If you need an example of why properly maintaining infrastructure is important, consider the Thames–the venerable English river that flows past London to the sea. The Thames has been depicted by famous artists like Claude Monet, above, and has figured prominently in Sherlock Holmes stories and other British literature.
Unfortunately, the glory days of the Thames are no more. Now the Thames has become a river of sewage and dangerous levels of E. coli, thanks to financial mismanagement and poor maintenance practices. The condition of the river is so bad that people are being urged not to come in contact with the water, and debris from the huge amounts of raw sewage discharged into the river has been collecting on its shores.
The problem is the management of Thames Water, a private company that is supposed to manage the river and London’s water and sewage systems. After its formation in 1989, Thames Water’s private structure initially allowed for increased investment in water services, and the company made a series of improvements to infrastructure. According to critics, however, Thames Water later took on debt to pay increased dividends to investors, rather than focusing on maintenance of London’s aging sewer and water systems, and regulators didn’t intervene or require increases in consumer water bills to help pay down the debt.
London’s population grew, and the so did the demands on its water and sewage systems. When interest rates increased and inflation spiked, those developments put financial pressure on Thames Water, and in April its parent company defaulted on its debt. What was supposed to be a safe investment for pension funds has turned into a potential financial disaster–and in the meantime huge amounts of sewage are polluting the Thames.
There’s a lesson here: you don’t mess around with municipal water infrastructure. Privatization is fine, so long as regulators are making sure that basic maintenance is occurring and systems are sufficient to service the population. But if people aren’t paying attention, the sad plight of the Thames is the result: a river despoiled by sewage.
Webner House 