Governor May Use Jackson’s Water Crisis to Privatize Water System
"Privatization is on the table," Gov. Tate Reeves announced at a press conference.
As Jackson, Mississippi entered its sixth week without usable running water, Republican Gov. Tate Reeves said the state is considering a plan to privatize the city’s water system, prompting alarm from local leaders and advocates of public water access.
Under the potential deal, an unnamed private corporation would lease Jackson’s water facilities and manage them going forward, sources with direct knowledge told Mississippi Today.
Jackson Mayor Chokwe Lumumba expressed his opposition to privatization on Wednesday. “The problem with privatization is that companies aren’t taking over your system in order to be benevolent,” he said during a press conference. “They’re trying to extract a profit from it.”
Leaders of local advocacy groups argue that Jackson’s water problems are largely the result of decades of underinvestment by state and federal actors, not mismanagement by the city. Jackson’s tax base was severely depleted after schools were desegregated in the 1960s, leading to an exodus of affluent white residents and a sharp population decline. The smaller community, whose residents are now majority Black with a per capita income of $22,815, could not afford to maintain the city’s aging water infrastructure.
Reeves and the Republican-controlled state legislature have repeatedly denied Jackson’s requests for vital infrastructure funding. In 2020, Reeves vetoed legislation to help Jackson forgive water debts and help finance water projects. Other attempts to improve the city’s water finances have died in the state legislature.
Now experts worry that privatization would do more harm than good for the Jackson residents.
“There is a financial incentive for [private water companies] to cut corners to try to lower costs so that they increase their profits,” Mary Grant, campaign director at the Food and Water Watch, told More Perfect Union. “It’s just the model of privatization, where the profit incentive is to cut costs in these types of contracts.”
Annual water bills under privately-owned systems are typically $144 higher compared to public sector systems, according to a recent study by Cornell University researchers. The same study found that low-income households served by private operators “spent 4.4% of their income on water service, about 1.5 percentage points more than in communities with public ownership.”
In addition to higher prices for residents, the privatization of water systems has led to job loss, mismanagement, poor water quality, and higher costs, according to studies by the Community Environment Legal Defense Fund.
Jackson has already faced one costly debacle with privatized water services.
In 2013, Jackson officials decided to spend $200 million to hire the German conglomerate Siemens to install new automated water meters and a new city-wide water billing system. Siemens promised to generate $120 million in “guaranteed savings” in the first 15 years, city officials said.
Instead, according to a city lawsuit filed against Siemens in 2019, thousands of the water meters didn’t work and failed to connect to the new billing system, resulting in $175 million in lost revenue.
As reporter Judd Legum documented, the city’s suit against Siemens “sought to recover the $200 million Jackson paid to finance the project, $175 million in lost revenue, and $75 million to stabilize and repair the water meter system.” Instead, Siemens settled for $90 million, only $10 million of which was earmarked for repairs to the water meter system.
Jackson has an existing relationship with Veolia, the world’s largest water company, which manages the city’s wastewater systems. Veolia is facing scrutiny after numerous accusations of neglect and mismanagement, and the company was sued for its role in the Flint water crisis.
The Environmental Protection Agency’s inspector general announced on Tuesday that it has launched a wide-ranging investigation of the roots of Jackson’s water crisis, including a focus on how previous funding for water infrastructure was used.