"We said recently that water companies were living in fantasy land if they thought customers would willingly pay increases of well above the rate of inflation."

Sheila Reiter,
Chair, Britain’s OFWAT National Customer Council

Water giants extend their reach

When it comes to Canada’s water, the for-profit floodgates are threatening to burst open — despite a decade of failed water privatization in Britain and elsewhere around the world. The federal government has not renewed the national infrastructure program that expired in 1998. Cash-strapped municipalities are scrambling to fund the extension and upgrading of water and wastewater systems. And the water corporations wait in the wings, eager to further their toe-hold in the North American market and tap into what they see as a huge potential for profit.

The water giants cast themselves as the solution to municipalities’ financial woes, offering to finance, own and operate much-needed systems in exchange for long-term control. Poor water quality, higher prices, heightened environmental and health risks and blurred accountability are the inevitable results of these so-called public private partnerships. The failure of water privatization around the world — and the emerging bad news from schemes in Canada — make any further water ‘partnerships’ a serious mistake that will be hard to reverse. Yet from Halifax to Vancouver, privatization continues to threaten Canada’s public water systems.

The need for new infrastructure

Water and wastewater infrastructure is a pressing environmental and economic concern. The Canadian Water and Wastewater Association estimates that Canada requires more than $90 billion over the next fifteen years to maintain, repair and build the country’s drinking water and wastewater facilities. With municipalities unable to fund these upgrades alone, the pressure mounts for the federal government to renew its commitment to public infrastructure.

In an era of budget cuts, debt avoidance and service downloading to municipalities, public water advocates are calling for a new federal program that specifically targets water infrastructure. It would fund only public ownership and operation, preventing the further spread of dangerous public private partnerships.

The last federal infrastructure program, which lapsed in 1998, provided $8 billion over five years for a wide range of projects. Yet this year the United States has committed US$775 million for state safe drinking water projects and about US$10 billion to be spent on new water and sewer construction. Canada’s experience stands in stark and unacceptable contrast. The longer municipal infrastructure needs are unfunded, the bigger the vacuum grows for corporations to step in and fill the void by offering funds in exchange for control of Canada’s water systems.

Corporate carve-up

Knowing that water is essential to daily life, corporations are leading the charge to get their hands on North American water and wastewater systems and the assured revenue they represent. Public water rates cover the cost of water services and upgrades. Corporations want prices that push the limits of what the market can bear, further padding their already hefty profits.

An unexpected interest in the water business comes from the giant bio-engineering and health industry corporation, Monsanto. Its thirst for water profits is understandable since the company states that its initial entry into the water business would "create US$400 million in annual revenues with the long term potential to create several billion dollars in annual revenue."

Enron, the giant Texas-based energy conglomerate, is a new entry in the water business through its water subsidiary, Azurix. Enron boasts Azurix is positioning itself to become a major global water company in a $300 billion market that is ripe for third-party investment. Last year Fortune magazine ranked Enron seventh in the world when it came to the biggest increase in profits — profits rose 570 per cent between 1997 and 1998. Thirsty for more, Enron justifies Azurix's participation in the water and wastewater sector on the basis that it will further increase returns for shareholders.