pipe improvements. So since everyone can get the same quality water for a lower price, Supplier A gets all the trade back, and Supplier B gets hosed ;)

Since no company can afford to completely replace all the piping - which they'd have to do in order to stop others using it - I can't see how this would work to anyone's advantage.

[BillyTK]

I guess we should move to the method used by the 'leccy and gas--Supplier A provides the water and manages and maintains infrastructure. Suppliers B-Z buy water of Supplier A and sell it to the general public.

Then we can have even more door-to-door/telesales people hawking round ever more complex "special offers" eith ever more machiavellian tricks to get you to sign up to a different supplier you probably don't want without you even realising.

My "favourite" was the guy representing an unnamed electricity company (their initials are YE, and the company name includes the words "Yorkshire" and "Electricity", but I don't want to give the name away anymore than I have ;) ) who asked if he could take my name and address to prove he'd actually left me some literature. He then asked me to sign for the literature as well. Strangely enough, it was on a form to authorise swapping over to Yorkshire Electricity...

[a_unique_person]

Originally posted by shanek


Of course there is. But with full privatization, you have competition acting as a sort of Darwinian selection. Those suppliers who are badly managed tend to give way to other suppliers who are better managed (or the suppliers who are badly managed improve their management). If this is a government-sponsored monopoly as I suspect it is, then that aspect is gone.

so we get of choice of taps to turn on in the kitchen, labelled with a brand name?

[shanek]

Originally posted by The Don
The company with the local water franchise has reduced budgets. The equation is relatively straightforward, income is capped by a regulator,

DINGDINGDINGDINGDING!!! I think we have it, Johnny! If their income is capped, then how can they recoup the costs involved in improving their service?

[shanek]

Originally posted by richardm
After all, all the water companies have to use the same set of pipes,

Says who? And if they do all use the same pipes, who controls the pipes?

But unless Supplier B lays pipes for their exclusive use, Supplier A is going to use them as well, and get the benefit without the expense.

Or unless you have more than one distribution company. Each distribution company might own its own set of pipes and let different suppliers use them, but might set rules for how pure the water has to be etc.

[shanek]

Originally posted by a_unique_person
so we get of choice of taps to turn on in the kitchen, labelled with a brand name?

Once again, you show you have absolutely nothing useful to contribute to a thread, even one you created. Pitiful.

[gnome]

Originally posted by shanek
Or unless you have more than one distribution company. Each distribution company might own its own set of pipes and let different suppliers use them, but might set rules for how pure the water has to be etc.

I'm kind of entering late, but are you saying let different companies lay their own separate pipework to each house? I may be misunderstanding you.

[shanek]

Originally posted by gnome
I'm kind of entering late, but are you saying let different companies lay their own separate pipework to each house? I may be misunderstanding you.

I'm saying let different companies find different methods for delivering water. That may be laying pipe, that may be using the pipes of a third-party company, it may be filling a tank on your property, it may be a lot of things.

[richardm]

Originally posted by shanek


Says who? And if they do all use the same pipes, who controls the pipes?


Okay. This is sort-of-analagous to the way that the railways are run here; the track and infrastructure is owned by one company who leases them to companies who want to run trains on them.

Originally posted by shanek

I'm saying let different companies find different methods for delivering water. That may be laying pipe, that may be using the pipes of a third-party company, it may be filling a tank on your property, it may be a lot of things

I can see that these are possibilities, but it is hard to see how well it might work in reality. The last option, for example, is possible now, but nobody's doing it. Still, I take the point, but will make a sort of dubious "Hmm" noise that is difficult to express in text :D

[richardm]

Originally posted by shanek


DINGDINGDINGDINGDING!!! I think we have it, Johnny! If their income is capped, then how can they recoup the costs involved in improving their service?

They don't need to incur costs - they could reinvesting more of the profits they make back into the company.

The profits of the 10 privatised companies in the UK went up to £2 billion a year by 1996, and I'm certain (I don't have numbers to hand) that they have continued to rise quite handily. And these are profits, not turnover.

Just half of that reinvested in infrastructure per year would make a huge difference.

[shanek]

Originally posted by richardm
I can see that these are possibilities, but it is hard to see how well it might work in reality.

The beauty of the free market is that we don't have to.

The last option, for example, is possible now, but nobody's doing it.

Not entirely true. My sister knows someone who owns property in the mountains here that has a large pond, spring-fed. Whenever there's a water shortage here, he drives his tanker up there, fills it with water, and brings it back. He also sells some to his neighbors to water their lawns etc. whenever the county puts restrictions on that. But I don't know of it being done on a large scale.

If nothing else, you can always run well/septic yourself and manage it on your own, if the government lets you (here, it doesn't, unless you don't have a municipal water supply).

[The Don]

Shanek,

Water is non-homogeneous and so cannot be pooled effectively (who put the crypto in the water ?).

