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.”