Water and Profits: Is There a Catch?

Canada seems to be finally lurching forward on the road to privatization, entrusting some of its vital infrastructure into private hands. Two large hospitals, plus the announcement of the RAV transit extension in Vancouver late last year, are just three recent P3 projects in the works. Private consortia will not only finance and build these facilities, but also will operate and maintain them once they are open and people are riding the trains and lining the halls waiting for medical treatment.

Meanwhile, the debate over these government handovers shows no sign of abating. Most of us find it difficult to decide who is right. Yes, private sector involvement is a wonderful idea if it means that more water treatment plants and roads will be built, because certainly we need them. But on the other hand there are many reasons to be cautious, not least because corporations are unstable and hungry bodies that (a) need to make profits and (b) might not be around in 20 years’ time.

To air these issues as they relate to the water and wastewater sector, we invited two people who represent extreme sides of the debate to give their views (see page 26). Subsequently, cruising the web looking for a third, more impartial stance, I came across some papers by Karen Bakker, Ph.D. Bakker is an assistant professor in the geography department at the University of British Columbia, who last year published a book on the privatization of water in the U.K.

On the telephone Bakker said she had come to the conclusion that the real issue is not about whether it’s a private or public utility sending water down the pipes, as it is about the need to have a strong framework of regulations and standards in place. We need regulations to ensure both water quality and fair pricing, because as Bakker cites in a research paper, the poor in Britain apparently had a hard time of it during the early days of privatization. During 1992, at the height of the problem, 20,000 people could not pay their bills and had their water supply cut off.

For consulting engineers in Canada, what might increased privatization mean? First, as Bakker has suggested, it’s important that consultants are seen to be impartial. If they are giving advice to a municipality about a new treatment plant, for example, then it must be clear that they won’t profit from the subsequent project and contracts must be set up so that there is no possible conflict of interest.

Second, consultants should be aware that they could be heading for major competition. The big players that will move into a privatized water sector in Canada are multi-national conglomerates. They are multi-faceted beasts that can offer equipment, project management, construction — and engineering design — all as part of one attractive package. Local consulting engineering firms could easily find themselves squeezed out of the field.

On the other hand, local firms could find themselves playing a new role. Municipalities who decide to hand over utility services to the private sector may find they have bitten off a rather large legal chew. They may need help to administer what are by necessity extremely complicated contracts and to make sure that the services are delivered as was promised.