Beyond the Fine Print: Water Sector Reform and Private Sector Participation (original) (raw)
Related papers
2012
This dissertation sheds new light upon the complex interplay of factors (social, political and economic) that constrain the enabling environment for water sector reform and private sector participation (PSP) by analysing of the process of policy reform and the nature of stakeholder engagement in the provision of water and sanitation. Findings are based on an in depth case study of the La Paz/El Alto concession arrangement from 1997-2005, when the contract was abruptly terminated. The analysis is encompassed within the New Institutional Economics conceptual framework as it provides a holistic application of economic analysis on the role of incentives, institutions and behaviour, providing a common link in understanding between traditional economists and other social scientists, allowing for greater reflection as to the ways socio-political, cultural and historical contexts determine the behaviour of those involved in the water reform process. The delicate nature of the water sector provides evidence of how under certain institutional constraints, and where optimum accumulation of information is virtually impossible, human behaviour can become motivated by a volatile set of preferences, making it particularly difficult for policy-makers to manage the reform process and accurately predict reform outcomes. Research findings conclude that the difficulties policy-makers faced in reforming the water sector and introducing PSP in the case of La Paz/El Alto, stemmed from three fundamental factors: (i) The reform process did not consider how race-based socio-political and economic hierarchies, endemic in Bolivian history and culture, would influence intended outcomes; (ii) stakeholders underestimated the transaction costs involved in the process of reform and PPP implementation due to information and bargaining asymmetries; (iii) systemic barriers, beyond the control of stakeholders involved, constrained the space for partnership innovation and flexibility in the provision of water and sanitation, debilitating the possibilities for future collaboration between civil society, government and the private sector.
Deconstructing the best case scenario: lessons from water politics in La Paz–El Alto, Bolivia
Geoforum, 2007
For nearly a decade the La Paz-El Alto concession in Bolivia was heralded by donor organizations, the state and the commercial water industry alike as an emblematic 'pro-poor' water concession under the private sector model. Managed by one of the largest water multinationals in the world (the French company Suez), the network was extended beyond the new connections required by the original 'pro-poor' contract, acclaimed as a pioneer of new pro-poor technologies and frequently disseminated internationally as an example of best practice. This paper analyses the La Paz-El Alto concession's pro-poor image focusing on issues of social exclusion and network extension, contract negotiation, participation and transparency. It documents the rise of social protest about the concession and critiques the failure of neoliberal regulatory systems to promote accountability to the poor. In the context of the continued transnationalisation of the water industry the paper highlights the need for new mechanisms and delivery models to ensure greater national control over private companies and the development of a framework for international water governance.
Current issues in Private sector participation (PSP) in water services
Development Policy Review, 2006
Privatization of public infrastructure became the mantra of many development agencies since the late 1980s. Water supply was not an exception and different forms of private sector participation (PSP) in water supply have been experimented. Among the policy circles, privatization became the objective in itself rather than a means of increasing access or helping the poor and increasing the overall performance of the economy. This article examines the results achieved by these experiments. The evidence shows that PSP has mixed results and private sector is not more efficient than the public sector. It also shows that in most cases PSP did not deliver as it was expected. Despite growing failures and increasing public pressure, the article concludes that PSP debate is still alive, but repackaged through different forms.
