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No to privatization of water in New Orleans, USA


Description

The city of New Orleans is one of many cities across the United States that have faced the threat of water privatization.

This water privatization, however, would have been the largest contract of its kind in the nation involving a 20 year contract worth $1.5 billion [1] and would have led to negative consequences for the citizens of an already poor city facing.

In 1998, the New Orleans Sewerage and Water Board (S&WB) settled a lawsuit filed by the U.S. EPA to force the city’s sewer system to comply with pollution control regulations [2]. The S&WB was found in violation of the Clean Water Act and the Clean Air Act [3].

The aging sewer system alone would cost $455 million to repair and while federal grants were possible, they were only available up to $100 million so the City would need to raise the balance locally [2]. In October 1998, S&WB asked city council to approve a 42% sewer fee increase staged in five annual increments to help raise the money needed for sewer system repair. After intense debate, city council approved a one step 30% sewer fee increase in March 2000. This fee increase, however was not enough to meet consent decree requirements, putting S&WB and the city government in danger of incurring fines as high as $10,000 per day for violating the consent decree [2].

Shortly after this fee increase approval, the city proposed water privatization as the solution.

Two large companies jumped on this opportunity: Vivendi (now Veolia) and Suez’s United Water.

Suez Environment, the world’s second-largest water company, has been active in the U.S. water industry for nearly three decades under various names. In 2000, Paris-based Suez expanded its presence in the United States by purchasing United Water, one of the country’s largest water companies. Under the leadership of Suez, United Water has become the second-largest private operator of municipal water systems in the country. Large scale failures including sewage overflows and contaminated drinking water have scarred the track record of this company in recent years [4].

Veolia Environment is the world’s largest water corporation providing drinking water to more than 101 million people and sewer service to 71 million people worldwide.

Veolia Water is a fully owned subsidiary of Veolia Environment and is the largest private operator of municipal water and sewer systems in the United States serving an estimated 10.5 million people in 32 states [1].

This proposal set off a year and half long pursuit and discussion of private management, operation and maintenance of the S&WB’s water and sewer system [5]. Supporters of privatization identify benefits as a savings to consumers through cost control measures, the most efficient provision of water and wastewater utility service, and improvements in customer service, billing and collections [6].

Public opposition to this proposal grew and stopped the deal before it ever began.

A community coalition of 90 organizations formed, including churches, civic groups, senior organizations and environmental groups.

The Water for All Campaign, ACORN and the Service Employees International Union (SEIU) Local 100 played key roles in building community power.

Methods used included car caravans, lawn signs, door-to-door education and rallies [1].

Arguments against privatization involve potential deterioration in customer service due to extreme cost cutting measures, the continued weakening of government oversight of essential services, the mounting evidence that the much touted savings for similar privatization projects have failed to materialize, and the limited success of privatization in the US and the world [6].

The Urban Conservancy provided an analysis of privatization for the city of New Orleans and concluded that privatization of the city’s water services was not in the best interest of the citizens of New Orleans.

They acknowledge the notion held by the city government that because it is a poor city, they have to take any offer of outside assistance. The Urban Conservancy argues that this mentality results in a weaker government beholden to outside organizations that are eager to manage essential services that were once the responsibility of the government and that these organizations have no loyalty to the community, only to their shareholders.

As a result, the potential for mismanagement is very high [6].

Possibly the most influential achievement of community activism was the organization of a local referendum that gave voters the power to approve or reject any privatization contract worth more than $5 million [1]. In March 2002, voters were asked to decide whether the City Charter should be amended to require voter approval of decisions by the S&WB to enter into certain privatization contracts [7].

New Orleans voters gave overwhelming support to amend the city charter [8]. Following this success, both Suez and Veolia withdrew their bids citing the measures as being cost-prohibitive for them [9]. Just a few months later, in October, the New Orleans S&WB voted to reject privatization [1].

This represented a landmark victory for citizens of New Orleans over corporate greed when the largest proposed municipal water privatization in the nation was rejected by the S&WB.

Wenonah Hauter, director of Public Citizen’s Critical Mass Energy and Environment Program stated that water privatization can foster corruption and result in rate hikes, inadequate customer service and a loss of local control and accountability [10].

One study that was done on the effects of water privatization on cities across the nation showed that many jobs are lost and it was expected that only half of the currently employed would retain their jobs after privatization [11].

