This post is one of ten in the serialization of my paper on human rights, which is introduced here.
Private or public management
Ownership will not mean anything if it does not come with some sort of delivery component. Because delivery is complex, it seems better to leave the details on how this system would work to the local, private or public delivery organizations that will buy trade water in markets and deliver it to customers who pay for service with the money they earn as sellers in those markets.
Market prices will clarify the value of water and increase the competition to deliver efficiently. This competition will not just take place among existing delivery organizations; the transparency of markets will encourage non-traditional organizations to get into water management, one of the most conservative and least innovative business sectors. New blood, ideas and management techniques will benefit customers, in the same way that deregulation of US air transport sparked massive improvements in service and pricing.
But what about those horror stories of abusive monopolies?
Galiani et al. (2005) analyzed privatization in Argentina and found that child mortality fell 8 percent where water services were privatized; the largest reduction (26 percent) happened in the poorest areas. Even with Cochabamba, the evidence is mixed. After kicking out Aguas del Tunari (AdT), the Bolivian subsidiary of the San Francisco-based Bechtel Corporation, Cochabamba’s community activists were disappointed to find that their revolutionary rejection of capitalists did not bring a revolutionary improvement in service by SEMAPA, the public water provider that resumed the provision of bad service that the World Bank had used to justify the original service contract to AdT:
Water experts who know SEMAPA well say that the company has failed to address its two biggest problems. In a valley still deeply thirsty for water, SEMAPA loses about 55 percent of the water it has to leaks in the pipes and to clandestine hookups. And despite a steady flow of financial support from international donors and lenders, including the Japanese government and the IDB, the company still doesn’t have a sustainable financing plan in place. One water expert familiar with SEMAPA’s internal workings blames the problems on mismanagement. “It is an organization that is completely dysfunctional. They don’t generate enough income to cover their costs and they are letting the system deteriorate." —Shultz (2009, p. 36)In accordance with Rijsberman (2004), Conant (2009) reports community success right next to SEMAPA failure:
“Every Friday," Condori said, “our workers walk the entire line checking for leaks and clandestine connections. Just two workers check the whole line, every week. We have a 6 percent water loss from leaks. Compare that to SEMAPA’s 54 percent. Not bad."Thus we see how a small and local community effort can be more efficient than a large public utility that is too distant for customer service or oversight. A private company could perhaps do better, but it has to face discipline for failure. Public or private ownership is not as important as community oversight.
APPAS is an autonomous association, like a cooperative, managed by Condori but governed by the neighborhood itself. “We decide everything by assembly" […]
“In our neighborhood, we have 6,000 water users. When we hold an Assembly, 95 percent of them show up. If someone isn’t happy with their service, they speak up."
In tomorrow's episode, I explore the impact of this idea on those who now "own" water -- usually farmers
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