Nearing A Watershed for Water Infrastructure?

By Henry Teitelbaum, Editor, P3 Planet

When public water infrastructure makes it into the presidential campaign debate, is it a sign that public discourse is at a tipping point?

Considering the scale of the looming national  water crisis, let’s hope it is. Public debate has been long overdue over how best to cover the giant backlog of under-investment in safeguarding sustainable drinking water supplies. We’re now at a point where doing something about it is as important as finding new sources of fresh water to supply the parched Southwest corner of the US.

Traditional Delivery

In most countries, the US included, the idea used to be that water is too precious a public resource to allow the private sector to have any control over managing its delivery, or even the operation and maintenance of its physical infrastructure.

But the  Flint, Michigan lead poisoning scandal changed all of that. For one thing,  the myth that dedicated public sector servants somehow can ensure better safety standards than if water supplies were privately run has been exposed. Not only did the government fail in its mission to protect and serve the people, it has claimed the right to hide from its responsibilities. 

Michigan’s Get-Out-Of-Jail-Free Card

Michigan’s ‘sovereign immunity’ doctrine is a piece of self-serving state legislation that now presents a significant legal obstacle to anyone seeking compensation, or even medical treatment for the long-term health damage caused by lead in the water supply. Under the law, Michigan and other states must grant permission to anyone making a legal claim against it.

In other words, officials elected by many of the same people who have been poisoned by their subsequent  negligence are in a position to deny legal responsibility for actions they take in an official capacity. So victims can give up on the idea that the government is better motivated than the private sector to pay for heath care,  worker’s compensation or damages, when things go badly wrong.

Blame it on the Budget

The lack of adequate public financial resources to pay for water infrastructure maintenance cuts to the heart of the issue, not just in bankrupt states like Michigan, but  across the country and, indeed, around the world.

It goes a long way towards explaining why water regularly ranks at the bottom of the American Society of Civil Engineers’ Report Card on the nation’s infrastructure. It’s current grade is a D-minus, placing it one notch above failing.

Private Money to the Rescue?

The free market approach, as often advocated by business-minded politicians, is that privatizing these assets will bring better cost control and more efficient service. This is predicated on the shaky assumption that any company that gets the contract will treat public health as a solemn trust, even as it strives to provide fat returns to its shareholders.

If you think calling in the private sector is always the best alternative model for managing water and other essential public resources, consider the largely preventable water crisis that recently brought the western hemisphere’s largest mega-city Sao Paulo, Brazil to the brink of disaster.

Sao Paulo’s Near Miss

SABESP is a mixed capital company that is both stock-exchange listed and publicly owned.  It has a 30-year concession for water and waste management in Sao Paulo, but has utterly failed to  manage the city’s available water supply in a country often referred to as the Saudi Arabia of fresh water. By neglecting to make critical investments in water infrastructure that might have prevented a severe water shortage in 2014,  it bears direct responsibility for bringing the city to the verge of catastrophe.

An equally damning  criticism  is that the profit-oriented structure of the company is fundamentally at odds with its ethical and public health duty to deliver an essential public service. The company’s long history of stock splits and  increasing dividends to stockholders does little to discourage this view.

Short-changing  Public Health

While the water crisis there has receded for the moment,  critics say SABESP’s failure to invest in critical water infrastructure gave short-shrift to the health of 30 million citizens of Sao Paulo.

Beyond the near criminal neglect of infrastructure are systemic legal issues, such as Brazil’s constitutional requirement for shared management of water resources by Federal, state and municipal authorities. A lack of communication or coordination among these levels of government resulted in watersheds being managed based on political rather than more logical geographical criteria.

Water Delivery in The Age of Shortages

So what is the right structure for water infrastructure delivery?

There is of course no single blueprint that applies to all situations. But considering how climate change is likely to bring a lot more spot shortages of water going forward, it’s fair to expect that water  infrastructure issues are going to come up again and again.

Given the gravity of water issues around the world a look at how Israel has overcome chronic water shortages by adopting holistic delivery and  management practices coupled with advanced desalination technology provides some scope for optimism.

Israel, like many countries, faces challenges related  to  a growing population, a thirsty agricultural sector and over-exploitation of natural water resources. It also exists  in a particularly hostile, crowded and arid region of the world.

As water shortages became critical earlier this century,  the Israeli government established an inter-ministerial agency in 2007 with the goal of coordinating policy at all levels and implementing the most comprehensive water management program ever undertaken.

Holistic Approach Needed

The program included a big push on water conservation, but also an ambitious wastewater recycling plan to ensure adequate water was available for agriculture use. For human consumption, the country planned. and has now mostly completed building five giant desalination plants using the latest reverse osmosis technology.

These convert sea water into potable water by forcing it through a membrane that filters out the salt and other impurities. The plants were delivered using the public private partnership (PPP) model, which enabled the government to tap the private sector know-how and financing to bring innovative approaches to reducing energy consumption and boosting efficiency.

In return, the company, IDE Technologies, got a concession to operate the plants for 25 years, after which time the assets will be transferred to state ownership. The state, for its part, retains final ownership of the assets, but buys the desalinated water from the company for 58 cents a cubic meter. That’s actually cheap by Middle Eastern standards. It then reinvests the money it collects from taxes into new water infrastructure, which is being developed by the national water company, Merokot.

Making Friends In the Middle East

The country now has a water surplus, which in a hostile neighborhood such as the Middle East, could go a long way towards building lasting friendships.

The risks are weighted toward further severe water crises, whether due to over-exploitation of existing natural supplies, or the effects of climate change. So at the very least, Israel’s successful use of PPP to manage its vital water requirements represents one highly effective model for water delivery in an increasingly thirsty world.

This article has also appeared on Medium and Business Daily