30 May 2009

The Poor Pay More

via TS, we get another example of the poor getting less water for more money in Peru:
Local residents of the shantytown pay 3.22 dollars per cubic metre of water, compared to just 45 cents of a dollar that is paid a few blocks away, across the main avenue, in Rinconada del Lago, one of Lima’s most exclusive neighbourhoods.


In late March, the president signed into law a bill on water resources that is aimed at putting an end to the problem caused by the fact that up to nine cabinet ministries are involved in decision-making on water.


Like in Peru prior to passage of the new law, Bolivia and Ecuador "are governed by decrees on specific water management issues that apply throughout the entire country, and that do not take into account the diversity of the regions which each have a dynamic of their own, and that ignore rural or community irrigation systems," said Rojas.

"There is a clear lack of integral policies that would give visibility to local communities," she said.

According to the office of the national ombudsperson, many social conflicts break out when mining and oil companies use water resources without authorisation from local communities.
While I agree that politicians often conspire against communities in taking water from people and giving it to companies, I do NOT think that this result should be used to condemn private companies that engage in water provision. As I wrote in this review, the private companies can do the same as or better than public companies. The issue is not private or public, but community oversight of the water provider AND the politicians who contract with them. And -- as usual -- local control is the best way to ensure that institutions serve local needs.

Bottom Line: The poor will get richer when they have power (in court, in polls, in markets) over those who would exploit them.


  1. a good article in the JEcon Perspectives recently outlining how the poor don't pay more for most of their stuff...havent finished it yet, but it started off interesting

  2. @Damian -- at least give us a link, you tease. Is this the paper that talks about different "bands" of consumption, i.e., poor spend smaller % on food since they choose cheaper food?

  3. This comment has been removed by the author.

  4. link here

    ALso, if you have no access to it, download it here


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