Eliza Dunn

English 101
Jill Darley
December 2nd 2013
Water privatization is a term that many people might have heard, but not many people
understand. At its heart, it is an economic action that could help or hurt the entire world. The
privatization of water would mean that private companies would take control of water sources
across the world and sell it for profit. Much like the current situation with oil, it could be helpful
to those who dont have access to it. However, it could also hurt millions who are unable to
afford it. In the article The New Oil, written by Jeneen Interlandi and Ryan Tracy, they explain
the benefits and risks of privatizing water. They try to tell the reader that a compromise must be
met between business and the government on the issue. Interlandi and Tracys idea of
compromise between the public and private sector is admirable. It is not, however, realistic to
how society functions. In the current reality, water should not be privatized and should be
available for full public access.
Proponents of water privatization state that with water going to the private market,
government corruption will decrease. But will that stop corruption in the private sector? While it
is true that privatization would cut government corruption, large corporations have proven that
they have their fair share of corruption scandals as well. The private sector lacks the transparency
that the government has. They are able to secret away their dealings, while any government
corruption is fairly transparent in contrast. Take, for example, the banking crisis of 2008 which
started the recent recession. Business is not free of corruption. And in many instances it is much
more dangerous for economy to have corporate scandals than government corruption. With the

banking crisis, many other corporations started to fail and the government had to bail them out.
The entire world economy changed due to business corruption.
One large argument for the privatization is that it is an easily obtainable resource, unlike
oil which has a very finite amount in the world. However, when examined, it is seen that it is not
the case. Many areas in the world get little to no rainfall or have no access to clean water. Places
like India and China have to either buy bottled water or boil water to get access to clean drinking
water. Asia holds sixty percent of the world population, and yet they only have thirty six percent
of the worlds renewable freshwater. Water scarcity also affects one third of Indias population
(Hughes 2). Desert areas also have limited access to water. During periods of drought, a reserve
water supply would only go so far. With the increased availability privatizing would provide,
more fresh water would have to be found and distributed. Water distribution is already struggling
in many regions in the world, even those who have greater access to fresh drinking water. Water
is not as easily obtainable as some would think. Much of the worlds freshwater is underground,
requiring drilling to access it, something would cost thousands if not millions to finance. While it
is true that as a commodity it is more obtainable then some, it is not as obtainable as people
would believe.
With the privatization of water, comes the possibility for war. By making water a public
market commodity, it is inevitable that there would be fights over it. Much like oil, water is a
very important substance in the world economy. However, water is much more important that oil.
Water is considered perfectly inelastic. The elasticity of a product is determined by societys
willingness to buy it compared with the price flux. If the prices of a product were to rise and the
demand was to increase with them, the product would be considered inelastic. Water is a
substance that would be perfectly inelastic because it is essential for human life. There is no real

substitute for water and it will always be in demand. As such the world would struggle to gain
control of fresh water sources. Like oil, the struggle has the potential to spiral out of control and
turn the world to war. Its a personal preference if someone is to think this an acceptable
consequence for the privatization of water; however, it would inevitably mean the loss of human
life, over something that is a human right.
Following the trends of business, profits will not always go towards maximizing
efficiency and building infrastructure. Examining many different corporations, profit comes first
and foremost, as it should in the public sector. However much of the profit that is generated does
not go towards upgrading their production capabilities or their employee benefits. Many
companies still outsource jobs across the Pacific Ocean, even though they have the profits to hire
workers in America. They do so simply because it is more efficient for their profits to do so, even
if products made in America are proven to have higher quality than those done abroad. The same
ideal can apply to the infrastructure that would be required to privatize water. Private companies
even lobby government officials to block higher water standards, as they find them too costly.
What is to keep CEOs from pocketing the profit and leaving infrastructure fairly minimized?
Increased conservation is something that proponents of privatization say will happen.
Water will be more expensive as it goes to the public market, therefore people will be more
careful with it because of the increased price. That much is true; people will want to conserve
water more. However, a businesss main objective is to make money. They will entice buyers to
use more water because it will increase their profits. In short, it would be a competition between
the will of the buyer and the persuasive power of the corporation. Interlandi and Tracy even that
critics say, private water companies usually have very little incentive to encourage conservation.
After all, when water use falls, revenue declines (Interlandi and Tracy). Price inelasticity

prevents growth in conservation. Water is essential to human life, therefore as price rises, people
will have no choice but to continue buying it. Even when water was scarce in California in the
1980s and the price was doubled, consumption only dropped by a third. As well as the fact that
people making less than $20,000 cut their water by half, but people making over $100,000 only
cut consumption by 10% (Interlandi and Tracy). Conservation is projected to be minimal if water
was privatized, not nearly as effective as some people would say.
Water is essential for human life. We cannot live without access to fresh drinking water.
Ethically there is something inherently wrong with privatizing something that is essential for
human life. Business would raise prices on water to make a profit. That much is certain, however
that would also cut off access to people in poverty. If water were to go to a public market and
business were to deny people who were unable to pay, that would become an ethics issue.
Societal business trends show that the public sector will charge any amount of money for a
commodity so they can make the maximum amount of profit while still retaining customers.
Doing so with water would further deny millions of people access to fresh, drinkable water,
something they need to survive. Denying people essentially the right to live is ethically wrong
and should not happen.
Interlandi and Tracy have a very admirable idea of the public and private sector working
together. And in some instances I would agree with the idea; however, the privatization of water
will cost society too much to justify the seemingly good intentions. Many people will disagree
and say the commoditization of water will help millions gain access. While that could
theoretically be true, following the trends of the current societal role market plays, that would not
be the case. The public sector is for making profit and to deny millions of people their lives for
that profit is ethically and morally wrong.

Works Cited

Draper, Stephen E. Limits to Water Privatization. Journal of Water Resources Planning and
Management Nov 2008: 493-503. Academic Search Premier. Web. 29 Nov. 2013.
Hudges, Richard A. Pro-Justice Ethics, Water Scarcity, Human Right. Journal of Law and
Religion 17 June, 2010: 521-540. Academic Search Premier. Web. 29 Nov. 2013
Interlandi Jeneen, and Ryan Tracy. The New Oil. Newsweek 8 Oct. 2010: 40-46. Academic
Search Premier. Web. 15 Nov. 2013.