Report: US Cities Increasingly Spurn Water Privatization

AUSTIN—A new report by Corporate Accountability International (CAI) and Public Services International Research Unit (PSIRU) finds that US cities are rejecting water privatization and taking back public control of their public water systems at a growing rate. The report was released at the annual National League of Cities conference, a forum often exploited by the private water industry to lobby and market its services.

The release of the report, titled “Troubled Waters: Misleading industry PR and the case for public water” comes in the midst of uncertainty about the state of public water systems nationwide. Prominent cases like Detroit’s recent shut-offs are stoking the public’s concerns about who controls America’s water systems and to what end. As federal funding for public water infrastructure dries up, corporations are rushing to fill the void with false promises that gloss over track records of rate hikes, water quality concerns, labor abuses and political interference.

The report finds that, since 2003, more than 30 US municipalities, including major cities like Atlanta and Indianapolis, have taken control of their water systems away from private water corporations like Veolia and Suez (known as United Water in the US). Water remunicipalization in the US is part of a global trend, with more than 100 cases of remunicipalization globally in the last two decades. In many cases, cities have saved millions of dollars after remunicipalizing; for example, Paris saved $46 million in the first year after terminating its contracts with Veolia and Suez.

“Make no mistake: Contracts with Veolia and Suez are bad deals for the community,” said Erin McNally-Diaz, director of Corporate Accountability International’s Public Water Works! campaign. “This report exposes what many communities across the country have learned the hard way: when you invite the private water industry into the picture, you jeopardize public health, affordable water, and the sustainability of your water system.”

The report cites specific examples of the failure of private water deals and the movement to take the systems back. In New Jersey, for instance, United Water avoids paying for critical infrastructure like underground pipes, despite profiting from water management contracts throughout the state. And in St. Louis a groundswell of public opposition based on the corporation’s track record of abuse led Veolia to withdraw its bid.

Given the public’s mistrust of privatization, private water corporations are repackaging their services, using such terms as “public-private partnerships”—a euphemism for privatization—and “consulting contracts” which could lead to privatization. In St. Louis, for instance, Great Rivers Environmental Law Center, a law firm providing public interest legal services, concluded that Veolia’s Peer Performance Solutions contract model would have the effect of “privatizing the city’s Water Division,” making city residents “captive to Veolia.”

In addition to public relations, the private water industry also relies on political interference to expand its market in the US At the federal level, private water industry front groups have testified on behalf of public-private partnerships and have lobbied the IRS and Treasury Department to adjust domestic tax law in an effort to expand the market for water privatization in the US At the state level, United Water lobbied legislators to oppose bills designed to increase the industry’s transparency to communities where it operates. In Illinois, the industry contributed to a legislator’s campaign who led the charge to enact the state’s fast-tracked water privatization law.

And, perhaps most disturbingly, at the city level, Veolia and United Water have long track records of discussing private water contracts with public officials behind closed doors with almost no public discourse or transparency. Veolia, United Water and American Water, for example, are full advisory board members of the US Conference of Mayor’s Water Council, positioning themselves as experts to mayors with virtually no public scrutiny or alternative viewpoints in the room.

The report draws its conclusions from interviews with dozens of public officials, data about water remunicipalizations from more than 100 cities globally, and direct engagement with community members involved in water management in cities across the country. The report is authored by Emanuele Lobina, a Principal Lecturer, PSIRU, at the University of Greenwich, UK Business School. Lobina is one of the leading analysts of the impact of privatization and liberalization on public services, with a focus on water services.

To download the full report, visit Public Services International Research Unit or Corporate Accountability International.