Water Privatization Works

At least in Argentina, and there's every reason to believe it'll work elsewhere in the developing world.

Comments

[dsquared]

Hmmmm ... not sure. Argentina isn't really part of "the developing world"; it's squarely a middle-income country. There was a similar study on privatisation in South Africa which found it to be disastrous. I would surmise that everything depends on the precise details of a privatisation program and that there are no general conclusions at all to be drawn.

[Abiola Lapite]

"Argentina isn't really part of "the developing world"; it's squarely a middle-income country."

That certainly qualifies as "developing" in my book, as it isn't developed. I don't use the term as a mere euphemism for "dirt poor."

"I would surmise that everything depends on the precise details of a privatisation program and that there are no general conclusions at all to be drawn."

The material Brad links to suggests otherwise - that in fact the benefits of water privatization are so great that they outweigh even the highly likely odds that its implementation will be screwed up in some way.

["In theory, water services are not an easy thing to privatize well because of natural monopoly problems and because some of the benefits of clean water are externalities. In practice, however, governments in developing countries do such a poor job at providing water that there are large potential gains to privatization even given such problems."]

By the way, I note that Tim Harford on the PSD Blog is discussing this very issue:

http://psdblog.worldbank.org/psdblog/2005/11/two_views_on_wa.html

He quotes a guy writing on a blog called Mzansi Afrika on the consequences of water metering: if that's what you refer to when you talk of a "disastrous" privatization, I have to say I'm not in the least convinced, as people watching their water consumption more carefully when they have to pay for it is nothing but the price system working as it should.