Tapped out: is water becoming the new oil?

by Patrice Sarath, February 14th, 2008, 6:18 am

A week ago I visited a third-world country, and that got me thinking about water.

Specifically, privatization. Water privatization is a hot-button topic around the world. Companies such as Veolia and Suez are the top water companies in the world, each serving hundred of millions of customers in both developed nations and much poorer countries.

The pros of privatization are many, according to proponents. Water can be more efficiently delivered by a for-profit company than a public utility, the theory goes, and competition will keep prices low. Additionally, companies pay taxes, which supports the tax base, allowing municipalities and local governments to deliver more services.

Not so fast, say the critics. Once an infrastructure is in place, a water company has a monopoly. How much competition can there be among water companies when the first provider installs the mains, the lines, and the pumps? Nor will prices remain fixed, since a company has to increase its profits to keep shareholders happy.

Additionally, the question of whether water is a commodity or a human right is at the center of many water conflicts. In Bolivia in 2000, water privatization caused riots, as provider Bechtel raised its rates in the poorest neighborhoods.

Rich nations are also at a crossroads. In the western US, water wars are nothing new. Colorado and California especially have suffered political fallout from water disputes. In Texas, 19th-century water laws state that landowners own all water below their property, while the state regulates rivers and lakes. Water is the new oil here. Entrepreneurs that last century were speculating in oil are seeking to buy up water rights in aquifer-rich West Texas. Ranchers have discovered once again that what’s below their land is more valuable than the cattle they run on the surface.

Water issues are starting to come to the forefront of the general consciousness. Peak oil may still be in dispute, but peak water is likely not far behind. Private companies and public utilities both are seeking to improve water delivery, whether that is through desalinization plants, improved infrastructure, more water plants, or all of the above. Rich and poor nations will face this urgent issue in the coming decade, although, right now, poor countries are bearing the brunt of it.

As for that third-world country, I visited? I didn’t have to go far. A broken water line left us high and dry for the weekend. For 72 hours, I had a taste of what it was like to be without water to easily drink, cook with, or bathe with. (Don’t be alarmed, we have friends with showers.) We bought water by the jugfuls and we made do, but it was an eye-opening experience. 

It will be a while before I take water for granted again.