Water Markets, Privatization and Deregulation

Energy Expert 

To bring demand and supply into balance, water markets are necessary. Under a market system, prices are not regulated, but are determined by the free exchange of water rights. In most countries where water is scarce or costly to access, systems of rights for water have emerged either through custom or through laws and regulations. The rights define the amount of water to which the owner is entitled. With rights well defined, water markets allow owners to make better decisions about the water they use. They can decide for themselves whether to use the water or trade the right. The owner of the right may choose to use the water himself when the market price is low. In fact, if the price is low enough the owner may even decide to enter the market and purchase additional water. When prices are high, however, the owner may find it cost effective to conserve water and sell it.
While water right markets are emerging all over the world, they are still in their infancy and face several challenges. Lack of information is one problem common across all water markets. Buyers and sellers have a hard time finding trading partners and when they do, limited market information exists to direct them on prices and terms of trade.
While there have been many successes in service delivery and investment, privatisation of water and waste companies has not been an unalleviated success. Firstly, it often faces political opposition which will mobilise any criticism it can to discredit it. This is a fact of life that investors have to live with and deal with as best they can. However, there have been cases of failures to deliver on contracted terms of concessions. The most frequent criticisms are attempts to increase prices when the company is some way into the concession, on the grounds that returns are not as presented. In some cases these increases have been very high, in one case as much as 400%.

These have inevitably attracted criticism from the anti-privatisation lobby and are presented as cases against the principle of private ownership. It should be pointed out that proponents of public ownership are less likely to criticise the faults in publicly owned companies and are reluctant to acknowledge the many successes of private sector participation.

Comments

Post a Comment

Popular posts from this blog

The largest solar farms in the world

Image
Solar energy is gaining in popularity. Most people know solar power as the rooftop panels that are being installed on more and more houses; or projects like Elon Musk’s Solar Roof. However, there are many different applications for solar and many ways energy can be generated using the power of the sun. Electricity is the most common use, but solar energy can also be used to heat water for use in the home, or a swimming pool, etc. Solar arrays can also be used to redirect the beams of the sun to a central point which is then converted to heat energy to drive turbines, much like a coal plant would use a burner – only this time there are no emissions, and just clean energy. A large array of solar panels, be it photovoltaic or thermal, is called a solar farm. Here we take a look at a few of the biggest in the world. Tengger Desert Solar Park Located in China, the world’s largest solar farm uses solar PV panels to generate 1,500MW of electricity. This plant covers 43 square kil
Read more

Building Smart Cities, an Energy Transition

Image
Smart cities were once thought to have been a $1.6 trillion market by 2020. Everything from housing, transportation, urban planning, management, would contribute to a smarter neighbourhood enriching the lives of the citizens and residents. From self-driving cars to automated delivery drones, IT networks will become the backbone of the interconnected world. We are not there, yet. Technology is developing and evolving but there is a lack of a common direction, and funding, for many of the players in the market bridging that final implementation gap. Often overlooked by the general public in their desire for a smarter city is also the technical feasibility. Not only do information networks play an important part; but energy is the driver of all of our smart ambitions. To foster the growth of smart cities and to facilitate the transition we must also critically evaluate our energy production and consumption pattern. On a local scale, Electric Vehicles are gaining in popularity
Read more

The World’s Longest Transmission Lines

Image
Some of the world’s largest power plants are in some of the most remote locations compared to where the electricity they generate is consumed. The technology of choice for many of these lines is HVDC or High Voltage Direct Current, which allows the electricity generated to be supplied up to hundreds of kilometers away. As the technology is not inexpensive, and requires a stable reliable generation supply in order to be effective. With increasing power demands and strain on electricity systems , developing High, and Ultra High Voltage power lines is only set to increase as new generation projects come online. As population centers are usually located far from hydro-electric plants, it is no surprise that most of the long-distance projects supply power from these dams to large population centers. Rio Madeira transmission link, Brazil Coming in at 2,385km, the Rio Madeira Transmission Link in Brazil tops the chart as the world’s longest. Supplying power from the Santo Antônio an
Read more