Most of the time, water resources are owned and maintained by public organizations such as local governments. When these public resources are transferred to private companies, this is known as privatization. Loosely defined, water privatization usually refers to the control or maintenance of water systems and water resources by private entities. For instance, a company might work with a local municipality to build and maintain a water treatment plant or wastewater facility. In a more controversial example, a private company might draw and bottle water from a public source with the intent of making a profit.
Water is such an important public resource and has been maintained by the public sector for so long that concept of water privatization can be controversial. In some countries, laws might be put in place to assure that citizens have water rights while restricting the water rights of corporations. On the other hand, private companies might lobby for expanded water rights to include private companies regardless of scale.
Opponents to water privatization might argue that private companies will be concerned only with making profit and will ignore the environmental and long-term costs of private water practices. Private companies usually are concerned with the bottom line, so they might focus on short-term benefits. As with the privatization of electricity, opponents to water privatization might argue that allowing private entities to control essential ingredients of life would be disastrous.
Supporters for water privatization might argue that private companies can improve the quality and availability of water and water-related services. Especially in developing countries, it could be argued that private involvement might be the only way to develop strong water resources quickly. Private companies might also stress that they can increase efficiency, improve quality and sustain operations over a long period.
"Privatization" is a broad term, and there are more specific classifications related to water contracts. The most direct type of water contract is the asset sale. In an asset sale, a private company could buy the entire water system from a government entity or establish that system. Another possible water contract is a management contract, in which a private company is responsible only for the operation of the system. The public sector would still control the access to water and the infrastructure, but a private company would manage the operation and maintenance of the system.