Water Wars: Privatization, Pollution, and Profit
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"Privatization" is another word for "monopoly". When a commodity is believed to have commercial value, the Corporate Oligarchy will work on every level possible to capture it for their financial benefit, which they will then attempt to draw out as long as humanly possible. To add to the analogy between the past and current monopolization of Carbon resources, and the current and future struggle over water resources, one only has to look at the history of the Corporate Oligarchy and their association with Carbon. By understanding this, we can understand the potential harm to the world, abiotic and biotic, human and non-human, if water resources are not adequately protected.
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This article was published on Counterpunch (link: http://www.counterpunch.org/yang06212008.html) on June 21/22, 2008
Weekend Edition
June 21 / 22, 2008 The Converging Food and Water Crises Dying of Hunger, Dying of ThirstBy JO-SHING YANG
In recent months worldwide food crises and food riots have dominated newspaper headlines and captured the attention of global media and political leaders as soaring food and commodities prices plunge an estimated 1 billion people worldwide deeper into poverty and on brink of malnourishment and even starvation—then forcing these masses of distressed people onto the streets to protest. Finally world leaders are paying attention to the plight of the chronically poor and now talk of “food crises” that ravage the lives of the desperately poor. By now, most people know that the reasons for higher food prices are higher petroleum prices (which affect oil-based agricultural inputs such as fertilizers, pesticides), higher food-transport prices, diversion of corn and other food crops to produce ethanol and other biofuel, more food demand from the emerging middle class of China and India (and their desires to move up the food chain, to eat more meats, eggs, and dairy), and extreme weather events associated with global warming. Few people have linked the food shortages to the water shortages—that is, aside from a few articles written by water analysts and experts (for example, Fred Pearce linking water scarcity to food crises).
After big investment banks and speculators on Wall Street have hiked up food, oil, and other commodity prices, they are eyeing the next major commodity: water. Goldman Sachs is urging investors to focus on high-tech end of the $425 billion global water industry because water is the “petroleum for the next century.” Potential areas of investment for Wall Street include manufacturers or servicers of water-filtration equipment, ultraviolet disinfection, membrane-based desalination technology, automated water meters, and other specialized niches in wastewater reuse (The Telegraph, June 6, 2008). Goldman Sachs also published a graph called “Water sector outperformance relative to S&P500” showing trends from 2000 to 2008, with water-sector index soaring to 400 while S&P500 stagnated at or below the 100 level (values rebased to 100).
There is a converging food and water crisis in the making, with eight extremely troubling and interrelated trends in water, as follows:
Depending on the region being examined, any one or a combination of these factors will affect fresh water supplies, delivery, and treatment in the coming years. They will also affect agriculture and food production for billions of people worldwide. Just focusing on two factors of global warming and aquifer depletion, as follows, gives us enough worries about sustainability and the future of agricultural production.
Some facts:
Water is the basis of agriculture—not just in growing food, but also in processing food. Water is the foundation of modern cities and urban sanitation systems—from our indoor plumbing to centralized wastewater-treatment plants. Water is the basis of industries and manufacturing. Water sustains nature and wildlife. In essence, humanity can live without oil—albeit more primitively—but humanity cannot survive without water. Despite its importance, rarely has the issue of water been integrated into our discussions of food crises, except when we briefly talk about global warming and extreme droughts that affect crop-growing regions. Interviewed for the New York Times (June 2, 2008), Barbara Helferrich, a spokeswoman for the European Union’s Environment Directorate, said, “Water will be the environmental issue this year — the problem is urgent and immediate. If you already have water shortages in spring, you know it’s going to be a really bad summer.” A UK-based environment writer Fred Pearce recently wrote that water shortages are a major cause of faltering crop production which results in food shortages: for example, Ukraine, Australia, China, India, and Egypt have been depleting their rivers and groundwater to the point that farmers can no longer irrigate their crops—thus, agricultural output will be reduced. Well-known analyst Lester Brown has been predicting that water shortages will further exacerbate food shortages in many countries.
