The Privatization of Residential Water Supply and Sanitation Services: Social Equity Issues in the California and International Contexts

Topics: Water supply, Public utility, Water Pages: 47 (14740 words) Published: February 20, 2010
Berkeley Planning Journal 13 (1999): 37-73
The Privatization of Residential Water Supply and Sanitation Services: Social Equity Issues in the California and
International Contexts
Isabelle Fauconnier
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.
Introduction
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

38
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...

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