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Water Privitization World Wide*

Report Recommends Some Curbs

For Water Privatization Programs


SAN FRANCISCO -- All across the developing world, local residents have protested the tendency by a new wave of private water ventures to raise prices and concentrate on serving more affluent neighborhoods at the expense of poor ones.

Yet without the private capital, many cash-strapped governments would be hard-pressed to fix water problems believed responsible for as many as 20,000 illness-related deaths a day -- mostly among children.

The Pacific Institute for Studies in Development, Environment and Security, an international think tank in Oakland, Calif., has issued a report proposing a solution to the conundrum of how to equitably manage the "water privatization" going on around the world. It calls for establishing basic contracts between the public and private sectors to ensure that unmet basic human water needs are met first.

Such contracts, the institute recommends, would include other standard provisions to avoid conflicts with users. For example, the report says basic water needs should be subsidized, if necessary, for the poor, while any rate increases should be tied to agreed-upon improvements in service. The report also recommends that governments retain or establish public control of water sources to keep private managers accountable. "Water has vital social, cultural and ecological roles to play that cannot be protected by purely market forces," concluded the report directed by Peter Gleick, co-founder and president of the Pacific Institute and an expert in global water issues.

Water privatization isn't new. Most of the U.S.'s municipal water supplies were privately run before cities took over to ensure the infrastructure kept up with growth. But privatization has taken on new significance as the world population has increasingly outstripped local governments' ability to keep water supplies growing apace, water experts say.

An estimated 1.2 billion people -- nearly a sixth of the globe -- currently don't have access to clean water. With many developing-world regimes either lacking the resources or will to address the problem themselves, private companies have moved in to try to fill the gap. While some of the results have been positive, many have not. In Cochabama, Bolivia, when the Bolivian government in 1999 tried to turn that city's water system over to a private venture, violent protests broke out after the venture raised water prices. The contract was later canceled.

Not everyone agrees the woes of privatization can be resolved contractually, as the report suggests. Some argue that competition is an answer. The World Bank encouraged Manila, for example, to award its private-water concessions to two providers; one for east Manila and the other for west.

Others oppose privatization altogether. They fret that big water monopolies could develop over time, eclipsing government's ability to keep them in line. "If you like what they did to electricity," said Jane Kelly, California director of advocacy group Public

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