Will New Federal Law Facilitate Privatization of U.S. Water?
A major piece of legislation funding the development and improvement of water-related infrastructure passed Congress last week for the first time in nearly a decade, and President Barack Obama is expected to sign the bill soon.
Photo courtesy of Shutterstock
Yet public interest groups warn that a key provision in the law would complicate public investment in drinking water and wastewater systems in big cities and small towns alike. The end result, they say, would be to strengthen privately-managed or -owned water systems while leaving the federal government to take on the risk of these investments—essentially subsidizing water privatization.
“This law will facilitate the privatization of water systems and prioritize funding for privatized systems,” Mary Grant, a researcher for the water program at Food & Water Watch, a watchdog group here, told MintPress News.
“The basic problem is that it will only fund up to 45 percent of project costs, but also stipulates that the rest cannot be made up through the use of tax-exempt bonds,” Grant continued. “Yet such bonds are the primary way in which local governments fund infrastructure projects, so why would they try to make use of this funding?”
The broader law, agreed upon by large majorities in both the House and Senate over the past week following a year of negotiation, is known as the Water Resources Reform and Development Act. The full bill authorizes funding for a spectrum of new water infrastructure projects—particularly around ports and waterways, including flood protection and restoration—worth some $12.3 billion, though this money will still have to go through an appropriations process.
Assuming that President Obama signs it, the Water Resources Reform and Development Act will be the first such water-related funding package to become law since 2007. Even then, the 2007 bill passed over the threat of veto from President George W. Bush, primarily due to budgetary concerns. As with any large funding bill, the act has received criticism from conservatives worried that Congress will not be able to provide adequate oversight for what they expect to be a frenzy of project requests.
The bill also includes provisions aimed at dealing with what experts say is a multi-billion-dollar funding gap for drinking water and wastewater systems across the country. Last year, the U.S. Environmental Protection Agency (EPA) estimated that some $384 billion in improvements would be needed in U.S. drinking water infrastructure over the next two decades. The EPA also found that many of the country’s 73,400 water systems are between 50 to 100 years old.
“[T]he nation’s water systems have entered a rehabilitation and replacement era in which much of the existing infrastructure has reached or is approaching the end of its useful life,” EPA Acting Administrator Bob Perciasepe said at the time. “This is a major issue that must be addressed so that American families continue to have the access they need to clean and healthy water sources.”
While Congress is receiving widespread plaudits for finally acting on this shortfall, critics are worried that the final law will be detrimental to communities across the country.
Dwindling Public Funding
According to data provided by Food & Water Watch, federal spending on improvements to drinking water and wastewater systems since the late 1970s have dwindled by some 80 percent. Since the late 1990s, the group says, federal grants have offered just $15 billion for this purpose.
In 2012, dozens of federal lawmakers wrote to the congressional leadership to highlight this situation, citing rising concerns among mayors, public water systems directors and others. The lawmakers noted that federal funding for water systems made up just three percent of total costs, down from 78 percent 35 years earlier. This shortfall, they warned, leaves “cities and towns across the country bearing the difficult challenge of pulling together funds for public water systems.”
The new Water Resources Reform and Development Act does attempt to ameliorate this problem, making available $175 million in funding over five years. But the part of the law that focuses on this issue, known as the Water Infrastructure Finance and Innovation Act, does so primarily by steering communities toward public-private partnerships.
It is unclear whether this is by design. As Food & Water Watch’s Grant notes, a central issue is the fact that the Water Infrastructure Finance and Innovation Act does not allow communities to raise funding for infrastructure through the issuance of tax-exempt bonds, a process that the watchdog group says has raised more than $1.6 trillion for local and state infrastructure projects over the past decade.
It appears, however, that this option was only removed after negotiations with an eye toward the federal deficit, following a budgetary “scoring” by the Congressional Budget Office. Groups representing the municipal water sector say the Water Infrastructure Finance and Innovation Act won’t work for their members.
“We have huge wastewater infrastructure needs, so we’ve been supportive of having more tools in the toolbox to help communities pay for upgrades and new projects,” Hannah Mellman, legislative manager at the National Association of Clean Water Agencies, a lobby group that represents the municipal wastewater sector, told MintPress.