So we need to ask the question: what about water in the midst of this precarious global economy and increasingly fragile natural world? How will the shortage and supply volatility of water affect food production and food crises? One similarity between oil and water is that of diminishing supply and rapidly growing demand. With shortages, conflicts and wars arise—this point has been made clear in Michael Klare’s 2002 book Resource Wars. Moreover, many other analysts—from those working for the CIA to those in the United Nations and Forbes magazine—have long predicted water as the major resource in which nations will fight wars over. The Dutch Crown Prince Willem-Alexander said, “Water could become the new oil as a major source of conflict,” during the 2001 World Water Forum in Stockholm. The Crown Prince Willem-Alexander was the previous chairman of the 2001 World Water Forum; he is also the oldest grandson of Prince Bernhard of the Netherlands who was the founder of the elite, highly secretive policy group called the Bilderberg in the 1950s; his mother, Queen Beatrix, is also a member of the Bilderberg and a principal shareholder of the Royal Dutch Shell. The former UN Secretary General Boutros Boutros-Ghali also said, “Water will be more important than oil this century” and that water is the next oil over which nations will fight wars. The late U.S. Senator Paul Simon said, “Nations go to war over oil, but there are substitutes for oil. How much more intractable might wars be that are fought over water, an ever scarcer commodity for which there is no substitute?”
The link between water and food is clear: without water, there can be no irrigated agricultural. According to the Telegraph in June 2008, “A catastrophic water shortage could prove an even bigger threat to mankind this century than soaring food prices and the relentless exhaustion of energy reserves, according to a panel of global experts at the Goldman Sachs ‘Top Five Risks’ conference.”
It is widely known that the genocide in Darfur has been exacerbated by competition over water and land resources by Arab nomads and African farmers as global warming-induced droughts aggravated desertification in northern Darfur for two decades. In the near future, will we see “water riots” and “water wars”—or even genocides and conflicts which masqueraded as ethnic/tribal or religious when the real conflict actually erupted over water? What should we be concerned about and what should we do now to avert the coming water crises? Let’s focus on two troubling water crises, that of global warming and depleting aquifers.
Extreme Weather, Climate Uncertainties, and Volatilities in Precipitation
Regardless of the current scientific debates on global warming of whether it is man-made or a natural planetary cycle, one thing is certain among scientists: this climate change is not a temporary anomaly. Global warming will worsen in the next decades. Weather will become more extreme and unpredictable in many parts of the world: for example, in June, we have witnessed catastrophic flooding in Iowa and elsewhere in the Mideast, which devastated the corn planting of 2008.Glaciers will melt at even faster rates, further lowering fresh water supplies in many regions. Precipitation will become more unpredictable—while some parts of the world will get more water through floods and storms, others will suffer reduced groundwater supply and even drought. While analysts have cited “temporary weather anomalies” (Washington Post, May 30, 2008, referring to droughts in Australia) as one reason for the sharp spike in food prices, global warming is not a temporary weather phenomenon afflicting the crop-producing regions of the world. In short, the droughts, floods, storms, hurricanes, and extreme weather patterns all over the globe are not short-term events. Globally, the extreme weather will be further exacerbated by the intensification of global warming in the coming decade. The wild and extreme weather patterns are here to stay—in turn, limiting fresh-water supply and food production in many food-growing regions.
In January 2005, the National Center for Atmospheric Research (NCAR) published new analyses linking rising global temperature to extreme weather, saying that the area on Earth hit by serious droughts more than doubled from the 1970s to the early 2000s and that widespread drought occurred in western and southern Africa, eastern Australia, much of Asia and Europe, and Canada (Journal of Hydrometerology, 2005). "Droughts and floods are extreme climate events that are likely to change more rapidly than the average climate," says NCAR’s Aiguo Dai. "Because they are among the world's costliest natural disasters and affect a very large number of people each year, it is important to monitor them and perhaps predict their variability."
