Limits to Water Privatization

Abstract

Water allocation under conditions of water scarcity is a looming issue that threatens the economic well being and quality of life of many of the world’s people. Although the causes of water scarcity are varied, many assert the inefficiencies and failures of water allocation by the public sector are to blame. One solution offered by proponents is to privatize the water allocation process, thereby allowing the efficiencies of the market place to resolve most issues. The thesis of this paper is that while privatization of many aspects of the water allocation process may bring increased efficiencies, certain core functions must remain with the public sector. These core functions include the ultimate decision making authority over the assignment of water rights as well as oversight authority to protect and secure both the rights of third parties and those private and public activities and values that may depend on existing uses. While the legal right to the use of water may be placed in the hands of the private sector, these rights must be closely controlled and managed by public institutions.