Case Study: The Privatization of Water Essay

land leaders at the Evian Summit prevail resolved to decrease the number of people who be without regain to synthetic rubber drinking pissing by half by the year 2015. Critics vexation that this may lead to privatization, arguing that cloistered companies be non do to provide wet to the poor. Those who favor privatization on the other hand entreat that only the private firmament can make the investment in place of the state, saying that beca custom of the states failure, the poor are in fact already give(a) more.What indeed is the effective solution for lick this addition to urine problem? Should the private companies do it or should the business remain with the state? What is the best way to do this? How can the water shortage problem be managed and what are the pros and cons to the issue of privatization?Privatization as an efficacious SolutionAccording to Michael Klein, Vice-President for Private Sector Development at the World Bank in Washington, the issue is not whether it is the private sector or the political relation that should serve as the entity to increase main courseibility to water. The realization is that mortal has to pay for water and the real issue lies in who pays? Governments face the fiscal and political difficulty of raising consumer tariffs and providing subsidies. And if nobody pays at the end of the day, plain the private sector leave behind not want to invest.The solution then lies in solving the problem of user fees, on who bears the responsibility of paying for water, the government through subsidies or the consumers through service provided by the private companies.The challenges to this standpoint and the corresponding responses by Mr. Klein are the side by side(p)Are there any specific Third World countries that turn in benefited from privatization without corresponding life-sized charges? Examples are Ivory Coast, Guinea, several cities in Colombia, Argentina, two cities in Bolivia and the Philippines (Manila). In the 90s, the average increase was about 30% of the cost of water systems and in countries where the government provided subsidies like Manila and Buenos Aires, the price levels remained low. But whether universe or private, the prices truly rise over time.How can it be guarantee that the cost of water especially in Third World countries go away be affordable? Focus should not on those who have access already but to providing access to those who do not have safe modern water systems because they are the ones who pay more (by drilling wells, paying private water vendors, among others). Providing access to these people using better service will lower prices and make water more affordable to them. And some(prenominal) for those who have access already and those who really cannot afford to pay, focus should be given to the subsidies to be given by government. The issues here are how oft subsidy is available and what kind of subsidy system should be used, and encoura ge assuring that these subsidies really go to the poor.How about cases like Tanzania where government has privatized water but entered it into an agreement with the World Bank? In most cases, privatizations are not full privatizations, it is still the state that bears the investment and the private sector just enters into a management contract with the state. It will only recreate if the private sector has the technical and management capability.Since experience shows the lack of busy of international private firms to invest in the least developed countries, should not the focus be on World Bank supporting everyday utilities to improve their services instead? That is why the real issue is not humans versus private but who pays at the end of the day. In some concession agreements and privatization arrangements where subsidies are given and incentives given to private companies, services expanded. Examples are Bolivia (La Paz), Philippines (Manila), Buenos Aires. The involvement of domestic water companies may also help in expanding water access in remote areas.How can corruption in privatization be avoided? It is commonly known that there is corruption in the public sector that in private companies especially in equipment supply. Privatization does not opine corruption will disappear, it only means that there will be better services.The Case Against Privatization From the Anti-Privatization Forum in Johannesburg, Trevor Ngwane asserts that water is a grassroots remove and as such it is the government that is mandated to ensure it provides all staple fibre needs and services which is in the public interest. If it is the private sector that will do this, profit will become the objective. The clash is between need and profit and in the case of water, the priority is the need which every government should provide the means for.The challenges to this standpoint and the corresponding responses by Mr. Ngwane are the followingAre there any specific Third Worl d countries that have benefited from privatization without corresponding large charges? As to the examples of success cases, they are not really successes and the example that can be given is Cochacamba in Bolivia where privatization caused the loss of access to water, which led to a civil war. In South Africa, even the moves to privatize already brings social conflict, dissatisfied trade unions, more people losing access to water, the outbreak of a waterborne disease cholera, which eventually meant loss of peoples lives. battalion need to realize that water cannot be provided for free. What then is the concrete excogitation to help government do this? Is the solution in the form of taxation, from payments of consumers, fro m subsidies from other consumers, etc.? In South Africa, the proposal is based on the premise that water is every citizens right. The recommendation is cross-subsidization, where high hoi polloi users like companies and industries subsidize low volume users lik e end users and the poor. The determine system recommended is the block tariff system where the more water you use the higher charges you pay. This will prevent wastage of water.How can corruption in privatization be avoided? How long will the poor wait to have water? decadence is brought more by privatization with businesses needing to bribe politicians, etc. Instead of expanding or furled out to remote areas as they should, private companies choose the most productive areas to operate and these are not the poor areas.Referencehttp//www.globalpolicy.org/socecon/bwi-wto/wbank/2004/01waterpriv.htmhttp//papers.ssrn.com/sol3/papers.cfm?abstract_id=317924http//www.cnn.com/2003/WORLD/africa/11/01/water.shortage.reut/http//eau.sagepub.com/cgi/content/abstract/12/2/63