Privatization vs.

Democratic Accountability of Management of a

Fundamental Resource
We have to understand that maybe privatization is going to be a good idea, but
the problem isn´t privatization itself, the real problem is the management and
organization to carry with a big responsibility.

There are cases where markets have provided innovative ideas and
efficiency in management. This typically requires a market where people that
can pay for the service. 

For universal access, however, (which includes people who may not be

able to pay, for a variety of reasons, and may require subsidies or assistance),
a solely market-based privatization may be inappropriate.

Two specific aspects of water provision in countries with low coverage

rates caution against an undue reliance on the private sector.

1. The water sector has many of the characteristics of a natural monopoly.

In the absence of a strong regulatory capacity to protect the public
interest through the rules on pricing and investment, there are dangers
of monopolistic abuse.
2. In countries with high levels of poverty among unserved populations,
public finance is a requirement for extended access regardless of
whether the provider is public or private.

The problems of privatization: WDM adds. For example,

 Alternatives are often not considered. Those private consultancies often

follow a privatization ideology and they of course stand to win money
 from it. A major problem is that it is the government of the poor country
left to pick up the pieces of failed privatization projects .
 Privatization of such vital resources (a right for all to access even if they
do not have money) risks losing democratic accountability, and as cases
in Bolivia, Argentina, Chile and elsewhere have shown, soaring water
prices as a result can lead to many, many people not affording a basic
right, and even spark massive unrest;
 Profits from a private company can also be siphoned off elsewhere
(often to other countries from where the company came) to their
shareholders, and less is reinvested into the system itself;
 Investment is likely only on those parts of the system that may bring
profit, leaving the government with less resources to deal with the other
parts of the system.

As if to turn around the World Bank’s point that privatization is not

being practiced properly and more of it is needed, Food First counters that it
is democracy not being practiced properly, so we need more democracy and
democratic accountability, rather than less.