Water Resources Engineering (WRE) connects engineering hydrology and hydraulics with global, economic, environmental, and societal issues. Our student, Karl Wilhelmsen, makes this connection here by discussing the potential privatization of Detroit’s water supply.
An article providing an in-depth look into this multi-faceted issue was published by the Detroit Free Press on 25 March 2014. The article is titled “Detroit Seeking Offers for Private Management of Water and Sewerage Department”. The issue at hand is hydrology-based with strong economic and political impacts stimulated by the bankruptcy filed by Detroit in July 2013. An emergency manager named Kevyn Orr has been tasked since the bankruptcy to assist Detroit in managing its assets and reorganizing public services in order to ultimately help Detroit recover from this dismal economic situation. Along with this reorganization comes the question of what to do with the management of Detroit’s public water and sewage system. Detroit’s water system is quite extensive, bringing water to 40% of Michigan’s population including 125 suburban communities. This further complicates the issue because the counties where these suburbs are located feel that they are being pressured or even squeezed out of political discussions involving the currently public water supply. The main driver for privatization is the potential for a private company to run the water system more efficiently, cover infrastructure costs that can be overwhelming, and generate an annual revenue stream for the city of Detroit. It is estimated that maintenance costs on the water infrastructure currently supplied by Detroit’s public supply will be in excess of $696 million within the next five years so there are obvious benefits in having a private company pick up the tab in addition to the annual lease payment of $47 million to go to Detroit as revenue. The primary concern is that water will start to be considered a consumer product that will result in rate hikes in the coming years. The current provisions being proposed include a 10-year rate cap of 4% price increases per year, but the lease contract being considered by the city is 40 years long. Other options being considered is breaking up the network currently supplied into two or more regional authorities in order to better manage the system and recover costs. According to Deputy Executive Robert Daddow of Oakland County, the next county North of Detroit, the Detroit Water and Sewerage Department has accrued a $1.5 billion deficit during the last seven years of operation. To put the magnitude of what the Detroit Water and Sewerage Department does in terms of water distribution for the people, an average of 610 million gallons of drinking water is pumped per day across a pipe network spanning 3,438 miles. Their wastewater treatment plant is also one of the largest in the country treating an average of 710 million gallons per day. The fact is that whether the water is run by a public or private entity, the looming infrastructure repair costs required in the near future along with mounting debts are going to have to result in increased rates in the near future in order to meet the water needs of the public in an economically sustainable way.
The privatization of municipal water supplies is primarily an economic and societal issue. 85% of water supplies in the United States are publically operated, but a recent transition has begun in the past 20 years towards water privatization. This switch stems mainly from economical origins, but our beliefs as a society is what makes this transition such a hotly-debated topic. Water is viewed by the public as a natural right to be provided by the government at a low cost. The main fear in privatization is that rate hikes will make water more expensive and out of reach for the portion of the population living in poverty. Public outrage has been the main reason many cities that talk of privatization remain public. There are situations in which privatization of public works coexists over the long term with the public. For instance, Baton Rouge, LA has had their water system privately operated since 1887. In developing countries, the issue of water quality can be addressed and, in some cases, significantly improved by water privatization. A study published in the Journal of Political Economy titled “Water for Life: The Impact of the Privatization of Water Services on Child Mortality” showed that after privatizing 30% of the country’s municipalities, child mortality decreased 8% in those regions and up to 26% in the poorest regions supplied. There have been beneficial and negative results pertaining to the privatization of water and each situation must be judged individually and carefully to properly assess the needs of the public in that specific area along with the economic, societal, and health consequences of such a privatization.

Figure 1 – The logo for the Detroit Water and Sewerage Department.

Figure 1 – The logo for the Detroit Water and Sewerage Department.

References
Detroit Water And Sewerage Department. City of Detroit, 4 Feb. 2014. Web. 10 Apr. 2014.
Galiani, Sebastian, Paul Gertler, and Ernesto Schargrodsky. “Water for Life: The Impact of the Privatization of Water Services on Child Mortality.” Journal of Political Economy 113.1 (2005): 83-120. Web. 10 Apr. 2014.
Snavely, Brent. “Detroit seeking offers for private management of water and sewerage department.” Detroit Free Press [Detroit, MI]. Gannett, 25 Mar. 2014. Web. 10 Apr.2014.

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