Water privatization in developing countries: Principles, implementations and socio-economic consequences

ABSTRACT
Water related problems are continuously affecting the social infrastructures and jeopardizing the
productivity of modern globalized society. As the water crisis intensifies, several governments around
the world are advocating a radical solution: the privatization, commoditization and mass diversion of
water. Water privatization involves transferring of water resources control and/or water management
services to private companies. The water management service may include operation and
management, bill collection, treatment, distribution of water and waste water treatment in a
community. The privatization of water has already happened in several developed countries and is
being pushed in many developing countries through structural adjustment policies. Water privatization
will invariably increase the price of this common property resource because there are hidden costs
involved in water collection, purification and distribution systems. Increase in water consumption will
be satisfied through the market dynamics often at the cost of the poor who cannot afford the increased
water tariffs. The corporations will recover their costs by exploiting the consumers irrespective of their
economic conditions. Another possible threat of water privatization is the unsustainable water
extraction by the water corporations for maximizing profits and subsequent destructions of water
bodies and aquifers. Corporations in search of profits can compromise on water quality in order to
reduce costs. Privatization can also favour bulk water exports as the control over water will be
transferred from local communities to global corporations, which will have disastrous ecological and
environmental consequences. Indiscriminate mining of groundwater by multinational companies in
Andhra Pradesh, Tamil Nadu and Kerala has resulted behemoth threats to the local water resources,
biodiversity and economic structures. Water pricing and privatization will inevitably increase the price
of the major crops and vegetables all around the world, which, in turn, can adversely affect the food
security of the common people. Community based water management practices like rainwater
harvesting, sustainable watershed management, integrated river basin management and irrigation
efficiency are sustainable alternatives to water privatization in the third world countries including
India.

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WSN 10 (2015) 17-31