Overwhelmed by dilapidated pipes, more cities are privatizing their water systems. But is anyone winning besides corporations?
More than a quarter of Coatesville, Pennsylvania’s 13,133 residents live below the poverty line. Abandoned buildings are rampant. With high unemployment, the tax base is dwindling.
And yet, many residents of Coatesville are paying hundreds of dollars for their monthly water service. That’s as much as people living in large, wealthy cities like San Francisco cough up.
Why? In 2001, Al Jazeera reports, Coatesville officials sold the city’s water system to the Pennsylvania-American Water Company (PAWC) for $38 million, with ambitions to revitalize the city with the sale. But the decision has had an opposite effect: The city mismanaged the revenue, and PAWC has sought exponential rate hikes on multiple occasions.
Locals wonder whether the publicly traded company is merely padding its investors’ pockets. PAWC says the increases have gone to support crucial water infrastructure maintenance and improvements, long deferred by the city.
Very likely, it’s both. America’s corroded, crumbling water infrastructure has reached the point of epidemic. Many of the country’s 1.5 million miles of pipes—some of which are more than a century old—are approaching a desperate need for replacement. Hundreds of thousands of water breaks occur every year. An estimated six billion gallons of treated water, which is as much as 18 percent of our total daily use, is lost to leaks or breaks every day. As urban populations grow, restoring and expanding our water systems—just to maintain current levels of service—will cost at least $1 trillion over the next 25 years.
Underground, out of sight, and pricier to fix than other kinds of utilities, water infrastructure has long been the victim of chronic underinvestment. Like Coatesville, many cities are overwhelmed by their system’s state of dilapidation, and are in need of cash injections. So they’re turning to corporations to manage their water systems. Next City reports that while about 15 percent of the U.S. population is currently served by private water companies, that number is predicted to skyrocket, largely thanks to the investment gap.
Yet abdicating control over such a crucial public resource is dangerous territory, as cities like Coatesville are discovering. The primary motive of most private utilities is profit. Private utilities make their money on a rate of return on investment. And the more they invest, the more they may be permitted to charge ratepayers. A study by the environmental justice think-tank Food and Water Watch found that “compared to local governments, private utilities charge the typical household 33 percent more for water.” Even when companies offer some form of rate assistance to low-income households, their rate hikes disproportionately affect the poor. And privatization does not necessarily result in high quality, equitable water service, or more efficient improvements to infrastructure.
What can be done, barring privatization? David LaFrance, CEO of the American Water Works Association, has said that public utilities first need to audit their systems and install meters more widely in order to get a handle on how much water is being lost. Beyond that, extensive infrastructure investment—maybe even a National Infrastructure Bank—is essential. More than ever, we need a safe, stable, and equitable water system—and only local governments should be entrusted to provide it.