“Yet the tax-exempt bond exemption will make [the Water Infrastructure Finance and Innovation Act] pretty unworkable for our members. That’s not to say that they wouldn’t use [the Water Infrastructure Finance and Innovation Act], but if they can’t finance their side of projects with tax-exempt bonds we don’t see how it will be usable. So we’re disappointed to see that in the final bill.”
Funding criteria under the bill will also be different than under traditional federal water assistance. For instance, the latter has always been in part based on issues related to public health, but the Water Infrastructure Finance and Innovation Act requires no such consideration. Instead, criteria for funding under the act will include issues that strike some observers as odd — for instance, how much of the money would go to areas with significant energy development, or whether the projects already have private financing partners.
Access and Equity
On the one hand, then, the Water Infrastructure Finance and Innovation Act likely will not offer communities large or small the funding required to address the water infrastructure needs that the federal government admits are necessary and widespread. On the other hand, watchdog groups say the bill’s impact could be more far-ranging still, touching on issues of access and equity.
“We are alarmed by the implications of this bill, which would open the doors to an increase in water public-private partnerships in the U.S. and effectively subsidize water privatization,” Erin Diaz, the director of Public Water Works!, a campaign at Corporate Accountability International, told MintPress in a statement.
“The privatization of water systems around the globe has often resulted in devastating results for the economy and people—rate hikes, layoffs, labor abuses, environmental damage and public safety risks—all while failing to invest in essential infrastructure.”
In 2012, Diaz’s office published an exhaustive report on the international experience of water privatization over the past two decades. With a focus on the World Bank’s role in this issue and a call for the multilateral lender to divest from private water companies worldwide (it has yet to do so), the report undermines the central rationale in favor of privatization: that corporate efficiency leads to lower operating costs.
Such findings have come up repeatedly in the U.S., as well, with surveys finding that investor-owned utilities in dozens of U.S. states charge around one-third more than those owned by the public.
Profit-driven systems also experience problems in deciding where to extend service. Driven by profit rather than public access, companies have at times proved reluctant, for instance, to provide services in low-income areas or very small communities.
Indeed, Grant says this was one of the original reasons that U.S. water infrastructure—much of which was originally privately owned—was taken over by the public sector during the early twentieth century. As this trend has reversed in some places over recent decades, similar concerns have again cropped up.
“Though water privatization remains fairly rare, there has been a lot of work on the part of private utilities trying to expand their operations,” Grant said.
“In West Virginia, for instance, a private water utility has been buying up other utilities, and the result has been smaller households have struggled in attempts to force the company to serve their areas. The company was also trying to cut back on its investments after the state government wouldn’t allow the rate increases it wanted to impose.”
Meanwhile, even as lawmakers are undercutting municipalities’ ability to raise money for water infrastructure from tax-exempt bonds, lobby attempts have made some headway in pushing Congress to remove legal caps on the levels to which bonds to fund private activity would be allowed in the water sector. In mid-May, senators formally proposed removing limits on what are known as private activity bonds for water-related projects, prompting applause from the National Association of Water Companies, a group that lobbies on behalf of water companies.
Lifting these caps would “open the floodgates to financing water privatization projects, effectively subsidized by taxpayers,” Corporate Accountability International’s Diaz told MintPress.
“This interference, present at every level of government, is just one small part of the private water industry’s strategy to expand its market across the U.S.,” said Diaz. “The provisions in [the Water Infrastructure Finance and Innovation Act] that could provide public financing to private water are just one example of the many policy avenues the private water industry pursues to privatize water and weaken its greatest competitor—publicly-controlled and democratically-governed water systems.”
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By Bob Jacobs
Hanako, a female Asian elephant, lived in a tiny concrete enclosure at Japan's Inokashira Park Zoo for more than 60 years, often in chains, with no stimulation. In the wild, elephants live in herds, with close family ties. Hanako was solitary for the last decade of her life.
