Latin America is rich in water resources, but geography, economics, and politics have conspired to prevent many of its people from obtaining their fair share of clean water.
Much of the water is in the basins of large rivers such as the Amazon and Parana, distant from the population centers that are in drier areas. The water that is close to the people has generally become polluted by poor farming practices, poor sanitation, industrial proliferation, and trash, worsening the scarcity of clean water. Economically, Latin America has the highest income disparity between rich and poor in the world. As the World Bank and the Inter-American Development Bank sought to alleviate poverty and financially challenged governments during the last few decades, they have consistently sought opportunities for multi-national corporations to take over operation of publicly owned water systems, and this has happened in at least 14 Latin American countries.
Many of the private water companies are local affiliates of three large multi-national corporations, Veolia (formerly Vivendi) and Suez of France, and RWE-Thames Water of Germany. The familiar pattern of rate hikes, disconnections, service problems, and large corporate profits has sparked a backlash against privatization in several countries. The most notable of these was in Cochabamba, Bolivia, where in 2000 embattled citizens convinced the government to cancel a contract with Aguas del Tunari, a subsidiary of Bechtel. The system reverted to public control, and water service remained less than adequate, demonstrating that both private and public water management schemes are capable of failure. Other examples occurred in Puerto Rico, where the solicitor general complained about the operational shortcomings of a subsidiary of Suez, and Uruguay, where voters approved a referendum protecting water as a human right and a public good.
On the other hand, there have been a few examples of relative success, such as Guayaquil, Ecuador, where a private company, Interagua, a subsidiary of a Spanish company and Veolia, entered into a contract that was specifically aimed at protecting the poor. The contract called for no rate increases for the first 5 years for the poor, and free connections for those who had not previously had them. Over 10 years the contractor improved service from 10 hours per day to 24 hours per day and managed to bring service to 55,000 new customers, increasing the percentage of residents with access to clean water from 64 to 82 percent. The new customers paid much less for their city water than they had formerly paid to vendors who sold water from tanker trucks. The common thread to these stories of globalization and privatization seems to be that success or failure in managing water systems is possible under both public and private control. The real determinant of success is in the competency of the managers and the care exercised in drafting contracts and management plans specifying how the policies and operations will be handled.
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