Jorge Garcia-Arias, Hug March, Nuria Alonso & Mar Satorras (2022)
We discuss the water remunicipalization process in the city of Valladolid (Spain), focusing specifically on its public financing model. Valladolid water remunicipalization has been a politically driven process, but implemented and managed in a technical way, through a public 100% municipality-owned company. As we show, it does not require the additional participation of financial intermediaries, public or private. The Valladolid remunicipalization process has been largely successful, with efficient financial and technical management, including some equity and environmental considerations, although it is not free from financial challenges that could cause it to totter in the future.
After decades of academic discussions on the benefits and negative dimensions of water privatization across the globe (e.g., Bakker, 2005, 2007; Budds & McGranahan, 2003; Swyngedouw, 2005), there is broad consensus around the idea that public water utilities can be just as efficient as their private counterparts, and in some cases more so (Bel et al., 2010). The lack of satisfaction by local governments with private water providers have pushed many municipal authorities to seek alternative modes of provision (Bel et al., 2018), either returning to public services (remunicipalization) or creating new public services (municipalization).1 However, while (re)municipalization has gained momentum and has been portrayed by some political movements, activists and academics as a transformative change that could embrace radical visions of society around autonomism and anticapitalism, empirical research has also shown that many (re)municipalization processes can be labelled social-democratic (McDonald, 2018) or even part of a ‘pragmatic market management process’ (Clifton et al., 2021, p. 293). As such, much of the recent literature on water remunicipalization focuses on whether the processes have been fundamentally driven by ideological and political reasons, or technical or economic causes (Hanna & McDonald, 2021).
Regardless of their motivations, remunicipalization processes need to be accompanied by solid transition plans, of which public financing and public banks can play an important role. In this sense, the classic discussion about the role, functions and effectiveness of public banking – which Marois (2022) labels as orthodox/political versus heterodox/developmental views – has been revived in recent years. In the view of many public bank advocates, public banking could play an important role by complementing the financing that private banks cannot or do not want to cover, especially in areas related to infrastructure, as well as helping to achieve certain socio-economic objectives by playing a countercyclical role, helping to stabilize the economy and reducing the intensity of crises.
Read the full article on the website of Water International, official journal of the International Water Resources Association.