Hanako, an Asian elephant kept at Japan's Inokashira Park Zoo; and Kiska, an orca that lives at Marineland Canada. One image depicts Kiska's damaged teeth. Elephants in Japan (left image), Ontario Captive Animal Watch (right image), CC BY-ND
Affecting Health and Altering Behavior<p>It is easy to observe the overall health and psychological consequences of life in captivity for these animals. Many captive elephants suffer from arthritis, obesity or skin problems. Both <a href="https://doi.org/10.11609/JoTT.o2620.1826-36" target="_blank">elephants</a> and orcas often have severe dental problems. Captive orcas are plagued by <a href="https://doi.org/10.1016/j.jveb.2019.05.005" target="_blank">pneumonia, kidney disease, gastrointestinal illnesses and infections</a>.</p><p>Many animals <a href="https://doi.org/10.1016/j.neubiorev.2017.09.010" target="_blank">try to cope</a> with captivity by adopting abnormal behaviors. Some develop "<a href="https://doi.org/10.1016/j.applanim.2017.05.003" target="_blank" rel="noopener noreferrer">stereotypies</a>," which are repetitive, purposeless habits such as constantly bobbing their heads, swaying incessantly or chewing on the bars of their cages. Others, especially big cats, pace their enclosures. Elephants rub or break their tusks.</p>
Changing Brain Structure<p>Neuroscientific research indicates that living in an impoverished, stressful captive environment <a href="https://doi.org/10.1016/j.jveb.2019.05.005" target="_blank" rel="noopener noreferrer">physically damages the brain</a>. These changes have been documented in many <a href="https://doi.org/10.1002/cne.903270108" target="_blank" rel="noopener noreferrer">species</a>, including rodents, rabbits, cats and <a href="https://doi.org/10.1006/nimg.2001.0917" target="_blank" rel="noopener noreferrer">humans</a>.</p><p>Although researchers have directly studied some animal brains, most of what we know comes from observing animal behavior, analyzing stress hormone levels in the blood and applying knowledge gained from a half-century of neuroscience research. Laboratory research also suggests that mammals in a zoo or aquarium have compromised brain function.</p>
This illustration shows differences in the brain's cerebral cortex in animals held in impoverished (captive) and enriched (natural) environments. Impoverishment results in thinning of the cortex, a decreased blood supply, less support for neurons and decreased connectivity among neurons. Arnold B. Scheibel, CC BY-ND<p>Subsisting in confined, barren quarters that lack intellectual stimulation or appropriate social contact seems to <a href="https://doi.org/10.1590/S0001-37652001000200006" target="_blank" rel="noopener noreferrer">thin the cerebral cortex</a> – the part of the brain involved in voluntary movement and higher cognitive function, including memory, planning and decision-making.</p><p>There are other consequences. Capillaries shrink, depriving the brain of the oxygen-rich blood it needs to survive. Neurons become smaller, and their dendrites – the branches that form connections with other neurons – become less complex, impairing communication within the brain. As a result, the cortical neurons in captive animals <a href="https://doi.org/10.1002/cne.901230110" target="_blank">process information less efficiently</a> than those living in <a href="https://doi.org/10.1002/dev.420020208" target="_blank">enriched, more natural environments</a>.</p>
An actual cortical neuron in a wild African elephant living in its natural habitat compared with a hypothesized cortical neuron from a captive elephant. Bob Jacobs, CC BY-ND<p>Brain health is also affected by living in small quarters that <a href="https://doi.org/10.3233/BPL-160040" target="_blank">don't allow for needed exercise</a>. Physical activity increases the flow of blood to the brain, which requires large amounts of oxygen. Exercise increases the production of new connections and <a href="http://dx.doi.org/10.1126/science.aaw2622" target="_blank">enhances cognitive abilities</a>.</p><p>In their native habits these animals must move to survive, covering great distances to forage or find a mate. Elephants typically travel anywhere from <a href="https://www.elephantsforafrica.org/elephant-facts/#:%7E:text=How%20far%20do%20elephants%20walk,km%20on%20a%20daily%20basis." target="_blank">15 to 120 miles per day</a>. In a zoo, they average <a href="https://doi.org/10.1371/journal.pone.0150331" target="_blank" rel="noopener noreferrer">three miles daily</a>, often walking back and forth in small enclosures. One free orca studied in Canada swam <a href="https://doi.org/10.1007/s00300-010-0958-x" target="_blank" rel="noopener noreferrer">up to 156 miles a day</a>; meanwhile, an average orca tank is about 10,000 times smaller than its <a href="https://www.cascadiaresearch.org/projects/killer-whales/using-dtags-study-acoustics-and-behavior-southern" target="_blank" rel="noopener noreferrer">natural home range</a>.</p>
