During the Industrial Revolution, when people moved to cities en masse, household and human waste began to mix in Berlin’s gutters. A stench rose from the street. Fouled water lead to deadly outbreaks of cholera and other water-borne diseases. By 1852, the Prussian government had to do something: it hired an English company, Fox and Crampton, to take over the city’s water service. It was one of the early Western experiments in the privatization of water.
Because water is so abundant—it rains from the sky, it collects in the earth—it feels like it should be free. The United Nations even recognized water as a human right in 2010. “It’s not like shoes,” Saskia Solar, a spokeswoman at Berlin’s water authority, told me. “Water is something fundamental to our existence.” But delivering safe water comes at a cost, and the fight over who should bear that cost has transformed water—and the merits and shortcomings of privatizing it—into an ideological battleground.
It has been at least two thousand years since governments started charging citizens for gathering and delivering water. The Romans financed their aqueducts through both public and private sources: about forty per cent of Romans paid a tax to have water piped directly into their homes, which covered the costs of maintaining the system. In the eighteenth and nineteenth centuries, as European economies moved from agricultural to industrial, urban populations exploded. Soon, scientists uncovered links between dirty water and disease. City governments, overwhelmed by polluted drinking water, looked to private companies. (Paris gave the Perrier brothers a contract to pipe water to the city in 1782.) But most city governments were dissatisfied with the private companies and put their water works back under public control. In 1873, Berlin ended Fox and Crampton’s contract and retook control of city water.
Now, after another experiment with partial water privatization—this one lasting fourteen years—residents of Berlin are once again regaining control of their water. In the late nineteen-nineties, stench and disease were no longer a concern in Berlin. Reunification costs, however, were stretching the city’s budget. Plus, the fall of Communism—and a political swing away from government-run services—had popularized privatization across Europe. So, in 1999, Berlin sold nearly half of the shares of its water system to two private firms. The city established a holding company that preserved the Berlin water authority as a tax-exempt institution, but gave day-to-day management to private shareholders. Over the years Berlin’s water quality remained extremely high, but people didn’t like that their rising water bills were benefiting private firms; in 2011, they voted to kick out the private companies by buying out the remainder of their contracts. That process ended in early November. In the end, to put its water system back in public hands, the city had to pay both companies for the remainder of their thirty-year contracts, which amounted to a cost of more than a billion euros.
It is difficult to measure whether state-run water systems perform better than privately run ones. Private water companies tend to raise prices: Food and Water Watch, a nonprofit that opposes water privatization, estimates that water rates increase an average of eighteen per cent every other year after private companies take over, and that private companies invest too much in unnecessary infrastructure. Public ownership, on the other hand, can have hidden costs: critics argue that public water utilities keep prices artificially low and make up for it by cutting investment or raising taxes. In any case, there is little proof that ownership structures affect water quality: in Europe, for example, strict water regulation ensures minimum standards regardless of who runs the system.
Opponents of water privatization contend that water systems should be run by citizen boards, rather than multinational firms or even state bureaucrats, and that water contracts negotiated behind closed doors exemplify the worst aspects of public-private partnerships. When Berlin sold part of its water service to private firms, Gerlinde Schermer was a member of Berlin’s Parliament. For her, the worst aspect of the deal was that the contracts weren’t made public. “As a Parliamentarian I could go into a room and see the contract, but I couldn’t made copies,” she told me. When she looked at the contract, she saw a provision that would guarantee the companies a profit every year. But she couldn’t prove it until the contracts were published in 2010. Now, Schermer is an activist at the Berlin Wassertisch (Water Table), which pushed to kick private water companies out of Berlin.
Privatizing water systems can sometimes make sense, though, Richard G. Little, an infrastructure-policy consultant, told me. In some regions, mismanagement, bureaucracy, and corruption do hamper public water systems. The World Bank, which long pushed for privatization of water in return for aid loans, says that the number of people served by private water companies in developing countries went from six million in 1991 to one hundred and sixty million in 2007, and that public-private partnerships reduced the amount of water lost to leaks, theft, and inaccurate measurement in those areas by fifteen per cent. Private companies can provide more professional management, bring new investment into neglected public water systems, and provide funds for research. “I don’t think it’s a simple binary thing where private or public is always bad or good,” Little told me. And when it comes to citizens buying back their own water, he said: “If it makes people sleep better at night, then that’s the price for a good night’s sleep.”
Photograph by Voishmel/AFP/Getty.