Unless the market is merely based upon re-selling of water and sewage services then you would have to have a dedicated link from suppier to consumer. Whilst this is possible (and indeed operating) for some high-usage commercial customers, it will not prove commercially viable

[shanek]

Originally posted by richardm
They don't need to incur costs

Uh, yes, they do. It takes money to do these things, and the money has to come from somewhere. If they're capped on the amount they can charge the consumers, how are they going to make it back?

they could reinvesting more of the profits they make back into the company.

The profits of the 10 privatised companies in the UK went up to £2 billion a year by 1996, and I'm certain (I don't have numbers to hand) that they have continued to rise quite handily. And these are profits, not turnover.

Just half of that reinvested in infrastructure per year would make a huge difference.

Just what do you think happens to the money from a company's profits?

[shanek]

Originally posted by The Don
Water is non-homogeneous and so cannot be pooled effectively (who put the crypto in the water ?).

That would be the challenge of a third party company leasing its pipes. But as I pointed out, there are other options.

Funny how people keep ignoring the fact that over 40% of the US's municipal water supplies are fully privatized...

[richardm]

Originally posted by shanek


Uh, yes, they do. It takes money to do these things, and the money has to come from somewhere. If they're capped on the amount they can charge the consumers, how are they going to make it back?


Yorkshire Water, for example, made a pre-tax profit of £205 million in 1995/96. Why couldn't they spend some of that? That's profit, over-and-above what they spent on running the company.



Just what do you think happens to the money from a company's profits?

Quite a lot of it appears to go to pay dividends (£127 million in that same period from Yorkshire Water alone). A lot of the rest goes to prop up non-water businesses owned by the same company.

[shanek]

Originally posted by richardm
Quite a lot of it appears to go to pay dividends (£127 million in that same period from Yorkshire Water alone). A lot of the rest goes to prop up non-water businesses owned by the same company.

Unless you have information that this particular company is doing it, this is baseless. Profits are put back into the company for the next year's budget.

Also, keep in mind that not all profits are liquid assets. For example, if a company buys a piece of property that's trashy and run down they'll buy it at a certain price. Then they'll fix the land up, clean it up, landscape it, and build on it, and now the property is worth more than it was before. Even though they actually have less cash, the assets they have in the land are greater and figure in to the amount of profits.

[Mahatma Kane Jeeves]

Originally posted by shanek
On the other hand, the EPA has found that in the 40+% municipalities in America that have privatized their water supply, costs are 30-50% lower, and the water is cleaner, as well as more plentiful during shortages.

Do you have a reference for that? I'd be interested in looking at it.

[shanek]

Originally posted by Mahatma Kane Jeeves


Do you have a reference for that? I'd be interested in looking at it.

I'll have to go through the maze of links that is the EPA web site to find it again. It's a PDF file. It's on www.epa.gov somewhere.

[shanek]

Okay, the EPA's redesigned their website...now things are even harder to find. :rolleyes:

I did find this:

http://www.epa.gov/OW-OWM.html/pdfs/prigudol.pdf

This is talking about wastewater privatization, not drinking water privatization, but it does mention many of the same figures. Go to page 9 of the PDF file (page 7 of the study):

Public drinking water systems are frequently owned by private companies (over 40 percent of drinking water systems are private, regulated utility systems).

It then goes on to hit the high points of privatization: Increased efficiency, cost reduction, environmental benefits, and access to capital.

[richardm]

Originally posted by shanek


Unless you have information that this particular company is doing it, this is baseless. Profits are put back into the company for the next year's budget.


In fairness, Yorkshire Water are a pretty unfair example to pick; they have a long and famous (in this country) track record of rotten management, greedy practices, and general short-sighted stupidity (e.g. spending £3 million a week on tankering in water, then, when the crisis was over, not increasing the £200k per week on fixing the leaks that caused the problem in the first place), cutting maintenance spend by 60% in the same year they increased shareholder dividend by 60%, giving the director a huge bonus the same year as the tankering problem, etc, etc.... So they're probably not the best example of privatisation in action (which is why I picked 'em ;))


Also, keep in mind that not all profits are liquid assets.


:D

[shanek]

Originally posted by richardm
In fairness, Yorkshire Water are a pretty unfair example to pick; they have a long and famous (in this country) track record of rotten management, greedy practices, and general short-sighted stupidity (e.g. spending £3 million a week on tankering in water, then, when the crisis was over, not increasing the £200k per week on fixing the leaks that caused the problem in the first place), cutting maintenance spend by 60% in the same year they increased shareholder dividend by 60%, giving the director a huge bonus the same year as the tankering problem, etc, etc.... So they're probably not the best example of privatisation in action (which is why I picked 'em ;))

That's why competition is desired.

:D

Yeah, I guess in this case, not even the liquid's a liquid asset. :p