An amendment to the water supply law to make it easier for municipalities to entrust private-sector companies with handling their water supply operations has been enacted by the Diet. Behind the move is the dire prospect that the public water supply system will suffer falling revenue due to loss of demand, brought on by the shrinking population, and municipalities won't be able to afford renovations to their aging water infrastructure. The experience of many other countries that privatized their water supply operations since the 1990s, however, indicates that putting operations in the hands of the private sector is no panacea for this problem in Japan.

According to the Health, Labor and Welfare Ministry, about 15 percent of the water supply pipes across Japan — many of which were introduced in the 1960s in the middle of the rapid postwar economic expansion — had passed their endurance limit of 40 years as of 2016, with less than 40 percent of them deemed strong enough to withstand a powerful earthquake. Ruptures of these aging pipes in times of major disasters leave local residents without a water supply for unacceptably long periods.

What hampers the efforts by city, town and village governments — which under the water supply law are in principle tasked with running their local water systems — to renovate aging infrastructure is the dwindling revenue from water bills, as demand declines along with the population. The nationwide volume of water consumed by households is falling after hitting a peak in 2000 — and is forecast to decline by roughly 40 percent from that peak in the next 40 years.