Berkeley Planning Journal 13 (1999): 37-73
The Privatization of Residential Water Supply and Sanitation Services: Social Equity Issues in the California and
This paper reviews the theoretical and policy debates behind the global wave of infrastructure services privatization, focusing specifically on water and sanitation services. It explores two questions: first, what is the place of social equity considerations in the rapid spread of privatization endeavors in water supply and sanitation services around the world? Second, why has the water services privatization movement been so much slower to catch on in the United States? Equity in water services is defined along three dimensions: physical access to safe drinking water, economic access or affordability, and access to planning and decisionmaking for the services. The paper briefly reviews cases in France, Great Britain and Argentina, then examines the case of California in more depth, and shows how equity concerns are constructed differently in these various settings. After discussing the pricing and regulatory implications of privatization from an equity
standpoint, the paper concludes with some directions for further research.
The role of government in the provision of infrastructure goods and services has changed dramatically, in both industrialized and developing countries, over the past two decades. Until the late 1970s, the public sector in most countries was judged to be in the best position to provide water supply and sanitation, electricity, telecommunications and public transport services, because these services were labeled “public goods” addressing “basic needs.” The private sector was deemed unfit for public service provision, since its main goal is usually to achieve profit rather than enhance social well being. In addition, central governments were often better able to mobilize funds for investment and service delivery than the private sector.
Since the late 1970s, however, conventional wisdom has shifted in light of the weak performance of many publicly owned and
operated utilities around the world. In many countries, public sector management practices have led to low rates of cost-recovery, low productivity, high debt burdens (usually passed on to the state), Berkeley Planning Journal
and ultimately low service quality and coverage. These
inefficiencies have been more publicized than in the past, and have in turn caused many countries to seek alternative institutional arrangements for the provision of infrastructure goods and services. In parallel, the gradual replacement on a global scale of the Welfare State model with the Free Market Economy model has also
contributed to the widespread opinion that central governments should delegate responsibilities that could be better managed by the private sector. Thus, among other policies (such as
decentralization, local management, community participation), the policy of privatization of public utilities has gained strong credence around the globe, and has become widely prescribed and applied in both industrialized and developing countries.
The above observations lead me to pose two questions: first, how are long-standing problems of access to service by lowerincome households addressed in privatization programs around the
world? Second, in the case of residential water supply, various forms of private sector participation have been incorporated into service delivery in countries like France, Britain, Argentina, Chile, and Côte d’Ivoire. By contrast, in the case of the United States, many water supply utilities remain publicly owned and operated. Why is this the case?
The first question arises because empirical research and
subsequent policy-making based on this research devotes
substantial resources to the question of improved economic
efficiency and rational management of infrastructure goods and services resulting from...
References: Association of California Water Agencies (ACWA). 1985. ACWA’s 75-
Adam, Christopher, William Cavendish and Percy S. 1992. Mistry,
Adjusting Privatization: Case Studies from Developing Countries.
Baumol, William J., J.C. Panzar and R.D. Willig. 1982. Contestable
Markets and the Theory of Industry Structure
Blackburn, Stephanie J. and David E. Dowall. 1991. “The Tools for
Financing Infrastructure,” Institute of Urban and Regional
Brendan, Martin. 1993. In the Public Interest? Privatization and Public
Briscoe, J. 1997. “Managing Water as an Economic Good: Rules for
Reformers,” draft paper for presentation at the International
California State Legislature, Senate Local Government Committee. 1991.
Cooper, Erwin. 1997. Understanding California’s Water: an Introduction to
Major Agencies, Projects and Controversies, self-published, (available
Donahue, John D., 1989. The Privatization Decision: Public Ends, Private
Dowall, David E. 1995. “An Overview of Private Sector Financing of
Urban Infrastructure Services,” IURD Working Paper No
Ferguson, Tim W. 1996. “Socialized Water,” in Forbes, March 11.
Guislain, Pierre. 1997. The Privatization Challenge: A Strategic, Legal and
Institutional Analysis of International Experience
Gomez-Ibañez, José and John R. Meyer, 1993. Going Private: The
International Experience with Transport Privatization
Howe, Charles W. 1996. “Water Resources Planning in a Federation of
States: Equity versus Efficiency,” in Natural Resource Journal
Hundley, Norris Jr. 1992. The Great Thirst: Californians and Water,
Idelovitch, Emanuel and Klas Ringskog. 1995. Private Sector Participation
in Water Supply and Sanitation in Latin America
Israel, Arturo. 1992. “Issues for Infrastructure Management in the 1990s,”
World Bank Discussion Paper No
Jacobson, Charles D. and Joel A. Tarr. 1996. “No Single Path: Ownership
and Financing of Infrastructure in the 19th and 20th Centuries,” in
Kahn, Alfred. 1988. The Economics of Regulation: Principles and
Kahrl, William, L. 1982. Water and Power. Berkeley: University of
Kessides, Christine. 1993. “Institutional Options for the Provision of
Infrastructure,” World Bank Discussion Paper No
Klappauf, Laurie. 1997. “Privatization Raises Both Questions and
Opportunities,” in Water Sense
Legrand, Julian. 1991. Equity and Choice: An Essay in Economics and
McClurg, Sue. 1996. “Privatization of Water: Split Opinions,” in Western
Miller, John. 1987. “Is the Cavalry on the Horizon?” in American City and
County, January, pp.46-50.
Mitchell, Davis and Steven Moss. 1996. “Maintaining Momentum on
California Water Issues: Business Leaders’ Findings,” report
Morgan, Stephen P. and Jeffrey J. Chapman. 1995. “Special District
Privatization,” Report prepared for the Association of California Water
Musgrave, R. and P. Musgrave. 1984. Public Finance in Theory and
Neal, Kathy, Patrick J. Maloney and Norma Morales. 1996. “The English
Experience with its Privatization of its Water and Sewer Industries,”
Ostrom, Elinor, Larry Schroeder and Susan Wynne. 1993. Institutional
Incentives and Sustainable Development: Infrastructure Policies in
Plumb, John H. 1974. (Secretary and Manager of Public Affairs, East Bay
Municipal Utility District)
Please join StudyMode to read the full document