Something in the Water Episode 9: The Public v. Private Debate for Water Management

In this thought-provoking episode of "Something in the Water," host Elena Berg dives into the complex debate of water privatization versus public management. Joined by Dr. Oleg Kobtzeff, Associate Professor at the American University of Paris, the discussion explores the implications of private and public water systems on consumption, conservation, and accessibility. From examining the economic motivations of privatization to the democratic values upheld by public systems, this episode dissects the pros and cons associated with each approach. With insights into the environmental politics and hydro politics, Elena and Dr. Kobtzeff uncover the realities behind the water coming out of our taps, shedding light on the power dynamics that influence water management globally. Whether you’re concerned about environmental sustainability or curious about the forces shaping water policies, this episode offers a comprehensive overview of a topic that touches all of our lives.

Episode Guest: Dr. Oleg Kobtzeff

More information about Dr. Kobtzeff  here

Dr. Kobtzeff’s website here

More information about Mexico City Case Study

More information about Bolivia Case Study 

More information about the episode and Something in the Water here.

Episode Transcript  and more information on the Pine Forest Media Website

Follow Pine Forest Media on Instagram @pineforestmedia

Hosted by Elena Berg

Written and produced by Elena Berg and Clark Marchese

Audio Editing by Clark Marchese

Cover art by Sarah Glavan

Theme Music by Josef Salvat

Transcript:

[00:00:01.100] - Elena Berg

Hello, everyone. It's Elena Berg, your host of Something in the Water, a podcast where we dive into the world of water from luxury mineral springs to the challenges of access, environment, and industry for a deeper understanding of what we drink. Welcome back to the show. You've made it to week nine, and I'm so glad to have you here. We've got another big water discussion to unpack today. A big goal of this show is to get people thinking more about their water. Knowing where our water comes from and who brings it to us is a big part of that. Last week, we talked with Dr. Jaa Litosin about tap water and education. Go back and listen if you've missed it, but in that episode, She briefly hinted that there's a bit of a discussion about who should be responsible for maintaining our tap infrastructure, if it should be a public entity or a private company. So today, we're going to be exploring that debate. If I asked you to If you were to think about some of the biggest water companies, which ones would come to mind? Anyone who spends time in an American grocery store or gas station would probably recognize these brands, Aqafina, Dasani, or maybe a scattering of others like Fiji or Pollenspring.

[00:01:32.310] - Elena Berg

Many of the common bottled water brands that you see are actually owned by four big international companies, Coca-Cola, Pepsi, Nestlé, and Denon. But have you ever heard of Ecolab Incorporated? American Waterworks, Veolia Environment SA. Not all drinking water companies are bottled water companies. We know the brands on the labels of our water bottles because we see them all the time, but there's no brand mark on the water coming out of our tap. We might assume the government owns it, but that's not always true. Often, government contracts go to private companies to maintain our water systems. And as our guest for today, Dr. Oleg Kobtzeff explains, these companies can be as powerful as oil giants. Think of the last time you played Monopoly. One of the biggest cash cows you can draw is the waterworks card, and I quote, If utility is owned, rent is four times amount shown on dice, end quote. If you buy the electricity card, too, rent is 10 times the amount shown on the dice. It seems we have an understanding, even if we only think about it during family game night, that a lot of money goes into maintaining utilities and infrastructure.

[00:02:45.060] - Elena Berg

After all, the symbol on the monopoly card is a faucet, not a bottle. In 2023, Ecolab Inc. Was valued at almost $40 billion. That's a lot of money. Now, just because these companies are making a lot of money doesn't mean that they warrant the same criticism as ExxonMobil. Not only does water not pollute the planet, like the burning of fossil fuels, but these companies are providing a public good, perhaps arguably even enabling us to reduce our impact on the planet. But because it's a lot of money, we should probably break down why we, as a public, choose to invest so much in a private option, if we even know that we have a choice. Remember, we're all about context on this show. So today's episode is focused on understanding all of the arguments, both in favor of a private water option as well as the public state-run maintenance of our water infrastructure. To help us break this down, I have invited my colleague from the American University of Paris Dr. Oleg Kobtzeff to the show. Dr. Kobtzeff specializes in environmental politics and teaches many courses on the subject. One in particular is called Waters of the Globe, and it's a semester long deep dive into hydro politics.

