Monopolies on the Local Water Front: Foreign-Based Multinationals Increasingly Are Buying and Privatizing U.S. Utilities. Critics Are Warning of the Potential for a Rising Tide of High Rates and Poor Service. (Business: Water Management)

By Cherry, Sheila R. | Insight on the News, February 11, 2002 | Go to article overview

Monopolies on the Local Water Front: Foreign-Based Multinationals Increasingly Are Buying and Privatizing U.S. Utilities. Critics Are Warning of the Potential for a Rising Tide of High Rates and Poor Service. (Business: Water Management)


Cherry, Sheila R., Insight on the News


For most Americans opening a tap to receive fresh, clean water is as basic as a flush toilet. But the nation's water and wastewater infrastructures are aging, creating an opportunity for multinational corporations that have recognized the profit potential for buying up cash-strapped municipal utilities.

Many cities, counties and townships are turning to giant conglomerates that promise to pick up the tab for renovating and/or operating outdated water utilities in exchange for a guaranteed profit under monopoly authority. These arrangements are called "build-own-transfer" or "build-own-operate" contracts.

When a local government cannot provide its citizens with safe, clean water, outside help is welcomed. But with large foreign-based multinational corporations increasingly acquiring U.S. utilities there is concern lest Americans find themselves as dependent on foreign ownership of water as they are on foreign oil. And critics of utility privatization charge that multinationals that win utility concessions sometimes transfer debt burdens from other subsidiaries to their utility divisions and then on to the utility customers.

Moreover, even the World Bank is singing the multinationals' tune. A World Bank white paper -- "Private Capital in Water and Sanitation" -- puts in writing the new emphasis of the World Bank and the International Monetary Fund (IMF) on utility privatization as a condition of badly needed financial assistance for developing countries. As critics long have noted that these entities tend to favor government rather than private solutions, it is surprising that the paper asserts:

"Private capital and initiative can help accomplish operational efficiency and investment objectives if two stringent requirements are met: (1) projects must generate revenues that cover operating costs and debt-service payments, and earn a competitive rate of return on equity, and (2) risks that are internal (for example, construction and operation) and external (for example, regulatory and foreign exchange) to a project must be identified and clearly allocated to the parties that are in the best position to mitigate them. With their own capital at risk, lenders and investors have strong financial incentives to ensure that a project is built on time and within budget, and is operationally efficient."

World finance favors the giant multinationals. And some of them seem to be into almost everything these days. It's hard to imagine that the same corporation that produces Oscar-quality dramas such as A Beautiful Mind and Erin Brockovich also bottles Seagrams beverages while collecting water bills and hauling sewer sludge. But France-based Vivendi Universal does, and it says of its water unit in its annual report for 2000: "Revenues generated outside France now represent almost 58 percent of total revenues, with 19 percent derived from the United States."

Vivendi and major diversified European utilities slowly have been acquiring private utilities in the United States and other industrialized nations. They are purchasing access to an established water market, effectively adding to holdings in developing nations acquired from their IMF/World Bank connections.

According to Vivendi's annual report, with operations in all major regions of the world, its environmental group provides integrated services that include water (Vivendi Water), waste management (Onyx), energy services (Dalkia) and transportation (Connex). All involve intimate relations with government regulators.

And they are doing it with approval from local governments -- and, in most cases, without the knowledge of residents. As one U.S. official admitted, if people today are mad about high cable-TV fees, then imagine what will happen (and in some parts of the world already has occurred) when water monopolies start turning the screws on the price of access to water.

But not all local-government officials are willing to turn their water utilities over to multinational monopolies. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Monopolies on the Local Water Front: Foreign-Based Multinationals Increasingly Are Buying and Privatizing U.S. Utilities. Critics Are Warning of the Potential for a Rising Tide of High Rates and Poor Service. (Business: Water Management)
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.