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Argument: Water privatization is more economically efficient

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For profit firms have a direct profit stake in the highest degree of efficiency

  • B. Delworth Gardner, Professor Emeritus of Economics at Brigham Young University. "The Efficiency of For-Profit Water Companies Versus Public Companies". 1993. - "The ownership structure of a company determines the incentives for efficient management. Economists have captured the essence of this issue in the notion of the 'residual claimant.' The owners of a for-profit firm have the residual claim on profits, and are therefore motivated strongly to monitor the management of the firm. Because their wealth is at stake, they have an incentive to minimize shirking by the employees of the firm and other practices that reduce efficiency. Unless the owners of the firm earn a competitive rate of return, they will withdraw their capital and place it elsewhere where returns are higher. In short, the survival of the firm is at risk. Competition for resources is a harsh taskmaster and furnishes a tremendously strong incentive for efficiency, cost minimization, and dynamic innovations that are expected to improve the competitive position of the firm."

Washington Consensus

  • The Washington Consensus is a term coined in 1989 that defines a consensus among many of the Washington-based world-institutions, such as the World Banks and IMF, that liberal market economics is the ideal model for international economic development. Under the Washington Consensus model, water should be privatized, as this is seen as the most likely means to providing water reliably to the most number of people in the world.

Supporting evidence

  • Indianapolis's privatization efforts saved the city $78 million, according to a 1999 report by the city.[1]

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