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Unholy Water
The EclecticEconomist alerts us to a story in the Onion CBC News:
The United Church of Canada may ask its members to stop buying bottled water.
The request is part of a resolution against the privatization of water supplies that has been put before delegates at the church's general council this week in Thunder Bay....
"We're against the commodification, the privatization is another way to say it, of water anyway, anywhere," [said a church leader.]
If the United Church cares about children they should reconsider their opposition. Privatized water saves lives. From my post, Water of Life:
...In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas....
That is the abstract to a very important paper, Water for Life: The Impact of the Privatization of Water Services on Child Mortality, by Sebastian Galiani, Paul Gertler and Ernesto Schargrodsky in the February 2005 issue of the JPE. (free working paper version).
Posted by Alex Tabarrok on August 18, 2006 at 07:12 AM in Economics, Education, Food and Drink, Religion | Permalink
Comments
Not only does privatized water save lives, but water represents an opportunity to create wealth. See T. Boone Pickens et al and water rights in Western Texas.
Posted by: Dave at Aug 18, 2006 8:10:16 AM
That paper is completely worthless on the effect of water privatization generally. It doesn't even compare Argentina's government water utilities to those in other countries. If Argentina's was significantly worse than those of other countries, all it means is that privatizing poorly-run government services makes them more effective. (To which I say: "duh.") There's zero reason to believe that Canada, a modern post-industrial nation, has the same sorts of problems with parasitic deaths.
Alex, surely you know better than to generalize from the effects of utility privatization in a single, underdeveloped country, not only to other underdeveloped countries whose public utilites may be run completely differently but to developed countries like Canada.
Posted by: Paul Gowder at Aug 18, 2006 10:12:45 AM
Regarding the comment by Paul Gowder...
Seven people died in Walkerton, Ontario, Canada a few years ago
from e-coli contamination of its government-run water supply.
About the only organization who performed well in this tragedy
was the private company who tested the water. They did their job,
and went beyond it by sending a fax alterting the water system
operators of the problem early when preliminary results were bad.
The operators, who were local government employees, were both
incompetent and dishonest. The provincial government was negligent
in not supervising the local utility properly.
Now guess who got blamed, in the public eye? The private company
of course. (Though the judicial inquiry did not agree.)
Posted by: Radford Neal at Aug 18, 2006 11:29:56 AM
Mr. Gowder,
First, harrumph, I think you may have the wrong impression of Argentina. My son recently returned from a month in Mar del Plata, Argentina for a student exchange and was impressed. It is not "undeveloped" and could be described as "a modern post-industrial nation." Per capita GDP is above the world average and is comparable to some of the new EU member countries. Indeed, I suspect that there are many parts of Canada that resemble the poorer parts of Argentina (as do some parts of the US, for that matter).
Second, and more to the point, even if the country settings were dissimilar, does not this paper change the null hypothesis? That is, there is evidence that privatization of water supply works better somewhere. Is there evidence that communal water supply works better anywhere?
Mike
Posted by: MW at Aug 18, 2006 11:33:33 AM
Paul, you did not read the post very carefully. The United Church is against the privatization of water "anyway, anywhere." They are not making an economic claim but an absurd ethical claim.
In contrast, if you follow the link to my original post, I was clear that water privatization may not have benefits everywhere.
As to Canada, well if you were Canadian you would not be so quick to throw off concerns about deaths from water-borne parasites.
http://www.cbc.ca/news/background/walkerton/
Posted by: Alex Tabarrok at Aug 18, 2006 11:36:52 AM
Water does generate emotional spasms. When the English water industry was being privatised, a friend banged on about it as an outrage, water's a public good, unnatural, blah, blah, blah. I pointed out that we happened to live in a city whose water had been supplied by a private company since 1853.
Posted by: dearieme at Aug 18, 2006 11:39:45 AM
Radford: anecodate =/= evidence.
Mike: Argentina is receiving world bank assistance, recently had a catastrophic economic collapse (right after the herculean privatization effort, whoops), and has (per the cia world factbook) 38.5% of its population in poverty. It sounds pretty underdeveloped to me.
Alex: Fair enough. I hadn't followed the link to your original post. My bad.
However, referencing that story on the Walkerton disaster is a bit ironic. From the story: "[The inquiry] found that illnesses could have been prevented if Koebel had monitored chlorine levels in the drinking water. It also pointed to deregulation of water testing and cuts to the Environment Ministry by the Ontario government as contributing factors."
Posted by: Paul Gowder at Aug 18, 2006 12:08:13 PM
Uh, "anecdote" of course. I have no idea how "anecodate" happened.
Incidentally, WRT absurd ethical claims, even assuming arguendo that water privatization does reduce mortality rates, what's absurd about the position that distributional equity is more important than net welfare?
Posted by: Paul Gowder at Aug 18, 2006 12:10:58 PM
"Argentina is receiving world bank assistance, recently had a catastrophic economic collapse (right after the herculean privatization effort, whoops), and has (per the cia world factbook) 38.5% of its population in poverty. It sounds pretty underdeveloped to me."
I suppose Germany in the 30's was also underdeveloped. That would explain why they weren't able to manufacture any advanced weapons.
Posted by: Dylan at Aug 18, 2006 12:20:28 PM
This seems like a hot topic, if the previous comments are anything to go by. It is certainly a hotly debated topic in Australia at the moment.
I tend to think water is a public good to, to the extent that it should be a public right and that the consequences of withholding it could be undesirable to say the least. However, the handling of the product by some states of Australia over the last thirty years has been an abomination.
I see the biggest problem of the privatisation of water suppliers as the claim on ownership. Can water be dammed at the mountains, never to make it to the big rivers? Do the people upstream have a greater claim? If the flow is greater downstream, how do we make a distinction?
