Privatize Water!

In recent days reports have been coming out about authorities’ struggle to battle a water shortage in Brazil’s two major cities of Rio de Janeiro and São Paulo. Ostensibly caused by a severe drought, the crisis has even sparked fears of an impending “water war”. Measures taken earlier this month to reduce the water flow at a major dam were unsuccessful to say the least, cutting off running water to families in some neighborhoods for as long as 12 hours a day.

Unsurprisingly, the vast majority of the water system is government-run without much debate. After all, for all its ubiquity, government incompetence does not always overtly affect people’s daily lives. Now that it does, it might bOLYMPUS DIGITAL CAMERAe an opportune time for Brazilian freedom advocates to voice their opinions.

While some market reform has taken place in recent years, the process has been severely stifled by jurisdictional conflicts fueled by Constitutional as well as other regulations. Besides establishing a national system of water resources management the Constitution also defines criteria for granting rights of use, and it regards surface water and groundwater as property of the states. The National Water Resources Policy even specifies many uses of water that require government permission.

A World Bank publication analyzing market reform in urban water supplies in Santiago de Chile found “surprisingly large” net benefits in economic welfare despite significant price hikes. After years of losses largely imposed by regulatory obstacles the Santiago Metropolitan Works Enterprise had become so underfunded it could no longer perform basic maintenance on its systems. Some of the positive results included almost 100 percent coverage of expanding demand, better water pressure, fewer interruptions of service and higher wages for employees. The outcomes were so positive, in fact, that full privatization of the entire urban water supply and sanitation sector was eventually implemented.

Studies on market reform of the water sector in other South American countries have also found positive results. In Argentina the privatization of local water companies – covering approximately 30 percent of the country’s municipalities – reduced child mortality on average 5 to 7 percent, preventing 375 child deaths per year. It is worth noting also that the effect was most pronounced (24 percent) in the poorest areas, offering empirical evidence that runs contrary to oft-heard claims about increased inequality. Overall the number of households connected to the water network increased by nearly 12 percent.

In Bolivia privatization was shown to increase water access relative to both the existing trend and the non-privatized areas. The results also concurred with the aforementioned that the relative benefits of were larger for the poorest segments of the population, who gained from the largest increases in access. Some of the same findings have been reported in Brazil, if only on a small scale.

Notwithstanding those positive results generated by market reform, the current legal framework is a severe impediment. These obstacles will have to be dealt with if Brazilians are to reap the full benefits of voluntary – rather than compulsory – human action in the provision of such a basic need as water. Empirical evidence clearly confirms it can be done, giving liberals and libertarians plenty of arrows in their quiver to build a convincing case for liberty and against statists’ fear mongering. If successful that could be a big step toward a freer Brazil.







4 thoughts on “Privatize Water!

  1. Thank you. I hope you do well with your blog as well. I apologize if I can off as critical. I think liberty is so important. I’m just concerned that the World Bank and IMF yield way too much power. I think in some ways I’m conservative but in some ways too so much. I believe in capitalism but believe corporations need to have good morals and ethics as well. I don’t think they should abuse their workers before profit or dump toxic chemicals into our environment or use toxic chemicals in food or other products. The thing I find so sad is that these big corporations will reformulate their products for the European market and overseas to be healthier. They don’t use artificial dyes in food but than I understand it’s supply and demand when people demand better products they will get better products but if the demand is not high enough than it will not be done. Of course people could argue it keeps costs for customers down but believe that to be deceptive but indirectly taxpayers are paying higher taxes to clean up the environment and the taxes go to corporate subsidies. So the playing field is not even. If the subsidies were taken away the price difference would probably be the same for certain products. But it’s just my opinion. I believe we need a government that gives us more freedom less taxes and we need a real discussion of all welfare not only for the poor but what about corporate welfare. I think personally if a company is in trouble should it be bailed out if a small business is in trouble there are as far as I know no bailouts or bail-ins. Just to mention about the documentary I think they talk about global warming and don’t agree with it but the rest of the documentary is not bad. I should watch it again and pay better attention. Also there is one called Tapped and Flow about the same topics. So I just ignore the whole global warming issue.

  2. Water privitization is not good at all. It gives corporations like Aquafina too much power and bottling corporations to much power and they purposely increase the water use. Look what Coca Cola is doing in India and there are tons of protests to get Coca Cola etc out countries. Coca Cola will use the water for their beverages while the people next to the plant barely have water. Please watch some documentaries like Blue Gold and others to learn the truth. I’m all for capitalism but these companies don’t respect that people don’t want them in their countries and force themselves on the people but of course the problem is consumers keep buying bottled water so the consumer is responsible for this privitization itself.

    • Thank you for your comment and for sharing the documentary Celine. I hope to watch it one of these days. In the meantime however, I have to honestly say I find the references listed in the article more convincing than anecdotal evidence from one specific case where a large corporation – likely after buying off local politicians – was/is able to use up so much water that the community suffers. I won’t pretend to be informed enough about this specific case to make a fair judgment but I’ll check the documentary out and maybe do some research. Thanks again and good luck with your blog!

  3. Pingback: End Brazil’s Water Nationalization | Tiffany's Non-Blog

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