Economist Alex Tabarrok, writing in Marginal Revolution blog, quotes from an abstract to, “Water for Life: The Impact of the Privatization of Water Services on Child Mortality“, by Sebastian Galiani, Paul Gertler and Ernesto Schargrodsky in the February 2005 issue of the JPE.
The abstract states:
While most countries are committed to increasing access to safe water and thereby reducing child mortality, there is little consensus on how to actually improve water services. One important proposal under discussion is whether to privatize water provision. In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas. We check the robustness of these estimates using cause-specific mortality. While privatization is associated with significant reductions in deaths from infectious and parasitic diseases, it is uncorrelated with deaths from causes unrelated to water conditions.
The paper can be found here. Alex Tabarrok has more.
This is a very one sided portrayal of what happened in Argentina. I think the post could’ve been made a lot stronger had you compared and contrasted the most salient arguments of the whole paper (not just the abstract) with the following reports:
http://www.cbc.ca/fifth/deadinthewater/argentina.html
http://www.guardian.co.uk/argentina/story/0,11439,1647532,00.html
http://www.globalpolicy.org/socecon/bwi-wto/wbank/2004/0226argwater.htm
I’m not a supporter of state-run utilities in Latin America because government bureaucracy and corruption run so rampant. But when we discuss alternatives, we should be more honest their actual results. Juan Arellano has an interesting report on the failures of water privatization in Peru.
I’m not a supporter of state-run utilities in Latin America because government bureaucracy and corruption run so rampant. But when we discuss alternatives, we should be more honest their actual results.
This is discussed in the ‘Alex Tabarrok has more’ link, Alex Tabarrok writes,
In other words, while privatization of water may not be perfect, it is better than the alternative, state-run water services.
Thatta boy, that’s exactly the kind of honest analysis that I’d like to see in the heart of the post instead of “privatization saves lives” rhetoric.
So then the question becomes, how do we keep water privatized to boost efficiency while enforcing minimal health standards and access for all even if not profitable? It seems obvious to me that the answer is privatization with the right amount of government regulation.
Well, nobody made the claim that privatization of water was perfect, only that it saved lives, which the abstract alone states.
I agree with you though, privatization with the right amount of government regulation (while we may disagree on what ‘the right amount’ is) seems to be the solution, with, as the post above implies, more focus on privatization than on government.