Basic Data

NameNo to privatization of water in New Orleans, USA
CountryUnited States of America
ProvinceLouisiana
SiteNew Orleans
Accuracy of LocationMEDIUM regional level

Source of Conflict

Type of Conflict (1st level)Water Management
Type of Conflict (2nd level)Water access rights and entitlements
Specific CommoditiesWater

Project Details and Actors

Level of Investment (in USD)1,500,000,000
Type of PopulationSemi-urban
Potential Affected Population480,000
Start Date01/06/1998
End Date01/10/2002
Company Names or State EnterprisesUnited Water from United States of America - One of the bidders
Veolia North America from United States of America - One of the bidders
GDF Suez (GDF Suez) from France
Suez Environnement from France
Veolia Environment from France
Relevant government actorsU.S. EPA, New Orleans city council, Sewer and Water Board
Environmental justice organisations and other supportersThe Water for All Campaign, ACORN, the Service Employees International Union (SEIU) Local 100 , Food and Water Watch, Urban Conservancy, Public Citizen

The Conflict and the Mobilization

Intensity of Conflict (at highest level)MEDIUM (street protests, visible mobilization)
When did the mobilization beginPREVENTIVE resistance (precautionary phase)
Groups MobilizingLocal ejos
Neighbours/citizens/communities
Women
Religious groups
Forms of MobilizationDevelopment of a network/collective action
Lawsuits, court cases, judicial activism
Referendum other local consultations
Street protest/marches
car caravans, lawn signs, door-to-door education and rallies

Impacts

Environmental ImpactsPotential: Waste overflow, Surface water pollution / Decreasing water (physico-chemical, biological) quality, Groundwater pollution or depletion
Socio-economic ImpactsPotential: Lack of work security, labour absenteeism, firings, unemployment, Other socio-economic impacts
OtherNo guaranteed water savings as a result of privatization, which would not provide any improvements to the current state of the New Orleans water and sewer issues.

Outcome

Project StatusStopped
Pathways for conflict outcome / responseProject cancelled
Withdrawal of company/investment
Do you consider this as a success?Yes
Why? Explain briefly.People came together quickly and effectively to stop a privatization deal before it even began, thus protecting themselves, their water and their community rights.

Sources and Materials

Legislations

[3] Consent decrees Sewerage and Water Board
http://www.swbno.org/docs_consentdecree.asp

References

[1] Food and Water Watch Study: New Orleans, LA
http://www.foodandwaterwatch.org/studies/new-orleans-la/

[2] Proposed New Orleans Contract Operations
http://www.waterindustry.org/New%20Projects/neworleans-2.htm

[4] United Water: Suez Environment's Poor Record in the United States
http://documents.foodandwaterwatch.org/doc/SuezEngLR.pdf#_ga=1.15119478.1996790308.1423689451

[5] Sewerage and Water Board Report of Proposal Evaluation Oct 14, 2002
http://www.bgr.org/files/reports/FullReportSWB10-14-02.pdf

[6] Water Privatization Sept 12 2002
http://www.urbanconservancy.org/issues/water-privatization

[7] Bureau of Governmental Research report on the Charter Amendment March 2, 2002
http://www.bgr.org/files/reports/CharterAmendment.pdf

[8] New Orleans Voters to Decide on Proposed Privatization of SWB Board- Water and Waste Digest March 5, 2002
http://www.wwdmag.com/new-orleans-voters-decide-proposed-privatization-swb-board

[9] Faulty Pipes: Why Public Funding —Not Privatization —Is the Answer for U.S. Water Systems
http://documents.foodandwaterwatch.org/doc/FaultyPipesSeptember2008-web.pdf

[10] Privatizing Water- Worldwatch Institute Jan/Feb 2003
http://www.worldwatch.org/node/610

[11] Water Privatization: An Economic Solution or Disaster- The Green Bulldog April 24, 2013
https://enveconunca.wordpress.com/author/h20group/

Links

AUTHOR: H20GROUP - APRIL 24, 2013 BY H20GROUP

Water Privatization: An Economic Solution or Disaster?
https://enveconunca.wordpress.com/author/h20group/

Other Documents

No to Profits from water Source: http://greywateraction.org/content/water-justice
https://file.ejatlas.org/docs/Water_Orleans.jpg

Meta Information

ContributorBernadette Grafton and Paul Mohai, [email protected] and [email protected], University of Michigan School of Natural Resources and Environment
Last update07/05/2015

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No to Profits from water

Source: http://greywateraction.org/content/water-justice