A few examples of how global warming has affected food production and resource conflicts worldwide are as follows:
Desertification is one of the more neglected environmental issues today, which is aggravated by global warming. Desertification is a critical issue because it affects arable land’s productivity and consequently, food production. The United Nations has estimated that more than 250 million people are directed affected by desertification in 110 countries occupying one-third of earth’s surface (this figure includes 135 million in danger of being driven from their land), and one billion people’s livelihood at risk. As 70% of all agricultural drylands are being degraded, they are at risk of desertification, which carries a price tag of U.S.$42 billion a year. Desertification further exacerbates water scarcity and degrades the land to the point that it is no longer productive.
Scientists have forecasted that as global warming heats the planet, the climate will be wetter in some places and drier in others. The worst part of that changing weather and volatile precipitation patterns will leave millions of people without dependable fresh-water supplies for drinking, agricultural irrigation, and hydropower. Global warming spells devastation for most countries’ water and agricultural future. It is clear then that we should expect global warming to decrease long-term freshwater availability, which in turn will also simultaneously lower food production and worsen the food and hunger situation in many developing countries.
A Hungrier Future Due to Our Unsustainable Withdraw of Groundwater
It typically takes 1,000 tons of water to produce 1 ton of grain. It is estimated that almost 10% of the global food supply (160 million tons of grain) is currently produced using unsustainable practice of overdrawing groundwater according to the USAID. But depleting groundwater is not only a threat to future food production—it is a contributor to sea-level rise. For example, publishing in Hydrogeology Journal, researchers found that the estimated global groundwater withdrawals to be at 750-800 km3/year, and that this massive amount of aquifer depletion may result in seal-level rise:
Unsustainable groundwater withdrawal and aquifer depletion will exacerbate the effects of volatile precipitation patterns on agriculture. Aquifer depletion in a few key grain- and food-producing countries with large populations—namely, the United States, Mexico, China, and India—is briefly summarized as follows:
Water is integral to highly productive irrigated agriculture. Without an adequate water supply, crop production will be diminished globally. With global warming-associated extreme weather, agriculture will be adversely affected as well. This week, as we hear the daily news of the catastrophic floods of Iowa, Illinois, Wisconsin, and elsewhere along the Mississippi River, that farmers will miss this corn-planting season due to flood-soaked land, corn prices reached record-high, stratospheric price levels.
So far we haven’t begun to discuss the serious problems of surface-water and groundwater pollution, privatization of water rights, water-resource grabbing by corporations, the collapsing water infrastructure, poor water management by municipalities worldwide, rising global inflation of chemicals and inputs of drinking-water and wastewater treatment, the rising demand and increasing pressure on existing water sources via soaring consumer demands for water-intensive foods (i.e., meats, dairy, eggs), and weakening governmental regulations to address water quality and water access. By analyzing the state of water, we can see a rather grim future—that of a hungrier one—for the world’s poor.
Jo-Shing Yang is the author of the book “Ecological Planning, Design, and Engineering. Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment. Small and On-Site Systems for Community Water Self-Sufficiency and Sustainability.” E-mail: jsyang@alum.mit.edu">jsyang@alum.mit.edu |
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Water Wars:
Privatization, Pollution and Profit by Vandana Shiva Where as Robert Glennon shows HOW water moves through the earth in “Water Follies”, Vandanna Shiva is concerned with the Life-sustaining Sacredness of water and our struggle to prevent the privatization of this precious resource. The “108 Names of the Ganges River” in the Appendix counterbalances the brutality by which the WTO has encouraged corporations to monopolize local water supplies in order to extract larger and larger profits from a relatively poor people for a substance that is essential to life. The introduction of large dam projects (encouraged by the WTO) has disrupted the local water management practices which have served well for thousands of years in India. The practice of giving gifts of water at piyaos, markets and temples is giving way to disposable plastic bottles of water from Dasani (Coca-Cola) or Aquafina (Pepsi) for sale (naturally). “I have witnessed the conversion of my land from a water-abundant country to a water-stressed country” writes Shiva, “The water crisis is the most pervasive, most severe, and most invisible dimension of the ecological devastation of the earth.” Again, what to do, what to do? Vandana Shiva ends her book on an up note, citing the struggles to regain local control over water resources, water democracy and the trend to view water as a “common resource. I only pray that our legislators see the writing on the wall and prevent the privatization of our local aquifer. |



Major banks and elite private equity funds are now seeing water as the new oil, and they're aggressively entering the water sector to buy up everything related to water. These banks have amassed several billion dollars in their "infrastructure war chests" in preparation to privatize water utilities.