[00:03:59.600] - Elena Berg

We got to talking about the arguments for and against private management of water systems. We talked about the big players in water privatization and how to balance the logistical shortcomings with the democratic advantages of a public water system. Hello, Professor Kobtzeff. I'm used to calling you Oleg. Welcome to the show. I'm glad to have you joining us today. I've known you for many years now, but our listeners haven't. So can you tell us a little bit about yourself?

[00:04:33.290] - Dr. Oleg Kobtzeff

Oleg Kobtzeff, Associate Professor at the American University of Paris for almost exactly the past 30 years.

[00:04:41.500] - Elena Berg

Glad to have you with us. I guess we'll just jump right into it. Can you walk us through some of the arguments that would support water privatization?

[00:04:50.210] - Dr. Oleg Kobtzeff

If I were simply a consumer, I would notice that on average, and I say on average with great prudence, we're going to have to very seriously I'll briefly nuance that a little bit later. The ones who are connected to private distribution system of fresh water pay less than a third of the costs of water. The problem is that those who are connected to a public distribution center pay even less. The problem is that consumers that depends on the country or the regions or the state or the community or the municipality, many Many do not pay their bills. The bills are very irregular. The water is underpriced, and basically, there is no financial incentive to conserve scarce water. So in a very cynical way, in the same way as politicians want to tax polluters, for example, when you consume too much gas in your car, you're going to pay a very high price on the gas as an incentive to not consume that much. Like in France, here we have something something like 80% of a sales tax on gas. You will be much more careful with your level of consumption of water if the water is expensive.

[00:06:09.910] - Dr. Oleg Kobtzeff

So yay for privatization because private companies are going to try to make as much money as possible. They don't want to ruin you. They don't want to kill the hen that lays golden eggs. That is the majority of consumers. So it's not going to be too expensive for most consumers. On the other hand, The price will be high enough for the consumer to be careful about how much water is being wasted. I am not talking about households using water for showers or to cook. I'm talking about great farms. I'm talking especially about corporate farms that are gigantic and that use an absolutely amazing quantity of water. They have been overconsuming and practicing extremely, and I repeat, extremely unsustainable forms of crop growing because water was so easily available and so cheap, and that was government water. Keep in mind that a lot of the greatest consumers of fresh water, we're talking about agrobusinesses and I'm not talking about small mom and pop farms, although we have to watch those. But I'm talking about large corporate farms run by huge companies who are the greatest consumers of water.

[00:07:28.130] - Elena Berg

Okay, so argument number one is that the higher price placed on water by a private company increases incentive to conserve. But I think it's important to remind listeners, as you mentioned, that the price difference likely won't be noticed through normal household consumption. We should all turn off the water while we're brushing our teeth, but really, you only start to notice differences in price if you're consuming thousands and thousands of gallons like you would on a farm, for example.

[00:07:55.280] - Dr. Oleg Kobtzeff

I'm talking about also industries. They are going to farm to fund the campaigns in democracies. They're going to fund the campaigns of politicians once in place, as legislators or governors or eventually presidents of company, they're going to make sure to keep the water bills very, very low so that these giant corporations can consume as much as they want and certainly not care about sustainability, which they often see as a nuisance. I will add that also we have a lot of cases where the corruption that you always find in politics, including municipal politics in the United States, which is almost a tradition in American history. You're going to have not only a lot of corruption and mismanagement and incompetence when it comes to water management. So the private companies say that there will be less room for corruption. It's not politicians who are going to run the system. It's engineers are hired by the company.

[00:09:04.480] - Elena Berg

I see. What I'm hearing is that as far as the environment is concerned, there's at least one reason to support private management because the price is high enough to limit waste. The Second reason would be that it's harder for large consumers of water like mega farms or other large industries to lobby a private company than it would be to lobby the government. That's interesting because normally we would think that the government would to prevent corporate corruption, but in this case, it could be seen as the other way around. Both of these points seem to be implying that waste and overuse are major concerns with a public system.

