In the latest anti-privatization episode, Baltimore Mayor Catherine Pugh signed legislation this summer that would make Baltimore the first city in the country to amend its charter to prohibit privatization of the city’s water system. City voters will get a final say on the matter on the upcoming November ballot.
Currently, Baltimore City is in middle of a water crisis after years of public utilities mismanagement. The city’s sewer system, more than a century old, is overflowing with contaminated water, and fixing it is expected to cost over $1.6 billion.
Since the early 2000s, the city’s water rates have risen by about 9 percent per year to address this gap in investment. Residents who cannot afford to pay have lost running water in their homes. This water affordability crisis is only expected to worsen. By 2022, the average annual city water bill is expected to exceed $1,100.
Clearly, neither Maryland’s Democrats, who prioritize spending for public schools, nor Maryland’s Republican Gov. Larry Hogan, who would rather devote $8.5 billion to attract Amazon to Maryland, seem to believe that putting an end to the city’s water crisis is an urgent matter.
To address government negligence, several reputable international water companies such as the Suez Environment and Veolia have expressed interest in managing the city’s water over the coming years. Fearing that the city’s infrastructure could soon be placed under serious, consumer-responsive management, some 50 lobbyists rallied outside Baltimore’s City Hall in 2014, demanding that the city maintain public ownership of water.
Baltimore’s water crisis inevitably draws parallels to the Flint, Mich., water crisis of 2014. Both crises show that government-run utilities suffer from lack of investment and crumbling infrastructure. Politicians can get more votes by allocating tax dollars to conspicuous things such as additional police officers and teachers. According to Baltimore City Department of Public Works spokesman Jeffrey Raymond, the city has “waited too long to take these investments seriously.”
Baltimore cannot continue with business as usual and must look for an alternative approach to water management. There are a few reasons why privatization is worth exploring.
Privatizing the water system could drive proactive investment to ensure the long-term integrity of water infrastructure. According to infrastructure expert Adrian Moore, “Private utilities simply borrow the money to build new water supply pipelines or treatment plants when they need them, and they have every incentive to build them fast and keep costs down.” Meanwhile, government suffers from bureaucratic inefficiency as it must go through a lengthy approval process and fight against other political priorities to get funding approved for upgrades.
It is also inefficient for government to manage the water system because few government officials have expertise in designing or implementing infrastructure upgrades. In contrast, private water companies’ main job is upgrading infrastructure, so they have this expertise.
Privatizing the water system also increases environmental safety compliance. During the last decade, Baltimore has violated the Safe Drinking Water Act four times. An analysis of U.S. Environmental Protection Agency data from 2010 to 2013 shows that health-based drinking water quality violations occur less often by private water companies compared to government.
This makes sense; private water companies risk costly lawsuits for providing unsafe products, but sovereign-immunity makes it difficult to successfully sue any government officials for wrongdoing, as noted by Yale Law School professor, Stephen L. Carter.
Many cities around the world have experienced the success of water privatization. Privatization led to a 70 percent increase in safe drinking water in Manila, Philippines. Buenos Aires, Argentina, experienced 8 percent decrease in child mortality rates after successful water privatization.
For a city like Baltimore, where water fountains in public schools have been shut off for over a decade because of lead contamination, even a marginal increase in access to safe drinking water would help improve children’s health.
That said, Baltimore should realize that privatization is not a magic remedy for its water crisis. Poorly designed privatizations have made private water companies just as unaccountable as the government departments they replace. But true privatization under competitive conditions — for instance, short-term contracts that force the water companies to continuously earn city residents’ trust — could help resolve Baltimore’s water crisis.
Carol Park is a Senior Policy Analyst at the Maryland Public Policy Institute. Her email address is firstname.lastname@example.org.