This is my most recent article just published last week.
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New article published on AlterNet.org (October 31, 2008)
(http://www.alternet.org/workplace/105083/why_big_banks_may_end_up_buying_your_city%27s_public_water_system/)
Why Big Banks May End up Buying Your City's
Public Water System
By Jo-Shing Yang, AlterNet. Posted October 31, 2008.
Water is the new oil for global financial powerhouses and water is being commoditized and traded in global stock exchanges.
Today in addition to being able to buy water rights and purchase lakes on private land, an individual or a corporation can invest in water-targeted hedge funds, index funds and exchange-traded funds (EFTs), water certificates, shares of water engineering and technology companies, shares of multinational private water utilities, shares of multinational banks and investment banks that own water companies, and a host of other newfangled water investments in this U.S.$425 billion industry which is expected to become a U.S.$1 trillion industry within five years. And if one happens to be a tycoon, one can also create his or her own private water districts and water utilities.
The recent media coverage on water has centered on individual corporations and super-investors seeking to control water by buying up water rights and water utilities. But paradoxically the hidden story is a far more complicated one. The real story of the global water sector is a convoluted one involving "interlocking globalized capital": Wall Street and global investment firms, banks, and other elite private-equity firms -- often transcending national boundaries to partner with each other, with banks and hedge funds, with technology corporations and insurance giants, with regional public-sector pension funds, and with sovereign wealth funds -- are moving rapidly into the water sector to buy up not only water rights and water-treatment technologies, but also to privatize public water utilities and infrastructure.
"Water" and "water sector" are used broadly to refer to water rights (i.e., the right to tap groundwater, aquifers, and rivers), land with bodies of water on it or under it (i.e., lakes, ponds, and natural springs on the surface, or groundwater underneath), water-purification and treatment technologies (e.g., desalination, treatment chemicals and equipment), irrigation and well-drilling technologies, water and sanitation services and utilities, water infrastructure maintenance and construction (from pipes and distribution to all scales of treatment plants for residential, commercial, industrial, and municipal uses), water engineering services (e.g., those involved in the design and construction of water-related facilities), and retail water sector (such as those involved in the production, operation, and sales of bottled water, water vending machines, bottled water subscription and delivery services, water trucks, and water tankers).
The story is multifaceted: In the midst of a recessionary economy with a blistering financial and economic crisis, declining employment, and a shrinking tax base, many financially strapped and debt-ridden local governments are beginning to relinquish public infrastructure (including water) and municipal services (including water and sewage utilities) to privatization by Wall Street and other global investors.
At the same time, Wall Street and multinational banks are seeing water, food, energy, and public infrastructure as safe investment havens with stable returns and financially liquid assets. Simultaneously, they are waking up to the golden opportunity presented by the current reality of a thirstier, water-scarcer world caused by global climate change (and its extreme weather), rapidly depleting groundwater and aquifers, increasing water pollution, soaring water demand exerted by population increases, fast-rising agricultural and industrial uses, and crumbling water infrastructure worldwide requiring billions of dollars annually in maintenance and upgrade.
