It Costs Real Money To Run Municipal Water Systems

June 27, 2008

Letter to the Editor, Wall Street Journal

Those taking back control of local water works should be careful what they wish for ("Callls Rise for Public Control of Water Supply" U.S. News, June 17). As your article correctly points out, much of the push to privatize in the 1990s was driven by the poor performance that goes hand-in-hand with below-cost, politically driven rate structures. Without enough revenue to keep the systems in good repair, valuable water is wasted, service declines and customers look for alternatives.

As we seem to have come full circle, this might be a good time to ask: "What's changed in 20 years?" Not much, unfortunately. Unless governments (and their voters) choose to treat water as a public good and provide it through general tax revenues, water systems are subject to the same laws as every other business.

This is really much less about who provides services than it is about trying to shield customers from this reality. Charging less than it costs to deliver a safe, reliable water supply is neither good business nor good public policy; in the end, neither the pipes nor the policies will hold water.

Richard G. Little
Director
The Keston Institute for Public Finance and Infrastructure Policy
University of Southern California