[00:09:40.680] - Dr. Oleg Kobtzeff

There's a lot of waste, actually. You look at Mexico City recently, there's been studies showing a few years ago, studies showing how much water is wasted because the pipes are completely in disrepair. That doesn't happen when you let private companies run the system. They're pipes, usually, and I'm saying this being very carefully, the pipes will be in a very good shape. One of the reasons why governments are not going to invest so much is that they have lots of other priorities. Imagine Ukraine. Of course, that is the most extreme case you can imagine with the water system being destroyed on purpose. But even countries that are at peace and that are even relatively rich, they still have a lot to worry about in defense, in health, education. You have so many choices to make with your budget?

[00:10:31.630] - Elena Berg

Yes, it's true. The New York Times, The Guardian, Latin America Reports, Reuters, and the International Water Association, amongst others, have reported on the need for updated water infrastructure in recent years. I'll post some links about this in the show notes. I'm also intrigued by the notion of priorities here. You would think that something as essential as water would be top tier, but I guess in reality, we see that it's not always the case.

[00:11:00.600] - Dr. Oleg Kobtzeff

Water doesn't always come first. If you just hand it over to a company, according to some management gurus, the job will be much more efficient. But I'm saying this with great, great care. You'll probably ask me a question about the counterarguments in a minute, and there's a lot of those.

[00:11:24.370] - Elena Berg

Oh, don't worry. I will ask you about those in a minute. But before we move on to the reasons why private company management of water transmission and distribution systems might not be the best option in all cases, I want to get a better understanding of who these companies are.

[00:11:39.320] - Dr. Oleg Kobtzeff

Most of the private companies in France, in fact, find their origins in building the Suez Canal. Can you imagine? Soon it'll be a 200-year-old experience. The example of France is very interesting because these are huge corporations that even have more power than some oil companies. You do have some extremely extremely, extremely powerful companies. I repeat, they are the size of the largest oil or gas companies. We're talking about the scale of companies like Total, Tattered Oil, like Gazprom in Russia. Since we were talking a lot about the United States, you've got American Waterworks. You have companies like Suez or Vivendi, also General in France. Actually, the largest companies in the world, the largest private companies in the world, run a lot of the water in France. That's about 70% of the water supply in France, which is privatized. In England, also, you have Thames Water, which is, by the way, also a subsidiary of our W. E. But watch out because by the time you've edited our podcast, it might have changed They may have been bought out by this company, that company, etc. These giant companies, and those that I mentioned, are really the ones who dominate the market.

[00:13:12.770] - Elena Berg

When you say that, that's a big deal. The international economy is dependent on oil. Wars are fought over it, and it's like public enemy number one in climate change discourses. People don't generally think of water as being so political as oil or water stakeholders holding as much power as countries or companies with lots of oil. After all, you can't burn water the way you can burn oil. Perhaps at this stage, maybe oil is getting more air time or we're more aware of oil scarcity, But that will certainly change. We don't necessarily want to villainize these companies, but we do need to keep our eye on them as we see water stress continuing to increase. But before we move on to talking about why a public system may be a better option, let's do a quick recap for a pro-private stance. A slightly higher price will incentivize conservation. It's more difficult for large consumers of water to manipulate private companies. The profit motive for these specialized private companies results in more efficient infrastructure that reduces water waste. Finally, all of these seem to promote responsible water management overall. Now then, you hinted to it earlier, so I'll ask the same question in two different ways.

[00:14:30.810] - Elena Berg

What are some of the arguments against water privatization, and what are some of the arguments in favor of public management?

[00:14:37.870] - Dr. Oleg Kobtzeff

All right. Well, first of all, there are as many examples as we have of corruption, mismanagement, technical incompetence. In fact, many examples of other forms of different forms of corruption with private companies.

[00:14:57.480] - Elena Berg

All right. So not to say that they cancel each other out, but corruption is an ever present issue that requires more of a case-by-case analysis. In other words, we have to assess the degree to which corruption will be problematic. Depending on the context, a private or public solution might be more viable. What else do we need to think about here?

