The Untapped Potential of Water Privatization
October 2000
The Untapped Potential of Water Privatization
By Edwin S. Rubenstein
TABLE OF CONTENTS
Executive Summary 1
Recommendations 4
Introduction 5
Competition in the Water Industry 8
How Big is the U.S. Water Industry? 11
Factors Driving Water Privatization 12
The Superiority of Privatization: A Statistical Analysis…………………………
Can We Afford Water? Equity versus Efficiency 15
Privatization Models 17
Private Ownership 18
Rate of Return Regulation 19
Barriers to Private Ownership 20
Contract Operations and Maintenance 22
Disadvantages 24
Other Regulatory Models :
Franchise Bidding (The French Model)…………………………
Rate Caps (The British Model)…………………………………
Can Water be Deregulated? 26
The Future: Water Industry Scenarios……………………………………………..
Case Study: Atlanta: A Liberal mayor Embraces Privatization………………….28
THE UNTAPPED POTENTIAL OF WATER PRIVATIZATION
A HUDSON INSTITUTE REPORT
FOR AMERICAN WATER WORKS, INC.
By Edwin S. Rubenstein
Executive Summary
Americans enjoy the best water service in the world. It’s so good we think little about it. Turn on the tap and water comes running.
Yet getting that water to the customer is a huge business. And the U. S. lags far behind much of the rest of the world in how we treat water utilities.
Privatization of water utilities is becoming commonplace in much of the world. In France, water utilities are private. Some are quite large and have worldwide operations: Vivendi and Suez Lyonnaise des Eaux are examples. Britain’s government water monopoly was broken into eight large private water utilities by Margaret Thatcher. Much of the developing world gives concession contracts to private water utilities to build and operate their expanding systems. Worldwide, just $300 million was spent on water privatization between 1984 and 1990. In the next seven years, more than $24 billion was spent. There is no question where the rest of the
The Untapped Potential of Water Privatization
By Edwin S. Rubenstein
TABLE OF CONTENTS
Executive Summary 1
Recommendations 4
Introduction 5
Competition in the Water Industry 8
How Big is the U.S. Water Industry? 11
Factors Driving Water Privatization 12
The Superiority of Privatization: A Statistical Analysis…………………………
Can We Afford Water? Equity versus Efficiency 15
Privatization Models 17
Private Ownership 18
Rate of Return Regulation 19
Barriers to Private Ownership 20
Contract Operations and Maintenance 22
Disadvantages 24
Other Regulatory Models :
Franchise Bidding (The French Model)…………………………
Rate Caps (The British Model)…………………………………
Can Water be Deregulated? 26
The Future: Water Industry Scenarios……………………………………………..
Case Study: Atlanta: A Liberal mayor Embraces Privatization………………….28
THE UNTAPPED POTENTIAL OF WATER PRIVATIZATION
A HUDSON INSTITUTE REPORT
FOR AMERICAN WATER WORKS, INC.
By Edwin S. Rubenstein
Executive Summary
Americans enjoy the best water service in the world. It’s so good we think little about it. Turn on the tap and water comes running.
Yet getting that water to the customer is a huge business. And the U. S. lags far behind much of the rest of the world in how we treat water utilities.
Privatization of water utilities is becoming commonplace in much of the world. In France, water utilities are private. Some are quite large and have worldwide operations: Vivendi and Suez Lyonnaise des Eaux are examples. Britain’s government water monopoly was broken into eight large private water utilities by Margaret Thatcher. Much of the developing world gives concession contracts to private water utilities to build and operate their expanding systems. Worldwide, just $300 million was spent on water privatization between 1984 and 1990. In the next seven years, more than $24 billion was spent. There is no question where the rest of the