San Jose, CA Considers Privatizing Municipal Water to Bail Out Budget

water behind fence photo

Photo via Alex E. Proimos via Flickr CC

San Jose, California is having a lot of trouble closing its budget deficit. After cutting back on public benefits like library hours and reducing pay for city workers, it is now looking at selling municipal water to a private corporation for a gain of around $50 million. Mayor Chuck Reed told Mercury News, "I'm trying to be creative about balancing the budget. This is an obvious potential source of money, and I have to look at it seriously... I'd like to put it up on eBay and see what we can get."That last part was said "half-jokingly" but it still reveals the underlaying idea that municipal water is considered a commodity that can be sold off to earn money for the city. But at what cost for residents?

Water privatization is a highly controversial issue. At its base is the question of whether or not water is a right and something that should be under municipal control, or a product that can be owned and sold by companies.

The Mercury News reports that San Jose's municipal water system provides drinking water to 124,000 people, and it is considered an asset that can be sold -- and there is already a potential buyer.

The San Jose Water Co. has been in business for 143 years, and currently provides water to 1 million people in the bay area. If the water system is sold to the company, it could result in rates around 29% higher for customers.

"It depends on where you sit," Reed said. "If you are in the 10 percent of San Jose residents who are getting a good deal [on your water rate], you are going to view it as an increase. But I am the mayor of all the people, and I have to look at it for everyone -- the whole community, the libraries, the police officers, the firefighters´╗┐ -- and all would benefit from having millions of new dollars in the general fund."

While it could help close a deficit for the city in the short term, what might this deal mean for consumers in the long run? There are pros to water privatization, including more resources for expertise in purification and infrastructure. However, there are some big cons, including the opportunity for serious corruption and the inability of consumers to do much about it.

To learn more about water privatization, check out two important documentaries, Thirst and Blue Gold. Here are trailers for each:

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