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‘Pro-poor’ water privatisation: ideology confounded in Bolivia?

Private sector involvement in water management is dubbed ‘pro-poor’ by donors and lenders. Is there evidence to support claims that concessions designed to generate international investment in financially-strapped public water companies are increasing the speed of network expansion to poor communities? What lessons can be learnt from concessions that have failed?

A report from the University of Newcastle looks at contrasting experiences of water privatisation in the Bolivian cities of La Paz-El Alto and Cochabamba. Research undertaken with local academics and activists shows that deficient legislative and regulatory frameworks and accountability mechanisms, together with limited user participation and access to information, have made schemes less pro-poor than expected. Most previous water concession studies have focused on the technical aspects of contracts and regulation and have paid insufficient attention to user involvement in decision-making.

In 1990, Bolivia adopted water and sanitation service transfer policies. In La Paz-Alto, the role played by a French-backed consortium – which successfully negotiated a second five year concession despite local opposition – is regarded by the World Bank as a successful example of pro-poor privatisation. In Cochabamba, however, the UK- and US-backed concession was forced to quit only six months into the contract. A coalition of urban and rural water users, rallying in defence of existing uses and customs (usos y costumbres), won a victory against privatisation.

The researchers produce evidence that in Bolivia, as elsewhere, over-promotion of a pro-poor image for concessions can obscure anti-poor practices. Neither of the Bolivian concessions can be judged to be pro poor because:

concession contracts have not stipulated the types of service delivery, nor prioritised poor areas
the exclusive nature of concession monopolies has illegalised existing alternative systems used by many poor people, leaving them unregulated
confidentiality clauses in contracts constrain user participation and weaken the power of regulators to take pro-poor decisions
decision-making channels in pro-poor decentralisation legislation are undermined by centralised regulation
consultation with users is partial and tokenistic.

The failure to establish a robust legislative and regulatory framework prior to privatisation has made it harder to realise pro-poor expectations. The regulatory system may be strong when dealing with consumers, but is weak in its ability to negotiate with the private sector. The public service is still unfamiliar with regulatory systems. Regulatory and legislative frameworks have significant gaps concerning environmental risk and inter-sector liaison.

The report calls for:

greater emphasis on accountability, transparency and user participation when designing and regulating concessions
wider public access to information that affects poor users’ ability to obtain and manage water
closer co-ordination between concession mechanisms for liaison with customers and existing structures supporting good governance and the inclusion of indigenous people in decision-making
efforts to ensure that contracts and regulatory regimes recognise water’s multiple uses and identify responsibility for risk and environmental management
expansion of the remit of water regulators to include alternative water systems and enhance inter-sectoral regulation
monitoring the long-term impacts on the poor of concessions and development of international mechanisms to support the interests of poor users in global water governance.

Source(s):
‘Pro poor water by concession, dream or reality? Lessons from Bolivia’, University of Newcastle, by Nina Laurie and Carlos Crespo, February 2003 Full document.

Funded by: DFID (SSRU R7895)

id21 Research Highlight: 26 November 2003

Further Information:
Nina Laurie and Carlos Crespo
School of Geography, Politics and Sociology
Daysh Building
University of Newcastle
Newcastle upon Tyne NE1 7RU
UK

Tel: +44 (0)191 2226346
Fax: +44 (0)191 2225421
Contact the contributor: Nina.laurie@ncl.ac.uk

University of Newcastle

Centro de Estudios Superiores Universitarias (CESU)
Universidad Mayor de San Simón
c. Calama E-0235, 1er piso
Correo 5389
Cochabamba – Bolivia

Contact the contributor: crespoflores@yahoo.com

Centro de Estudios Superiores Universitarias

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