P r i v a ti z a ti o n o f w a t e r r e s o u r c e s Page |1

Privatization
Is the incidence or process of transferring ownership of a
business, enterprise, agency or public service from the public
sector (the state or government) to the private sector
(businesses that operate for a private profit) or to private non-
profit organizations. In a broader sense, privatization refers to
transfer of any government function to the private sector -
including governmental functions like revenue collection and
law enforcement
The term "privatization" also has been used to describe two
unrelated transactions. The first is a buyout, by the majority
owner, of all shares of a public corporation or holding
company's stock, privatizing a publicly traded stock, and often
described as private equity. The second is a demutualization of
a mutual organization or cooperative to form a joint stock
company

Types
There are four main methods of privatization:

1. Share issue privatization:- (SIP) - selling shares on the stock

market
2. Asset sale privatization:- selling an entire organization (or part of
it) to a strategic investor, usually by auction or by using the True
hand model
P r i v a ti z a ti o n o f w a t e r r e s o u r c e s Page |2

3. Voucher privatization:- distributing shares of ownership to all

citizens, usually for free or at a very low price.
4. Privatization from below:- Start-up of new private businesses in
formerly socialist countries

Water privatization
is a short-hand for private sector participation in the provision
of water services and sanitation, although more rarely it refers
to privatization of water resources themselves. Because water
services are seen as such a key public service, proposals for
private sector participation often evoke strong opposition.
Globally, more than 90% of water and sanitation systems are
publicly owned and operated.
The privatization of the water industry is a trillion dollar
industry and involves multiple technologies including
impingement and entailment as methods of water intake.
Bottled water (mineral water) is another important part of the
privatization of water.
Water privatization is a highly controversial topic and touches
on the much broader arguments for and against the private
control of formerly public services. There are many examples of
protest that have occurred over the privatization of water.
There was a parallel forum that was set as an alternative to the
P r i v a ti z a ti o n o f w a t e r r e s o u r c e s Page |3

World Economic Forum; the World Social Forum, held first in

2000, was a way for those opposed to privatization to express
the downsides associated with corporate control of water.
Counter-measures are being taken by water corporations to
answer to the opponents. They provide a small portion of
proceeds from water sales in one place to finance water
projects in a place of true need [clarification needed]. They also have
begun educational projects so that people can understand
where their water is coming from and to make them aware of
the current water issues [citation needed]. Many [who?] question whether
or not these programs are altruistic in nature. The Cochabamba
protests of 2000, also known as the "Cochabamba Water
Wars", were a series of protests that took place in
Cochabamba, Bolivia's third largest city, between January and
April 2000, in response to privatization of the municipal water
supply

The impact of water privatization

The impact of water privatization on access, service quality,
tariffs and efficiency is controversial. The empirical evidence is
mixed. For example, according to an empirical study of private
participation in water and sewage in three Latin American
countries that compared the outcomes with a comparison
P r i v a ti z a ti o n o f w a t e r r e s o u r c e s Page |4

group of public utilities, access to water supply and sanitation

increased both for utilities under private and under public
management to the same extent. The study concludes that
"private sector participation, per se, may not have been
responsible for those improvements" and "in terms of
connections at least, private sector participation did not harm
the poor

Water resources
are sources of water that are useful or potentially useful to
humans. Uses of water include agricultural, industrial,
household, recreational and environmental activities. Virtually
all of these human uses require fresh water.
97% of water on the Earth is salt water, and only 3% is fresh
water of which slightly over two thirds is frozen in glaciers and
polar ice caps.[1] The remaining unfrozen freshwater is mainly
found as groundwater, with only a small fraction present above
ground or in the air.[2]
Fresh water is a renewable resource, yet the world's supply of
clean, fresh water is steadily decreasing. Water demand already
exceeds supply in many parts of the world and as the world
population continues to rise, so too does the water demand.
P r i v a ti z a ti o n o f w a t e r r e s o u r c e s Page |5

Awareness of the global importance of preserving water for

ecosystem services has only recently emerged as, during the
20th century, more than half the world’s wetlands have been lost
along with their valuable environmental services. Biodiversity-
rich freshwater ecosystems are currently declining faster than
marine or land ecosystems.[3] The framework for allocating
water resources to water users (where such a framework exists)
is known as water rights.

Distribution of water on earth:

P r i v a ti z a ti o n o f w a t e r r e s o u r c e s Page |6

Economic considerations

Water supply and sanitation require a huge amount of capital

investment in infrastructure such as pipe networks, pumping
stations and water treatment works. It is estimated that
Organization for Economic Co-operation and Development
(OECD) nations need to invest at least USD 200 billion per year
to replace aging water infrastructure to guarantee supply, reduce
leakage rates and protect water quality