Everyone wants the best quality drinking water. Who produces the best drinking water – public or private companies?
Elizabeth Warren, naturally, has a plan. Like all of her plans, it calls for more government control. But statistics show that private companies do a better job.
Seth M. Siegel is a self-described drinking-water activist who is the author of Troubled Water: What’s Wrong With What We Drink. Siegel writes in The Wall Street Journal that 85% of drinking water utilities are owned and managed by municipalities and other public entities. The rest are controlled by private companies, some closely held, others publicly traded. A recent report from the National Academy of Sciences concluded that for-profit companies do a better job than government entities at removing contaminants from drinking water.
You may be surprised, as I was, to learn there are over 50,000 water suppliers in the U.S., many times the combined number of electricity and gas utilities. This amounts to more than 16 water utilities for every U.S. county! They are not all in rural counties. Los Angeles County has more than 200 of them. In all, 92% of drinking-water utilities serve 10,000 or fewer customers each.
This large number of water suppliers increases inefficiency and waste. More importantly, it adversely affects the quality of water. Siegel says, “The smaller the drinking-water utility, the greater the likelihood that it lacks the funds needed to hire highly skilled engineers, buy new treatment equipment, and replace aging infrastructure.”
This also impacts violations of the Safe Drinking Water Act. Siegel says, “Government companies are nearly 30% more likely than their private counterparts to incur violations of the Safe Drinking Water Act, according to a 2016 study in the American Journal of Political Science. Many of these violations go on for years, subjecting millions to water with unsafe levels of contaminants.”
There are reasons for these differences. Private water companies are subject to a layer of regulatory oversight from state public utility commissions from which municipal utilities are ordinarily exempt. When violations are found, regulators are often reluctant to hit small municipalities with fines, and are quicker to punish violations of private operators. That fear of a financial penalty encourages private companies to be more vigilant.
Yet Senator Warren would have us believe that more government-run utilities would give us more high-quality drinking water.
Siegel suggests the following solutions:
- Consolidation of utilities beginning with serial violators
- Incentives for smaller communities to merge with larger neighbors
- Sell local water services to private companies or outsource their management
Each of these solutions is aimed at encouraging larger companies, both private and public, that have greater resources to modernize their equipment, invest in infrastructure, and become more efficient through mergers.
Warren supports legislation introduced in the Senate by Bernie Sanders that would provide incentives for communities to terminate contracts with private water suppliers and restore water utilities to public ownership and management. This is no solution at all. It would eliminate the best of the water suppliers and discourage the mergers that would lead to more modern methods of assuring high quality drinking water. Eliminating competition by private water suppliers is a dangerous step in the wrong direction.