[00:15:17.180] - Dr. Oleg Kobtzeff

One of the problems with evaluation, with how to price the water, is that indeed a private company will price the water also high enough for to make a profit. The problem with this model is that in many countries, and one of the worst examples is Bolivia, you have a whole section of the population that will be sacrificed. It is those who indeed needed the lowest possible price of water to be able simply to survive. Almost the entire population in very rural areas that simply were cut off Since their water source has been privatized, it's been completely cut off as private property, and they couldn't even access it as they used to, to go with their buckets of water and go fill up in a river or in a mountain lake or wherever you had water that was now completely privatized. That's one thing that we have to bear in mind. There will be sources of water that will be simply physically inaccessible. It'll be a big wall or barbed wires around it or armed guards or whoever will say, No, sorry, this is private property. You will have no more access to it then, let's say, to an oil rig if you want to fill up your distill crude oil and then fill up your automobile.

[00:16:45.250] - Dr. Oleg Kobtzeff

Here you have a huge portion of the population of Bolivia, and that is the case also in other developing countries that suddenly ended up not being able to access the water that they survived with. When I don't think the fact that this was essentially the Indigenous population.

[00:17:04.980] - Elena Berg

Okay, so let's talk about this Bolivia example. This is definitely an extreme case, and it doesn't happen every time that a private company takes over, but we're still going to break it down. Because I think it does exemplify an anxiety that many people share that privatizing water can prioritize profits over universal access. Okay, so in 2021, Sarah T. Hines published a book about this situation called Water for All: Community, Property, and Revolution in Modern Bolivia. If you're interested in reading more about it, I'll also put some links to more information in the show notes. But briefly, what happened was at the turn of the century, in 1999, the Bolivian government hired a syndicate of private companies called Agua del Tunari to take over management of the water systems in the Cochabamba Valley in Bolivia. One of the companies under this umbrella was a US construction company, incidentally called Bechtal. What ended up happening is just what Dr. Kobtzeff said. Entire communities ended up getting priced out of their basic water needs and lost access. It prompted a major grassroots political movement for Indigenous rights and for access to public goods that lasted many years and ultimately ended up bringing a new President, Aval Morales Ima, who happened to be the first Indigenous President in the country.

[00:18:24.890] - Elena Berg

So yes, we do love to see more representation in government. However, water deprivation is probably not the way we want to get there. Obviously, this was disruptive for the lives of those directly impacted in the region, but it was also quite disruptive for the whole country and resulted in a considerable amount of political unrest.

[00:18:44.040] - Dr. Oleg Kobtzeff

And when you think of the political consequences, is that this brought in change of government? It brought in Morales as a president who represented these people who were deprived of water. This government lasted for several years, and then recently, you had a coup d'État to remove Morales. You're beginning to see that the problems are cascading and we're stuck with exactly the same perils as we are with the politics of oil. You have some extremely dangerous situations when you completely give a carte blanche to private companies that, of course, are there, above all, to make a profit and not, contrary to what they would tell us, not to improve the lives of of local people in this or that country, even though that may happen, but I would say rather as a side effect and not as a project of these private companies. The welfare of the population will never be their main priority. The other problem is democracy. In a democracy, you can control the government, especially if it's a municipal government, a city hall, and especially when it's a small city and a town. You have a direct contact with the politicians, and it's much easier to run for a seating a municipal council and even win that seat.

[00:20:12.920] - Dr. Oleg Kobtzeff

If you transfer absolutely all the power over water to private companies, unless you are a shareholder and a major shareholder, you have absolutely no control of the decisions made by the big water company. So go ahead and try to have any influence on the decisions made there. Whatever consumers they are ready to sacrifice, that could be up to 20, 30% of the population of the entire country that might completely go into absolute poverty.

[00:20:46.380] - Elena Berg

What you're saying is that contracting a private company takes away a direct line of accountability between the public and those managing their water systems. But what about quality? We've talked about the economic side and a bit about the environment, but what about the quality of the water itself? Does the democratic aspect of publicly run systems ensure higher quality tap water? Or as we talked about earlier, do the multiple priorities of a government cause quality to slip more often as opposed to the specialization we spoke of with private companies?

[00:21:21.100] - Dr. Oleg Kobtzeff

It depends on the quality of the people and the organizations responsible for the water system. How responsible are they is the first question we should ask. We have worst-case scenarios. Flint, Michigan, for example, where the water is absolutely undrinkable. Is it the fault of the municipalities? Is it the fault of industries? Or both? You have many other examples like that in the world, whether it's in Indonesia, in South Africa, in the former Soviet Union. Then you have the perfect examples of sustainability, excellent management.