Often, the picture painted by mainstream media and water-rights activists is too simple -- that of a single corporation (such as Coca-Cola in India or Bechtel in Bolivia) "corporatizing water;" the real story is not just of flamboyant tycoons (such as U.S.'s billionaire and former oil tycoon T. Boone Pickens, or more recently, Hong Kong's real-estate billionaire Li Kai-shing, or Britain's magnate Vincent Tchenguiz) single-handedly grabbing water rights or individual corporations (e.g., Coca-Cola and Nestlé) sucking dry springs and groundwater to the detriment of poor subsistence farmers or slum-dwellers, but vastly complex global networks and partnerships of investment banks and private-equity firms linking together with other institutions (such as public-sector pension funds in Australia, Canada, and Europe; and sovereign wealth funds in the Middle East and Asia) and multinational corporations elsewhere to buy up and control water worldwide.
Not only are individual corporations buying up water but a deluge of globalized capital are also rapidly buying up water and consolidating their foothold in the water sector; these capital entities are investment powerhouses such as Goldman Sachs, JPMorgan Chase, Merrill Lynch (before it was sold to Bank of America), Citigroup, Morgan Stanley, Deutsche Bank, Credit Suisse, Macquarie Bank, Allianz SE, UBS AG, HSBC Bank, Alinda Capital, The Carlyle Group, Barclays Bank, Nomura Holdings, and many others. In fact, Wall Street and their global banking and corporate partners are aggressively buying up water all over the world.
Given this recent liquid-gold rush by private (also several public pension-funds) capital, it will be extremely difficult for environmental activists and human rights advocates who called water a basic human right and a public good which should be under public control to reverse this privatization trend. Naturally, when governments are financially strained by revenue shortfalls and tightening municipal-bond markets, calls for privatization of existing public infrastructure and utilities will be louder and harder to resist.
These banks and investment funds are aggressively entering the water sector, and they have raised billions of dollars for their water and infrastructure specialty investment funds (i.e., index funds, hedge funds) -- and they can recruit more money (in euro, pound sterling, dollar, RMB/yuan, yen, Australian or Canadian dollar, and whatever currency needed) within a short period of time from anywhere in the world, transcending all boundaries (whether national, ideological, political, linguistic, religious).
All this water-market reshaping is occurring in the midst of a global frenzy over privatization of public infrastructure -- considered to be low-risk investments -- such as roads, bridges, tunnels, ports, airports, gas, and water and sewage treatment. Water is one of the critical infrastructures, and Wall Street knows it. For Wall Street and global capital, water is also so much more -- it is the new petroleum of this century, an essential commodity to be invested, owned, controlled, and speculated upon to maximize profit.
Unfortunately, for water users everywhere, a likely consequence of Wall Street and multinational corporations' ownership and control of water in the midst of a global financial and economic crisis is that they will attempt to recapture their massive losses in their risky investments in the financial and housing/real estate sectors and elsewhere at the expense of water users.
For example, U.K. water customers are being squeezed by their private water utilities, to the tune of 17.5 percent to 62.2 percent increases in water rates, and could be paying as much as £1,000 in annual water bill per household within five years. Predictably, when Merrill Lynch boasts that its ML China Water Index yields a 102.2 percent returns, outperforming the benchmark by 70.7 percent during a 12-month period from 2006 to 2007, other multinational banks will also rush to invest in the water sector because they see it as a haven with rich rewards and expect these stratospheric returns. One possible outcome is the squeezing of water end-users.
Private water utilities are monopolies and they are able to set prices at will (or exert monopolistic pricing) due to a lack of competition and governmental regulations. Additionally, water itself is an essential good without a substitute; demand for water is also inelastic relative to price: regardless of its cost, one must have minimal amount of freshwater for maintaining daily life -- for drinking, washing and hygiene, crop production, and food preparation. (Goldman Sachs sees water consumption doubling every 20 years.)
If the history of U.K.'s water privatization is a guide, then water users all over the world -- not just households, but also businesses, industries, and agriculture -- are in serious trouble because they will be held hostage to high prices exerted by the monopolistic private water corporations and water utilities, many of which are owned by multinational banks and investment banks, and in turn these banking institutions have their shareholders, private investors, and even public pension funds demanding and expecting high returns on their water investments.
