Water privatization in Buenos Aires
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I can not understand why politicians call those processes as "privatization of water", water itself remain public, what switch to private is the operation and maintenance of the infrastructure to extract and distribute the water, which is a different thing. To drill pits, to install and maintain pipes, to equalize pressure, all those process requires investment. Where those investments are made by government is used by politicians to benefit special groups which often pay nothing for the service, and many others are excluded by lack of coverage.Again my comparison Chile and Peru: in Arica, Chile coverage (privately operated) is near 100% and everyone pays for a good service, in Tacna, Peru (operated by municipality) many dont pay and coverage as supply are very poor, with lots of shortage. Cost of service always rise in a privatization because people pay exactly what it cost, plus the profit of operator, and what about the poor who can not afford it? government give them direct subsidies if they qualify. The system is not perfect but much better than operated by government
I don't agree with the statement "cost of service always rise in a privatization". What rises is price! Cost might (and probably always does) go down with privatization, owing to increased efficiency. Only in cases of privatization without competition (i.e. a public monopoly becomes a private monopoly and there are no price controls) can actual "cost" (not sure if that would be the appropriate term but to use your words) increase if profits rise more than what the savings in efficiency grant (and as long as demand elasticity plays to the supplier's advantage).
Well, it depends on point of view: the "cost" for consumers is the amount (price) of their bills ;) the cost of production varies and maybe is not directly comparable because private firms may give additional services (increased coverage by example) with extra cost, the state administration may have deficit with few consequences, etc.
Good case study. Note that the industry term is "non revenue water" more than "unaccounted for water" -- that's because NRW includes water that's delivered but not paid for.
For a LDC success in privatization, see http://cmsdata.iucn.org/downloads/phnom_penh_waterfinal.pdf
For the challenge of moving to meters in England/Wales, see:
Note that Chile deals with affordability, if I recall right, by showing "eligible poor" how much they'd pay but then reducing the bill (I've also heard they give income transfers and all households pay full cost).
I have a quarrel with the first practice question. There was a drop in investment as a result of a dispute the government and the service provider about rate setting. I understand that there was an influx of new capital initially, but that doesn't mean that everything stayed that way. Was there a net increase in investment? It appears so, but that increased investment was not consistent.
Has there been any research on how the water quality has changed since the system went back under public ownership?
Tyler, regarding what you said in the "moral intuitions" minilecture. Now in the case of BA -- as a complete outsider to this situation -- it seems to me you can satisfy both the "water for everyone" and the cost realities with a "penalty". Give everyone free up to a certain amount, and then those with usage levels more like they have a washing machine or a garden, pay a penalty -- or call it whatever you want.
Exactly the same mathematical structure as the Rabushka flat-tax structured on EconTalk: constant, then linear (kinked). The average of these two makes a smooth-ish curve.