[00:21:59.030] - Elena Berg

Okay, so a A similar conclusion to what we found when it comes to corruption, you can find good eggs and bad apples in either system. Can you give us any examples of a system that you think is running really well?

[00:22:11.250] - Dr. Oleg Kobtzeff

So yes, here in France, what we have here in the villages that are along the Vieu and River is one example of a job relatively well done. Again, it's only one example in France. And we're talking about the huge companies like Veolia or Vivendi, for example, a show Are they doing that good of a job elsewhere where they can exploit populations without bothering too much with democratic systems or people who could complain but have absolutely no access to the media or to politics? That's another issue. But here, I would say in France, we have some good examples. The governments are doing a good job by regulating. Probably the highest record of sustainable management of waters is in Scandinavian countries, including Finland, which is not ethnically Scandinavian, but it's in the Scandinavian Peninsula, and I include Iceland as well.

[00:23:10.830] - Elena Berg

Thank you so much, Professor Kupsev, for coming on the show. It was really great to have you. All right, everyone. Wow. This was a dense episode. If you've made it this far, I thank you for sticking with us through to the end. The question at hand is an important one, so I think it's worth breaking it down to understand it. So what's our answer then? After everything we've heard today, should water management be public or private? I don't think we can take a stance so broadly. As we've discussed almost every episode in this show, as well as today, context is important. Things like government systems, resource abundance, and specific company actors, just to name a few, may cause us to change our answer. But what we can do is run down a general recap what we've learned today. In general, we can see that private companies managing our water systems typically tend to promote more conservation by consumers, less waste through infrastructure. On the other hand, a public system tends to foster more democratic pricing accessing, access, and accountability, bearing in mind that issues of water quality and corruption can be seen in both systems.

[00:24:22.060] - Elena Berg

Because we weren't able to give you a definitive answer today, I encourage you to take a look and see who is responsible for managing the water that comes out of your tap. We learned on last week's episode that education and knowing the answers to these questions is the best way to build and maintain trust and also to increase accountability. I think there's actually one last thing that I'd like to mention, which has to do with giving water value or putting an actual price point on what should be a universally accessible human right. At the end of the day, though, we don't live in a world where everyone has a well in their backyard. Making water accessible is expensive, and I think Unfortunately, this is a reality whether our water systems are publicly or privately run. At the end of the day, the bill gets sent somewhere. I think because we've grown so accustomed to having this tap that we can just turn on, it at any time of the day when we live in particular parts of the world where that infrastructure is available, we forget about that price tag. This is a reality that would be easier to get on board with if it was directly correlated with the cost of getting water to the consumer.

[00:25:32.020] - Elena Berg

But at least in the US, this is not always the case. How we price water is also very complex with lots of different variables. I guess I just wanted to say that understanding water's value is complicated, and it's a process that we really, really have to grapple with. So we did it. That's the end. A quick reminder that you can find more information about the case studies that we discussed on today's show in the show notes. Thank you so much for listening, and I'll see you right back here wherever you're listening to this in one week's time for our final episode. We're bringing it back full circle to where we started. Now, hopefully, having explored all these different topics about the water that we drink and visiting water farmers from around the world. Hopefully, we're starting to think a little bit differently about how we interact with it day to day. And that's why for our last episode, we'll be speaking with two guests, Jan Bender and Michael Tenusis, about the future of fine water and the ways in which we can start to use water differently in our own lives. Thank you for listening to this episode of Something in the Water.

[00:26:48.200] - Elena Berg

I'm your host, Elena Berg. This podcast was produced and written by myself and Clark Marchese. This episode's guest was Oleg Kobtzeff, and we put some information about him in our show notes. Something in the Water is part of a larger network of environmental podcasts that are part of Pine Forest Media. So I definitely encourage you to check out some of our other shows. More information, as well as full transcripts, can be found at pineforestpods. Com. The music you're listening to was produced by Joseph Salvat, my friend, and a past guest on the show. Cover art was made by Sarah Glaven, and the show was edited by Clark Markezi. Finally, thank you to the American University of Paris for making this podcast possible. If you feel called, writing a review and giving us a five-star rating is the best thing you can do to help us out so that we can make more sciencey podcasts in the future. So thanks to all of you, and see you one last time next week.