Water is more important than oil: it takes some 1,800 gallons to produce a barrel of crude oil, some 4,000 liters of water to produce a liter of ethanol, and 900 liters of water to make a liter of biodiesel. Several people have already made the statement about water being the new oil of the 21st century; recognizing its importance, Wall Street has rushed into global water markets to cash in on this liquid gold. The former heads of state, United Nations chiefs, CIA and Pentagon analysts, CEOs, tycoons, analysts with the world's largest investment banks and private-equity firms, and oil companies' executives have agreed on this.
Multinational and Wall Street banks and investment banks often disguise their investment in the water sector as a part of the so-called green, sustainable, environmentally friendly, socially responsible, clean-technology, climate friendly or global warming-reducing investments. They see "rich rewards" in water and infrastructure: Indeed, the European Union requires an investment of between U.S.$150 billion to U.S.$215 billion in sanitation infrastructure; more than U.S.$700 billion (incidentally, this is also the amount just given to bail out Wall Street) is needed to maintain and upgrade its water and sanitation infrastructure in the next 20 years. In Australia, an estimated AUD$5 billion is needed just to replace aging water assets in cities over the next five years and that AUD$30 billion is required to build new water infrastructure in the next decade.
Emerging economies such as China and India also have such serious water shortages and pollution problems that they both require at least a trillion dollars of investment to solve their respective water problems. Water-sector investment opportunities are also immense in Mexico, Egypt, the Middle East, Brazil, several African countries, and many other water-stressed nations.
Why Water Is the "Petroleum for the 21st Century"
Only 2.5 percent of the earth's water is freshwater -- and of that 2.5 percent, 70 percent is locked in the glaciers, ice caps, and aquifers, so less than 1 percent of world's freshwater (or 0.007 percent of world's water) is accessible and potable for humanity, to be shared by the world's 6.7 billion people, the myriads of wildlife and ecosystems, and humans' agriculture and industries.
Back in 2001, the CIA had already estimated that by 2015, almost half of the world's population will live in water-stressed countries. Worldwide, 1.1 billion people lack adequate water and 2.6 billion people don't have adequate sanitation. By 2025, the United Nations forecast that 3 billion people will lack clean water. The Organization for Economic Corporation & Development (OECD) predicts that nearly 50 percent of the world's population will face severe water shortages by 2030. In China, some 360 out of 600 cities are facing water shortages, with 100 facing severe shortages, according to China Institute for Geo-Environment Monitoring. The first person to serve as China's Minister of State Environmental Protection Agency, Qu Geping, said, "The ideal population for China's limited water resources is no more than 650 million people." China's population is 1.3 million in 2008.
Water is often dubbed "the new oil" because of its similarity to oil: diminishing supplies and rapidly growing demand worldwide. The world has already seen many oil wars in the 20th century over supposed dwindling supplies of natural commodities and resources. This century, the world has already witnessed the genocide in Darfur, which was initially brought about by climate-induced droughts and desertification lasting more than 20 years (since the 1980s), which led to tribal competition over water and grazing land between Arab nomads and black African farmers; these small-scale resource conflicts eventually exploded into a full-blown genocide backed by a racist, genocidal ideology.
Indeed, lobbying group Justice Africa told BBC in July 2007 that "the root cause of the conflict is resources -- drought and desertification in North Darfur." In June 2007, UN Environmental Programme (UNEP) said that peace in Darfur is nearly impossible unless the issues of environmental destruction were addressed.
Water is the basis of agriculture -- not just in growing food, but also in processing food. Water is the foundation of modern cities and urban sanitation systems -- from our indoor plumbing to centralized wastewater-treatment plants. Water is the basis of industries and manufacturing. Water is also used to generate electricity. Water sustains nature and wildlife. In essence, humanity can live without oil -- albeit more primitively -- but humanity cannot survive without water.