The limitations of water regulation: the failure of the Cochabamba concession in Bolivia
Bulletin of Latin American Research, 2002
This article examines the limitations of governmental capacity to regulate private sector participation in urban water supply in developing countries through an analysis of the most dramatic failure to date of a major franchise contract for supplying water and sanitation services to a large city ± the 40-year concession awarded in September 1999 to Aguas del Tunari (AdT) in Cochabamba, Bolivia. Five months, the population rioted against water tariff increases and the contract was cancelled. The paper analyses the background, context and factors that explain the failure of the concession and seeks to draw lessons for the regulation of future concessions. allocative efficiency. First, there is the problem of moral hazard (i.e. where, after agreement of a contract the behaviour of one party alters opportunistically at the expense of the other, in the knowledge that the losing party is unlikely to cancel the agreement because of the heavy cost of doing so). Second, there is the problem of asymmetric information (i.e. where one party to a transaction has more information about the quality of the good or service exchanged than does the other). Third, there is the problem of first mover advantage (i.e. the advantage which the party winning a contract has in securing future contracts with the same customer). 1 Fourth, the high cost of making a bid deters competition, and these costs are ultimately passed on to the consumer. Fifth, the franchise is usually protected from market forces by an excessively long period, usually more than ten years. This paper examines the issue of governmental capacity to regulate PSP in UWS through an analysis of the most dramatic failure to date of a major franchise contract for supplying water and sanitation services to a large city. 2 In September 1999, a 40-year concession was awarded to Aguas del Tunari (AdT), to provide water services in Cochabamba, Bolivia. The concession included operation of the existing water supply system and construction of the US$214m Misicuni Multipurpose Project (MMP), a project involving the use of the water resources of the River Misicuni for electricity generation, irrigation and water supply to the city. Yet within five months, the population rioted against water tariff increases and the contract was cancelled.
Privatization and Renationalization: What Went Wrong in Bolivia’s Water Sector?
World Development, 2012
This paper investigates the concentration of access to safe water across income levels in Bolivia. In particular, it focuses on how privatization has changed coverage, affordability and concentration of access to water to the poor. We compare the performance of two privatized cities (La Paz and El Alto) with a cooperative managed (Santa Cruz de la Sierra) and a publicly provided one (Cochabamba). We examine the pre-and post-privatization periods. Close inspection of the household surveys reveals that access to water by low-income consumers increased during the periods of provision under private concessions. Coverage has expanded significantly in the bottom quintiles of the population in the privatized cities, translating into a more equitable access to water. The state, however, renationalized the water utility. What went wrong then in Bolivia's water sector? The answer is that the private concessionaire failed to meet the consensual targets stipulated in the contract. The tariff increases required for full cost-recovery has eventually led to public outrage and forced the government to terminate the contract.
Privatisation and Renationalisation: What Went Wrong In Bolivia's Water Sector?
2012
This paper investigates the impact of water service privatization in Bolivia. It compares the performance of cities in which the service was privatized (La Paz and El Alto) with a city in which it is managed as a cooperative (Santa Cruz de la Sierra) and one where the service is publicly provided (Cochabamba). We find that access to water by low-income consumers increased under private provision. However, the concessionaire failed to meet the targets stipulated in the contract. The tariff increases required for full cost recovery eventually led to public outrage that forced the government to renationalize the company.
Water Services Sustainability: Institutional Arrangements and Shared Responsibilities
Sustainability
Poor water services in developing countries after national conflict as a result of institutional setups and devastating infrastructures. This study assesses how institutional arrangements have affected the poor water services in Somalia, through thematic analyses. The huge gap in the literature about Somalia highlights the significant need of such research works and the originality of this paper. For this paper, different stakeholders were interviewed from seven zones of the city of Garowe. The results show that public private partnerships (PPP) play a vital role in providing drinking water. The results show that the institutions involved in the water sector in Puntland are not well organized. Roles and responsibilities were unclear, and different governmental institutions criticized each other for deliberately taking over others’ responsibilities, leading to poor and over-priced domestic water quality. Most consumers cannot afford a drinking water supply to their homes, so they are...
In Search of Sustainability of Water and Sanitation Beyond Sectoral Borders
Systematic assessments of returns on investments in integrated water resource management (IWRM) do not exist. Yet, examples of unsustainable investments in water and sanitation resulting from poor water resource management are plenty. Consequences range from deteriorated water sources, increased conflicts, health problems, failure to impact on poverty and threats to good governance. In order to reach and sustain targets set by the Millennium Development Goals WASH programmes will need, and should be more actively involved in, improved water resource management.