Public vs. private: the continuing debate

By Eric Gutierrez, WaterAid's Policy Officer.

In 1989 the British Government fully privatised the ten regional water authorities of England and Wales.

The idea was to transfer water and sanitation services, until then public responsibilities, into private ownership to stimulate more efficient operations and much-needed investments.

Full divestment did not catch on in many places in the world. Instead, the 'privatisation' that took place elsewhere was in the form of concessions, leases and management and service contracts - now referred to as 'private sector participation' or PSP.

PSP is comparable to governments hiring plumbers to do the job for them, while retaining ownership and control of the assets. Large-scale PSP only covers about 5-10% of the world's population.

In Europe, private operation is only predominant in the UK and France. The two main water multinational companies, Vivendi and Ondeo, only report having 220 million customers between them.

The private delivery of services is not limited to big companies. In poor countries, small-scale entrepreneurs take over where governments leave gaps in provision. This 'private sector' may be an enterprising neighbour who invested his lifelong savings in a cart and jerry cans to be a water vendor.

It can be a family enterprise bidding for contracts to construct wells and boreholes. There are no estimates of how much of the world they cover, but as a whole they are more significant than the large-scale companies.

Opponents of privatisation claim water should remain a public good and not be commoditised. They are suspicious of the promotion of PSP as a mechanism for opening up more markets for big business. They maintain that profit oriented private entities could not be entrusted with upholding the public good. But water does remain public in most of the world (ie governments own water sources and assets).

Yet delivering it and keeping costs down is still a huge problem. Also, the commoditisation of water is more spontaneous rather than a planned process - look at how poor water vendors improvise. Profit making does not necessarily conflict with serving the poor, especially when it's regulated.

The points of contention between public and private provision need to be restated. Are local communities ready for the private sector? Does the private sector understand its role in development and community participation? Are small scale entrepreneurs part of the problem or the solution? Should large-scale PSP be pushed at the expense of small-scale?

The public-private debate will continue, and it is essential for the points of contention to be restated from the vantage of poorer communities.

More information on on PSP