Japanese water is clean and readily available, as evidenced by drinkable tap water and a nearly 100 percent penetration rate.
But perhaps less known is the dire decay that has slowly chipped away at its infrastructure, casting doubt on its sustainability.
To address this, the Diet passed an amendment earlier this month to the Water Supply Act, paving the way for effective privatization.
But critics say this flies in the face of a global trend toward “re-municipalizing” — or reinstating public control over — water management after years of soaring bills and compromised service quality, which they say underscore the profit maximization ethos of the private sector.
So what’s the status quo of Japan’s water system and what does the revised law do? Here is our look into those questions:
What’s the situation that prompted changes to the law?
Water pipes nationwide, many of them holdovers from the early postwar era that marked Japan’s rise as an economic superpower, are rapidly aging.
Adding to the disrepair is a staff shortage and reduced water use stemming from Japan’s ever-shrinking population that have made it increasingly difficult for municipalities, especially smaller ones, to run their water businesses in a sustainable manner.
Government data show that about 30 percent of water suppliers nationwide have seen their business slip into the red — a situation predicted to only worsen amid a further decline in manpower.
Health ministry statistics meanwhile show that about 15 percent of water pipes across the nation had outlived their 40-year duration as of fiscal 2016 and are thus in need of upgrading. But at the current pace, it is estimated it will take Japan about 130 years to bring all pipes up to date. Only 37.2 percent of major pipes are sufficiently quake-resistant, pointing to the danger of a prolonged water outage in the event of natural disasters, according to the health ministry.
What does the revised act do?
The underlying spirit of the law has changed, from espousing the postwar expansion of water businesses to their maintenance. Under the revision, operators will be obliged to keep their water facilities in proper condition and work toward a long-term update.
But most controversial is the law’s endorsement of a shift toward effective privatization, where a path will be eased for private-sector firms to run water services.
The revised law will facilitate what is known as a concession contract, allowing municipalities to sell the rights to run water services to private firms for an extended period. Where municipalities interested in such a lease were previously required to relinquish their ownership of water equipment altogether, the revised law would enable them to remain legal proprietors even if they adopted a concession framework, thereby lowering a hurdle for private involvement.
“In municipalities with a population of under 50,000, for example, there are only an average 10 or so staff members in charge of water management. These communities are simply too small to be capable of running the services,” said Takuya Urakami, a professor of water management studies at Kindai University.
“One solution is to let the private sector step in and take care of the operations.”
Miyagi Prefecture, which is considering ushering in a concession agreement, believes utilizing the expertise provided by private firms will have a long-term benefit by leading to a cut of up to ¥54.6 billion in water upkeep in 20 years.
What’s the controversy?
Fears run deep that Japan may follow in the footsteps of other countries that in the past moved toward privatization, only to re-municipalize years later amid an outcry over spiking water bills and poor service.
According to a 2014 report released by the Transnational Institute (TNI), Public Services International Research Unit (PSIRU) and the Multinational Observatory, 180 cities retook public control of water and sanitation services between 2000 and 2014, including 136 cases in high-income countries such as France and Germany as well as major U.S. cities, including Atlanta and Indianapolis.
Those cases of re-municipalization were prompted mostly by the poor service performance of private operators, their lack of financial transparency and underinvestment as well as soaring prices and a marked decline in water quality, the report said.
In Paris, for example, two lease contracts were awarded to water giants Veolia Environnement and Suez Environnement in 1984, but ensuing allegations of inflated prices and stalled infrastructure maintenance eventually led to the city re-municipalizing in 2010, when publicly owned Eau de Paris took over, the report said.
In Atlanta, quality deteriorated so much that “orange and brown” water spewed from residential taps, according to the report, prompting the city to terminate its 20-year contract with United Water, a subsidiary of Suez, 16 years prematurely in 2003.
“Since private firms fundamentally prioritize making profits, there is a high probability that they will increase water bills as much as they are legally allowed to do. I wonder if that’s really going to be in the best interest of the public,” lawmaker Tsunehiko Yoshida of the opposition force the Constitutional Democratic Party of Japan told a Lower House committee earlier this year.
The prospect of a concession agreement has also stoked fears over private operators’ disaster-preparedness.
“The introduction of the concession framework poses grave concerns over private firms’ preparedness for natural disasters and their ability to coordinate help from other municipalities,” the Niigata Prefectural Assembly, for one, said in a statement it adopted in October calling for the scrapping of the revised law.
“Given water is an important lifeline that underpins citizens’ livelihood and their economic activity, water services are essentially unsuitable for privatization. The revision risks destroying rights held by all members of the public to use safe, affordable and stable water and to lead sanitary lives,” the assembly said.
How has the government responded to those concerns?
Chief Cabinet Secretary Yoshihide Suga said the law doesn’t mandate a shift toward a concession agreement, and is merely giving municipalities an option they can consider.
The government also insists it has scrutinized and learned from those examples of unsuccessful privatization reported overseas — although deliberations during this past extraordinary Diet session revealed that the health ministry had examined just three of these failed cases abroad.
It also claims to have put in place measures meant to prevent a recurrence of similar mistakes, including strengthened public involvement.
For one, under the revised law, private operators can set water rates only within the scope predetermined by ordinances. The law also authorizes municipalities, which will still retain ownership of water facilities under their jurisdiction, to conduct an on-site probe of operators, demand reports on their financial situation and, if necessary, rescind their rights to run services.
“I believe that in many cases overseas where a concession agreement went wrong, there was little room for the public power to get involved and enforce these measures, thus leading to numerous lawsuits. We’re different,” health minister Takumi Nemoto told the Diet.
How are municipalities responding?
The city of Osaka, for one, is welcoming the move.
Water pipes in Osaka, where the process of urbanization began relatively early, are notorious for their pervasive decay, with 46 percent having aged past a durable life of 40 years in fiscal 2017, the highest figure among the 20 ordinance-designated cities in Japan, according to the city.
“Instead of the bureaucracy taking full care of (water services), I want private operators to manage their updates so we can realize a more robust water system in preparation for a massive quake,” Mayor Hirofumi Yoshimura told reporters after the revised law cleared the Diet.
Meanwhile in Kobe, Mayor Kizo Hisamoto voiced a more cautious attitude.
Hisamoto, speaking to a plenary session of the city assembly after the passage of the bill, reportedly clarified Kobe, at least for now, doesn’t intend to adopt a concession system.
“Having undertaken water businesses from early on, Kobe has long seen talented staff support our services and pass down their experience and know-how to generation after generation. We are open to the idea of commissioning the private sector where necessary, but the important thing is to maintain the basis of our current method,” Hisamoto was quoted by media as saying.
What are the odds that the Japan version of water privatization will lead to problems similar to the ones experienced across the globe?
Urakami said the possibility cannot be ruled out that there is going to be an increase in water bills in the short term.
Private firms, he said, will be saddled with bigger costs than municipalities, both in terms of funding and tax payments. They would have to recruit a sufficient number of personnel, too, if they truly want to revive moribund water businesses eroded by a staff shortage, he said.
“In the short term, it’s inevitable that water rates will rise,” he said.
But in the long run, the “know-how” possessed by private operators in trimming costs could prove beneficial, he said.
Urakami is more optimistic about the water quality, which he said is likely to survive forays by private firms intact, citing draconian quality control tests imposed by the health ministry that involve 51 safety criteria.
“At the moment, Japanese pipes are so dilapidated and rusty inside that a water-related accident could happen anyway if the situation is left unaddressed. … So privatization isn’t necessarily the only possible path to water degradation,” he said.
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