Simply put, without water, there's no agriculture and food production, no industries, no viable ecosystems, and no life. Major multinational banks and corporations around the world are waking up to the reality of water's emerging scarcity, which can disrupt national economies and lead to social and political chaos. In the midst of global climate change which brings extreme droughts and in the midst of a chaotic global financial and economic environment, water is a commodity likened to gold: it is liquid gold that sustains life. Hence, in the recent few years we have witnessed a mad rush by Wall Street and multinational banks and super-investors elsewhere to buy up and control this commodity.
In the past few years, multinational and Wall Street investment firms and banks have launched water-targeted investment funds. Several well-known specialized water funds include Pictet Water Fund, SAM Sustainable Water Fund, Sarasin Sustainable Water Fund, Swisscanto Equity Fund Water, and Tareno Waterfund. Several structured water products offered by major investment banks include ABN Amro Water Stocks Index Certificate, BKB Water Basket, ZKB Sustainable Basket Water, Wagelin Water Shares Certificate, UBS Water Strategy Certificate, and Certificate on Vontobel Water Index.
One often-heard reason for the investment banks' rush to control of water is that, "Utilities are viewed as relatively safe assets in an economic downturn so [they] are more isolated than most from the global credit crunch, initially sparked by concerns over U.S. subprime mortgages," according to a 2007 Reuters article. A London-based analyst at HSBC Securities told Bloomberg News that water is a good investment because, "You're buying something that's inflation proof and there's no threat to earnings really. It's very stable and you can sell it any time you want.''
The Coming Tidal Wave of Privatization of Public Infrastructure and Municipal Services
Privatization of public infrastructure -- including water utilities -- has been gaining more mainstream media scrutiny recently. For example, the New York Times recently reported on cities debating the issue of privatization of public infrastructure: Wall Street investment banks and investors -- such as Goldman Sachs, Morgan Stanley, Credit Suisse, Kohlberg Kravis Roberts, and the Carlyle Group -- are amassing an estimated U.S.$250 billion "war chest -- much of it raised in the last two year -- to finance a tidal wave of infrastructure projects in the United States and overseas," the New York Times reported.
As the New York Times pointed out correctly, U.S. federal, state, and local governments are financially strained with "mounting deficits that have curbed their ability to improve crumbling roads, bridges and even airports with taxpayer money," hence both the voting public and the governments are increasingly open to the idea of privatizing public infrastructure; the crumbling infrastructure is estimated to require at least U.S.$1.6 trillion investment in the next five years to maintain and upgrade according to the American Society of Civil Engineers.
Currently, approximately 8 percent of water utilities worldwide are in private hands; this figure is expected to double by 2015, according to several investment-banking analysts. As for water corporations (e.g., those in technology and engineering, materials and equipment, vending and private distribution via water trucks), all are in private hands. According to data compiled by Bloomberg, the rate of infrastructure privatization for all types of infrastructure almost doubled to U.S.$340 billion between 2005 and 2007.
The New York Times also reported that many cities suffering severe financial strains after having been shut out of the municipal bond markets are cutting back infrastructure upgrade and maintenance projects. Cities are also facing revenue shortfalls attributable to unprecedented housing foreclosures (shrinking property-tax base), decreased employment base, dwindling sales taxes, and reduced funding from state and federal governments. For example, Athens-Clarke County in Georgia delayed a U.S.$221 million bond issue for upgrading its three sewage-treatment plants after Lehman Brothers filed for bankruptcy.
Given the current state of economy in the United States and elsewhere in the world, we can expect more municipal infrastructure and services privatization. Goldman Sachs, Citigroup, the Carlyle Group, AIG Highstar Capital, Credit Suisse (also partnering with GE), UBS AG, JPMorgan Chase, Deutsche Bank, and other multinational banks are amassing "war chests" of several billions of dollars in anticipation of this "tidal wave" of infrastructure (including water) privatization around the world.
Jo-Shing Yang is the author of Ecological Planning, Design, & Engineering, Solving Global Water Crises: New Paradigms in Wastewater and Water Treatment, Small and On-Site Systems for Water Self-Sufficiency and Sustainability and can be reached at jsyang@alum.mit.edu">jsyang@alum.mit.edu.