The political economy of water infrastructure: An introduction to financialization

Water infrastructure has been financed by differing combinations of private and public ownership throughout history and across different geographies. In the present moment, processes of financialization suggest a radical reconfiguration of these arrangements in a number of locations, such that water infrastructure is being transformed into a wealth extraction mechanism. In this Primer Article, we introduce financialization, showing how the term describes a process through which financial actors have gained new power and in which the locus of profit making at least appears to have shifted from the “real economy” to a financial economy. In the case of water infrastructure, processes of financialization have enabled apparently fixed and stable forms such as pipes, water treatment plants, and sewers to be transformed into liquid assets, opening up new opportunities for sovereign wealth funds and pension fund investors. The super‐profits made by these financial actors are best conceptualized as forms of rent, derived in part from the monopoly ownership of a basic need. This distinctive shift needs to be positioned in relation to broader changes in the political economy of water infrastructure. We situate financialization historically in relation to the development of water utilities and networks: municipalization and nationalization during the first decades of the 20th century, privatization since the 1990s, and renewed interest in remunicipalization in some places alongside the deepening logic of financialization in others. We conclude by thinking through the likely implication of water financialization for future infrastructural arrangements.