Water privatization in the US

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Water privatization is not just a headache in developing countries. See RWE AG’s troubles in the US:

Dreams of heady profits evaporated amid heated opposition in places such as this town of 6,500 people, south of San Francisco in California's coastal redwood forests. Today, RWE is in the midst of dismantling an international water empire that cost more than $10 billion to assemble and spanned more than 40 countries at its height.

Water turns out to be less like electricity than RWE had hoped. It's heavy and hard to transport, making it difficult for a big company to build economies of scale. Regulation is never predictable. In the United States, RWE found itself fighting in town referendums and state legislatures across the country, winning many battles but losing the war.

So where does private participation in water stand in the US?

Private-sector ownership of water in the United States remains stuck at 15 percent to 20 percent. Some industry participants think momentum will pick up as municipalities face pressure to upgrade long-neglected infrastructure. Still, "the market has grown more slowly than any of us thought possible," says Peter Cook, executive director of the National Association of Water Companies in Washington.

Of course, it didn’t help that RWE is a German company. Via Phil Miller. Also see EclectEcon on water shortages and regulation in England or a previous post on road privatizations in the US.

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