Disrupting Brain Chemistry and Killing Cells<p>Living in enclosures that restrict or prevent normal behavior creates chronic frustration and boredom. In the wild, an animal's stress-response system helps it escape from danger. But captivity traps animals with <a href="https://doi.org/10.1073/pnas.1215502109" target="_blank">almost no control</a> over their environment.</p><p>These situations foster <a href="https://doi.org/10.1037/rev0000033" target="_blank">learned helplessness</a>, negatively impacting the <a href="https://doi.org/10.1155/2016/6391686" target="_blank" rel="noopener noreferrer">hippocampus</a>, which handles memory functions, and the <a href="https://doi.org/10.1016/j.neuropharm.2011.02.024" target="_blank" rel="noopener noreferrer">amygdala</a>, which processes emotions. Prolonged stress <a href="https://doi.org/10.3109/10253899609001092" target="_blank" rel="noopener noreferrer">elevates stress hormones</a> and <a href="https://doi.org/10.1523/JNEUROSCI.10-09-02897.1990" target="_blank" rel="noopener noreferrer">damages or even kills neurons</a> in both brain regions. It also disrupts the <a href="https://doi.org/10.1016/j.neubiorev.2005.03.021" target="_blank" rel="noopener noreferrer">delicate balance of serotonin</a>, a neurotransmitter that stabilizes mood, among other functions.</p><p>In humans, <a href="https://doi.org/10.1006/nimg.2001.0917" target="_blank" rel="noopener noreferrer">deprivation</a> can trigger <a href="https://doi.org/10.3389/fnins.2018.00367" target="_blank" rel="noopener noreferrer">psychiatric issues</a>, including depression, anxiety, <a href="https://doi.org/10.3389/fnins.2018.00367" target="_blank" rel="noopener noreferrer">mood disorders</a> or <a href="https://doi.org/10.1177/1073858409333072" target="_blank" rel="noopener noreferrer">post-traumatic stress disorder</a>. <a href="https://doi.org/10.1007/s00429-010-0288-3" target="_blank" rel="noopener noreferrer">Elephants</a>, <a href="https://doi.org/10.1371/journal.pbio.0050139" target="_blank" rel="noopener noreferrer">orcas</a> and other animals with large brains are likely to react in similar ways to life in a severely stressful environment.</p>
Damaged Wiring<p>Captivity can damage the brain's complex circuitry, including the basal ganglia. This group of neurons communicates with the cerebral cortex along two networks: a direct pathway that enhances movement and behavior, and an indirect pathway that inhibits them.</p><p>The repetitive, <a href="http://dx.doi.org/10.1016/j.bbr.2014.05.057" target="_blank">stereotypic behaviors</a> that many animals adopt in captivity are caused by an imbalance of two neurotransmitters, dopamine and <a href="https://doi.org/10.1016/j.neubiorev.2010.02.004" target="_blank" rel="noopener noreferrer">serotonin</a>. This impairs the indirect pathway's ability to modulate movement, a condition documented in species from chickens, cows, sheep and horses to primates and big cats.</p>
The cerebral cortex, hippocampus and amygdala are physically altered by captivity, along with brain circuitry that involves the basal ganglia. Bob Jacobs, CC BY-ND<p>Evolution has constructed animal brains to be exquisitely responsive to their environment. Those reactions can affect neural function by <a href="https://www.penguinrandomhouse.com/books/311787/behave-by-robert-m-sapolsky/" target="_blank">turning different genes on or off</a>. Living in inappropriate or abusive circumstance alters biochemical processes: It disrupts the synthesis of proteins that build connections between brain cells and the neurotransmitters that facilitate communication among them.</p><p>There is strong evidence that <a href="https://doi.org/10.1523/JNEUROSCI.0577-11.2011" target="_blank">enrichment</a>, social contact and appropriate space in more natural habitats are <a href="https://doi.org/10.1111/j.1748-1090.2003.tb02071.x" target="_blank" rel="noopener noreferrer">necessary</a> for long-lived animals with large brains such as <a href="https://doi.org/10.1371/journal.pone.0152490" target="_blank" rel="noopener noreferrer">elephants</a> and <a href="https://doi.org/10.1080/13880292.2017.1309858" target="_blank" rel="noopener noreferrer">cetaceans</a>. Better conditions <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5543669/" target="_blank" rel="noopener noreferrer">reduce disturbing sterotypical behaviors</a>, improve connections in the brain, and <a href="https://doi.org/10.1038/cdd.2009.193" target="_blank" rel="noopener noreferrer">trigger neurochemical changes</a> that enhance learning and memory.</p>