Public or Private: Which kind of administration is best to treat your water

and your domestic sewage? Are publicly owned, privately owned or a

mixture of the two, the best kind of companies to adequately treat water
and societies sewage in the most efficient manner with the least cost?
Whenever the discussion or writing mentions the Greek philosophers Socrates and Plato an
inner voice says: Here comes some difficult thinking. But recently Joo Pereira Coutinhos
column in the Folha de S. Paulo entitled Em defesa das causas perdidas (see page C6 of the
12th of September edition) where he comments on the defense of lost causes and ends with
some interesting and understandable comments about the difference between Socrates and
Platos philosophies. Coutinho identified Socrates as a conservative radical and Plato as a
radical conservative. He went on to explain that Plato always tells us what to think, while
Socrates shows us how to think. Socrates believed in knowledge, of course, but not the
presumptuous and arrogant expositions offered up by the political and radical right or left.

So, what does this have to do with the questions posed in the title?

Here in Brazil, and to some lesser extent in the USA, the discussions around the subject of public
or private control over the collective utilities, such as energy, communication, transportation
and water and waste treatment can become very strident and aggressive. And with the
upcoming elections in 2018, it might be interesting to study and think, first about what to believe
in, and secondly what, and even more so, how you (voters) should think, as, both making and
distributing potable water and, wastewater treatment.

First lets be clear about my starting point. And please dont stop reading just because of some
of the words I use. Only recently have I found that the word spelled Liberal in the Portuguese
language would be more correctly translated as Conservative in American English. And a
Liberal as in American English is probably best translated as a Progressive in Portuguese.
Therefore, reviewing feelings, thoughts and actions over my past, I could be described as a
Conservative Radical Progressive with an emphasis on efficient results and not just a
precooked dogma. The American professor and linguist Noam Chomsky once defined that
anarchy is a form of legitimate authority. So, in that sense, I like to describe myself as a Chomsky
Anarchist, with a strong emphasis on the legitimization of any authority based on knowledge
derived from the use of the scientific method of research and reproducible results.

So going on, I found in a useful and short reference on the internet [Privatization Of Water
Treatment In The U.S.] the author Elisa Meyer summarizes the pros and cons of privatization of
water treatment. She even includes some comments of the experiences of France and Great
Britain.

If you are also in doubt as to what is best manner to treat water (in relation to ownership and
operation of the systems), I would suggest reading the entire reference above. Its only three
pages long! But again, mostly for my own benefit (but you readers too), the following
summarizes and comments on the principal points and information that Meyer presents.

First four common types of ownership are presented:

1. Outsourcing public utility support services to private companies;

2. Private companies operate and manage public treatment works;
3. Design-build-operate contracts;
4. Sale of government-owned water assets to private companies.

Only in the last case is ALL the risk and responsibility transferred to a private company.
Meyer ends her comments with words from a reference written by Edwin S. Rubenstein
published in 2000, THE UNTAPPED POTENTIAL OF WATER PRIVATIZATION. It states a concept or
idea that I grew-up with in the USA and feel important to present now and even come back to
at the end of this blog or Rant. Meyer writes about the pros and cons of privatizing water and
wastewater treatment and includes an important comment of Rubenstein:

One suggestion for taking advantages of the pros and minimizing the cons is to create
an organization responsible for oversight and regulation of private contractors in the
water treatment industry. Rubenstein (above reference) points out that some regulation
will always be necessary in the industry, and that changes to tax exemptions and other
policies can make it the most beneficial system for America.

This expresses well my current feelings on the subject.

