NCPA - National Center for Policy Analysis

Supplying Water Through the Private Sector

April 8, 2003

At the third world water forum in Kyoto, Japan, a high-level report estimated that in order to provide clean drinking water to the world's population, worldwide investment would have to rise from $80 billion a year to near $180 billion.

Governments are hard-pressed to provide that much capital, so most will have to come from the private sector. However, activists in Kyoto -- mostly from developed countries -- fiercely resisted the notion that private enterprise might improve poor countries' water supply.

In Cochabamba, Bolivia, riots three years ago over hikes in water charges forced the cancellation of a contract for a consortium including the Bechtel Corporation to supply water. Elsewhere, private companies have successfully supplied water in developing countries:

  • Abidjan, Ivory Coast, has one of the few working municipal-water systems in Africa, provided for years by a private company.
  • In Chile, private water suppliers have raised charges to cover full costs, but poor people get water stamps to pay their bills; now 95 percent of the population has clean water.
  • In Argentina, a recent study concluded that, by raising quality and improving access, privatization had reduced child mortality.

One developed country that has depended on private water for centuries is France. Indeed, the world's two biggest private water companies are French.

Source: "Bogged Down: Why the Private Sector Should Play a Bigger Role in Water Supply," March 28, 2003, Economist.

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