Has the Bubble Finally Burst? A Comparative Examination of the Failure of Privatization of Water Services Delivery in Atlanta (USA) and Hamilton (Canada)

Abstract

The last few years have witnessed significant attempts by a number of municipalities across the globe to reverse private sector involvement in water services delivery to citizens, with examples across North America, Europe, as well as in some developing countries. What makes this reversal of private sector participation in water services delivery baffle many is that, in the not too distance past, private sector involvement in water delivery was touted as a better service delivery option for municipalities. It was seen as a panacea for the perceived inefficiency, ineffectiveness, and unaccountable nature of the public sector. Why are municipalities deprivatizing their water services delivery? Did the promises of privatization fail? This article argues that the privatization of water services delivery was based on the (false) premise of the market being more efficient and effective, which would enable governments to save costs and lead to the emergence of a competitive environment in a monopolistic industry. It seems, therefore, that the private sector failed in no uncertain terms with respect to its promises to deliver. This argument will be supported using two cases drawn from Canada and the United States.

Understanding and Managing Urban Water in Transition

“…Some authors even suggest that "policies based on a commodification of water and sanitation services are intimately related to the increasing inequality that has been recorded in developing countries since the 1990s" (Castro, 2007). PSP has also been increasingly contested by citizens and politicians, as such evidence has highlighted the weakness of States to exercise regulatory control over private operators, particularly in weak democracies (Castro, 2007;Ohemeng and Grant, 2011). The ideological movement aiming at reversing private sector involvement in water services delivery to citizens, born in Latin America is now gaining momentum in Europe and increasingly becoming an important local political issue (Barraque, 2012).…”

Neither public nor private: The efficacy of mixed model public service delivery in two Canadian municipalities

“…Effectiveness in service delivery has been defined as the “outcomes or benefits, such as the reduction in waste generation” (McDavid and Mueller ). Effectiveness is also concerned about the timing of service delivery, but is linked to efficiency since such timing may require either fewer or more resources (Ohemeng and Grant : 291). Thus, effectiveness of a service may be determined to a large degree by the level of customer satisfaction surrounding delivery.…”

“…In spite of these advantages, many believe that the model has a number of limitations (Ohemeng and Grant 2011;Bel and Costas 2006). First, the presence of competition does not guarantee that the model will be successful (Donahue 2009;Slyke 2003).…”

“…Indeed, the two constitute the core of the private sector model. In simple terms, privatization occurs when governments transfer or sell assets to the private sector, so that they are no longer responsible for operating a program or delivering a service (Ohemeng and Grant ). Contracting out is more difficult to define.…”

“…By the late1990s, however, it appeared that many of the promises of ASD had not been fulfilled. Consequently, many governments retreated from ASD and began searching for new ways to deliver services (Ohemeng and Grant ; Hefetz and Warner ). This search led to the adoption by many, of what has been described as the mixed model approach to service delivery .…”