It is clear that the industrial facilities of Canada should not be compared to those of Argentina, but "we find that child mortality fell 8 percent in the areas that privatised their water services and that the effect was largest (26 percent) in the poorest areas" is such an enormous number that surely (if the numbers are correct) there is something to learn from this, even in Canada.
Posted by: Clinton at Aug 18, 2006 12:43:27 PM
Dylan: the issue isn't overall level of technology, it's rural infrastructure. A country with a weak rural infrastructure is of course going to have shoddy water service in poor rural areas. I haven't been able to find much on this from a few searches, but the Inter-American Development Bank seems to think that "Argentina has some serious physical infrastructure gaps, the result of years of scanty investment and maintenance." + "Studies on the provinces show development gaps in some parts of the country, particularly rural areas." For what it's worth.
Posted by: Paul Gowder at Aug 18, 2006 12:58:56 PM
I don't see how "distributional equity" is relevant in any way, shape, or form. Mr. Chambers is stating that he and his organization oppose privatizing water supplies for any and all reasons, simply because the private providers might earn profit from it. If he was concerened with "distributional equity" he might stop to consider the possible benefits to everyone else. But he is not, he is entranced by some perverse ethical standard according to which profit taints any human enterprise, which is despicable and he well deserved to be ridiculed for it and the value of his ideas discounted to zero on account of it.
Posted by: Noah Yetter at Aug 18, 2006 1:01:54 PM
Water supply is a natural monopoly. What's absurd about the position that privatizing it is likely to decrease net welfare unless the monopoly is regulated?
Posted by: anon at Aug 18, 2006 4:30:47 PM
Paul Gowder writes:
"...referencing that story on the Walkerton disaster is a bit ironic. From the story: "[The inquiry] found that illnesses could have been prevented if Koebel had monitored chlorine levels in the drinking water. It also pointed to deregulation of water testing and cuts to the Environment Ministry by the Ontario government as contributing factors."
How is this "ironic"? Presumably you think this somehow argues against privatization of water utilities. But, rather obviously, the failures at Walkerton have to be counted as an argument against public management of water utilities. Unless, that is, you think that the merits of public utilities should be assessed on the counterfactual assumption that they will always be staffed by honest and competent people, and that the government will always provide unlimited funding.
Posted by: Radford Neal at Aug 18, 2006 4:45:29 PM
It's ironic because the failures were caused at least in part by the policies that libertarian-types love to advocate as the intentional slippery slope toward privatization (drowning the government in a bathtub and all that) -- to wit: deregulation and underfunding public services. Yes, government services that have been crippled by policies consciously intended to force them to fail will underperform private services. Big shock.
Posted by: Paul Gowder at Aug 19, 2006 12:23:29 AM
Paul Gowder write, concerning the Walkerton tragedy...
"... the failures were caused at least in part by the policies that libertarian-types love to advocate as the intentional slippery slope toward privatization (drowning the government in a bathtub and all that) -- to wit: deregulation and underfunding public services. Yes, government services that have been crippled by policies consciously intended to force them to fail will underperform private services. Big shock."
The Koebel brothers were employed by the local government to run the water system for many years before the Conservative provincial government that you presumably object to came to power. They were just as incompetent, and just as dishonest, back then. That there was no tragedy earlier was just luck.
You presumably think that the Conservatives underfunded the provincial oversight body in order to pay for tax cuts. I've no idea if this is true, but supposing it is, why exactly do you think that a Liberal govenment would never cut funding for a low profile agency like that in order to pay for higher welfare payments or a new Opera house?
Your speculation that the government deliberately underfunded the system in the hopes of creating a tragedy, so they could then advocate privatization, is utterly absurd. You apparently are completely incapable of conceding that there could be even one data point that supports privatization. This ability to look at something black and maintain over and over that it's actually white is regrettably common in politicized discussions.
Posted by: Radford Neal at Aug 19, 2006 10:36:45 AM
Surely there are cases where privatizing the water supply amounts to a grant of monopoly where no such previously existed? In such cases there doesn't seem to be a public benefit. As for T. Boone Pickens and his water company, I don't think exploiting public land use traditions to precipitate a tragedy of the commons is something to be cheered on; stockholder wealth was created, but more or less just by efficient looting of a public resource (the aquifer).
Those who find anecdotes compelling might also look at Bechtel in Bolivia or water privatization in Tamil Nadu - I don't think the outcomes are as bad as some make them out to be, but those would probably be examples the left would cherrypick of they wanted to show how corporations could screw things up.
Posted by: bbartlog at Aug 19, 2006 12:13:01 PM
People are making good points here. There's a case for providing a "basic human need" of about 50L/capita/day and charging beyond that. There are several papers I know of that show private and public water conveyance to be similarly efficient. The key (again, pointed out above) is to watch that monopoly problem -- either through regulation of the private company or community management/political oversight of the public corporation.
More interesting is the lack of comments here about *bottled water* which costs over 1,000 times as much as municipal water. It not only wastes resources (plastic and shipping), but allows those people most interested in a good water supply to opt out of the piped water system. This means that performance will go down. I am clearly NOT a pure-libertarian when I advocate this, but I think the "freedom to choose" bottled water reduces provision of a public good (oversight of water companies), to the detriment of many people who cannot afford to change to bottled water or could use the $ they spend on water in other, more useful ways. (Note that the POOREST in developing countries buy "bottled" water from trucks that is 10-100 times more expensive than piped water that goes to the rich.)
Bottom line: monopolies are bad. Bottled water is stupid. Consumers/citizens should work on improving water provision.
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