But what are some of the reasons for NOT privatizing water and wastewater treatment systems?
Meyer lists five:
1. Reduction of public accountability: private companies may be so profit-driven
that they do not act in the best interests of the public;
2. Impact to low income households: inability to afford water services and lack of
government involvement could impact low income homes the most;
3. Higher rates: data from countries and states who have privatized water treatment
tends to support the idea that privatized water comes at a higher utility cost to
citizens;
4. Lack of concern about local issues: Companies with the capital to invest in water
operations are often national or international, with corresponding interests. The
companies cited for scandal in France are both worldwide operators;
5. Reduction in benefits for workers: A 2009 report Water Privatization Threatens
Workers, Consumers and Local Economies, published by the Food and Water Watch
found that benefits, health insurance coverage, and union membership dropped or
were significantly lower in privately-run water treatment plants than in those
publicly-run. They argue that these changes affect the overall economy, impacting
us all.
Going back to Meyers explanation, here are the reasons she lists FOR privatizing water and
wastewater treatment systems:
1. Efficiency: private water contractors are motivated to maximize efficiency in order
to maximize profit, while government-run operations have no such concern;
2. Water safety: since private companies bear liability for the safety and quality of the
water, they are motivated to ensure safety;
3. Financial benefits: depending on the arrangement, upfront payment from
companies leasing city assets can be an excellent source of funds for the
government to reinvest;
4. Reduction of public sector costs: contracting water services to private companies
reduces the amount of wages, benefits, workers compensation, and other expenses
that must be paid to or for public employees;
5. Specialization: some advocates argue that private contractors bring more
specialized employees and knowledge to water operations than public operators
can;
6. Less bureaucracy: government can be slow, bureaucratic, and inefficient, due to
regulations and a lack of direct accountability. This is generally not the case with
private contractors;
These six factors FOR privatization can be readily compared with the five AGAINST privatization.
A solution to maximize the six FOR and minimize the five AGAINST seems could be to create an
organization responsible for oversight and regulation of private contractors, as mentioned in
Rubensteins comment. I would add that this oversight should be on as local level as possible,
including as much direct contact to the population served. However, this seems to be far from
easy to implement particularly in Brazil.
It seems worth adding that social benefits such as subsidizing the cost of water for the less
fortunate is better performed politically and directly with more transparency, instead of
including subsidies for all users, rich and poor. The same might be said for privileging public
workers with extra benefits. Salaries should be competitive and merit based. Government
subsidies for lower wage workers should be explicated outside of the cost of water treatment,
which serves both the rich and poor.

Subsidizing costs in providing water to the users, not only hides these costs, it also helps those
who dont require help. It also contributes to waste and uncontrolled use of the water. In times
when water has frequently become scarce, the most efficient distribution and use can only be
achieved by charging the real cost of the water to all users (including a financial amount for the
environmental or social right to use the water). These real costs are frequently based on
individual, industrial and agricultural uses, and not always are they socially just and
transparent.

Its important to make clear that I am a strong believer in reducing social and financial
inequalities among various groups, be it people or countries. It seems that a reasonable goal in
life is to become more civilized as a person or collectively. It is my firm belief that this can best
be done by promoting more equal opportunity in education, health and other basic and
collective human needs. However, this is not the place to define what social justice is and how
best it should be achieved.

Finally, an interesting study by Andrea Kopaskie on how the United States of America owns,
administers and operates its water system can be found at the Environmental Finance Blog. This
blog has a thought provoking subtitle, that states: How you pay for it matters.
It seems that even in the USA which highly values capitalism and financial independence, this
reference indicates that only around 12% of the national population is served by privately
controlled water treatment systems. And it ends with a caveat about all the previous discussion:
Efficiency, cost, and profit margins are all matters of debate, and it is difficult to say which type
of ownershippublic or privateis necessarily more beneficial to the customer.
So, after all this reading, thinking and writing, what have I decided? Here are some completely
opinionated conclusions as to what type of ownership and control of a wastewater treatment
plant I would prefer and vote for:

It would NOT be based on a nationalist type argument, such as just

because the control is Brazilian it will be better; or that Brazilian or state
control is a necessity.
I would vote in FAVOR of proposals that can show continued real experience
with positive efficient and low-cost results, not only operationally but for
any investments too.
Local and regional (water basin based) control would be desirable for the
election by and closer contact with the voters of a supervising organization.
Direct voter approval as line items on the ballots for specific rate increase
and investment needs.