New Research Finds Water Privatization Raises Rates

New Research Finds Water Privatization Raises Rates

Food & Water Watch has issued a thoroughly researched report on water privatization. A survey of more than 200 public and private water systems found that private suppliers charge significantly more than public systems. The 10 largest initiatives increased water rates  on average 15 percent a year after privatization. After local governments brought water systems back in-house their rates, on average, were 21 percent cheaper.

Many cities privatize their water systems to generate a much-needed quick infusion of revenue.  But the report offers compelling evidence that this decision is penny-wise and pound-foolish. “The funding that a city receives by selling or leasing its water system is effectively an expensive loan that a water company will recover from consumers through water bills. A Food & Water Watch analysis estimated that the typical interest rate on this loan would be 11 percent. This is 56 percent more expensive than public financing through a typical municipal revenue bond.”

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David Morris
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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.