Homenews

New Orleans’ summer of floods revives the threat of privatization

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New Orleans was caught off guard by a summer of floods. In August, parts of the city were overwhelmed after nine inches of rain fell in four hours. Another flash flood in October shut down some streets and submerged cars. As climate change warms the Gulf of Mexico, it’s expected that the city, which sits below sea level, will see heavier rainstorms and more flooding in the future.

This year’s spate of floods prompted sudden scrutiny of the city’s long-neglected infrastructure, but everyone knows the system is not fully prepared to manage the city’s regular downpours. 

New Orleans uses a complex hundred-year-old pumping system powered by a World War II-era electric system. After the August flooding, the Sewerage and Water Board admitted that at least 14 of the pumps that constantly churn water out of the ground had been offline. Outrage erupted. Several board officials resigned in political sacrifice, and Mayor Mitch Landrieu (D) called for a private company to intervene and potentially take over the agency.

As climate change intensifies weather events like the rainstorms that keep hitting New Orleans, the burden on cities’ infrastructure gets heavier. At the same time, the backlog of deferred maintenance in most of the country has weakened these systems’ resilience. Most municipal governments are ill-equipped to handle the increasingly urgent overhauls, especially if they’ve just been hit with a major disaster. That opens a window for private companies — so-called “disaster capitalists” — to make their pitch.

Water privatization has already wreaked havoc in impoverished nations in the global South, and it’s creeping north as the U.S. infrastructure debt grows. Privatization forces have seized the opportunity presented by recent storms; as the Intercept reported, companies were eyeing Puerto Rico’s main power utility even before Hurricane Maria destroyed most of the island’s infrastructure.

Private firms Veolia and CH2M quickly snapped up no-bid contracts to analyze New Orleans’ systemic failures after the August flood, stoking suspicion that the mayor would quietly transfer power over the water systems to for-profit companies. CH2M and its subcontractors have been tasked with servicing turbines that power the city’s pumps and finding back-up power sources. Veolia, which already manages part of the city’s wastewater system and its entire mass transit system, has been authorized not only to analyze the failings of the stormwater system but to “start taking the right steps to any necessary maintenance efforts.” The cost of fulfilling these contracts is still unclear.

To some degree, the massive shortfall between the city’s means and its needs makes privatization a compelling option for bureaucrats. The backlog of maintenance on snapped pipes, burned-out turbines, and ancient pumps will cost millions of dollars to fix. In a city where nearly a quarter of the population is living in poverty, millions of dollars can be hard to come by.

On a national scale, that expense balloons quickly. Some official estimates put the cost of sustaining workable water infrastructure through the next decade in the trillions. Meanwhile, state and city infrastructure budgets have shrunk or disappeared entirely over the years.

Outsourcing water management may be a quick fix in an emergency situation, but the consequences can be devastating. Private companies tend to produce their savings by cutting staff and quality controls. Water main breaks and boil advisories became the norm after United Water took the reins in Atlanta in 1998, a failed deal now considered a textbook warning against privatization. In other states that contracted out their utilities, water bills rose higher than what public entities charged.

The specter of privatization has lingered over New Orleans’ water systems for decades. Mayor Landrieu’s predecessors both attempted to privatize the city’s water, arguing it would keep rates down as the city undertook costly repairs to bring the system in line with the Clean Water Act standards. In 2001, the city came close to outsourcing its water and wastewater systems control in what would have been the largest private procurement of its kind in the United States. “No solid evidence has come to light that suggests privatizing the city’s water and sewer systems would be in the public’s best interest,” watchdog group Public Citizen concluded at the time. 

Ultimately, the effort failed because companies simply lost interest. But the memory of the failed privatization bid fueled backlash against the most recent suggestion of a takeover. Mayoral candidates hoping for election in November have vowed to keep the Sewerage and Water Board  under public control, but they have also stood against charging residents fees to fix and modernize the system.

As the bills mount, it remains to be seen which promise will stick.

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