A great debate has emerged across the country about the current tendency toward privatization of water utilities — the shift from non-profit, public-owned water utilities to for-profit, privately-operated (and sometimes owned) utilities. Since 1997 the number of public utilities nationwide now run under contract by private firms has increased from some 400 to about 1,100.
Save for a major exception or two, the shift toward privatization has occurred without fanfare. In contrast, the recent move toward privatization in Stockton has been anything but quiet. In February 2003 when the Stockton city council, in a close 4 to 3 vote, approved a $600 million, twenty-year contract with OMI-Thames, the largest such arrangement in California and the American West, many residents reacted angrily because the public had been left out of the process.
"Nobody is calling the public dummies," declared the Stockton mayor, Gary Podesto, a strong advocate of privatization, "but do they want to give up the time in their lives to understand the contract, or did they elect me to make those decisions?" Attempts to force a voter referendum on the contract fell short of the required number of signatures, but a leading opponent promised: "We're not going to fade away." Nor it seems will the privatization advocates who have vowed to stay the course.
Lessons from the Past
The debate in Stockton and elsewhere has revealed no awareness of the problems created in the late-nineteenth and early twentieth-centuries when privately owned water companies actually did hold sway in California. Pollution, inadequate supplies, and accelerating costs became the order of the day. These were the same deficiencies found in the earlier "public" Spanish/Mexican zanja system that had worked well for the small populations of those eras but failed to respond with the capital and technical expertise needed to meet the needs of a mushrooming population of newcomers from the United States.
In a precipitous move for a quick fix, the new American towns/cities responded enthusiastically to privatization. Entrepreneurs promised clean, bountiful, reasonably priced water supplies as well as more efficient and sanitary networks of covered pipes rather than the open ditches with their ever-present threat of pollution. In exchange, they asked for what every self-respecting entrepreneur sought: an opportunity to make a profit. Put simply, they demanded franchises give them control of delivering water and removing waste and storm water.
These dream deals soon became nightmares of diversion facilities ripped out by floods, wooden pipes leaking more water than they carried, mud holes pitting the streets, pollution exceeding anything witnessed in the past, and an escalating fire threat as adobe structures rapidly gave way to the newcomers' desire for wood-frame buildings reminiscent of their former homes back east. So embarrassed became one of Los Angeles's private water contractors over the fiasco that he committed suicide in the town council chambers.
Citizens now responded with demands for modern "public" water systems that, through bonds financed by the thousands of new residents, could hire the engineers and other technical experts and buy the necessary concrete and steel to build a reliable water system and to acquire increasingly greater water supplies to meet the needs of mushrooming populations.
One Hundred Years Later
Propelling privatization today in California and the nation has been the deterioration of once modern public systems — aging water delivery and treatment facilities, sewer pipes, and other water infrastructure — at a time of economic uncertainty. City leaders look desperately for ways to postpone or avoid altogether the costs of repair. Exacerbating the problem is the always spiraling population growth that, despite water conservation and recycling efforts, invariably finds a way to intensify the search for additional supplies.
That search has sometimes led to expensive water transfers from farmers and others willing to deal for a price and, for communities along the coast, to the construction of desalination plants. But many towns and cities resist, cannot obtain, or convince themselves they cannot afford such solutions. They have, as a result, become fair game for the new water entrepreneurs who promise to end the supply problems and reduce costs.
The lesson of privatization in California more than a century ago and the lesson now is that it takes great technical expertise, integrity, and vast sums of money to create, in the first instance, and then to maintain the dams, aqueducts, filtering works, recycling systems, desalination plants, and conservation innovations (plus much more) that keep the millions of people in California (and those elsewhere in the world as well) supplied with an adequate, clean, and affordable water supply.
Historically, the vast sums of capital needed have been of the sort that only the people — the public — have been capable of providing. Put another way, it would be extraordinarily foolish for the public to go down the path of privatization without being absolutely convinced that the entrepreneurs in whom they are placing their trust have the integrity, the resources, and the expertise to deliver clean, adequate, and affordable water. The past suggests that a public moving blindly toward privatization does so at its peril.
None of this is meant to say that public ownership has been an unblemished success. To a significant extent, my latest book, "The Great Thirst: Californians and Water — A History," argues otherwise. Whatever the public and public leaders decide to do about the privatization of water utilities, they must also address and eliminate the chaos and fragmentation among state, federal, regional, and local water agencies. Such fragmentation fosters, rather than lessens, the despoliation of California. The fragmented public water agencies of California have made it all but impossible for the public — certainly, the average reasonable person — to understand the water system. Without knowledge of something, you can't improve it or keep it from getting worse.
Norris Hundley is a UCLA Professor Emeritus of History and the author, most recently, of The Great Thirst: Californians and Water — A History (2001).