Policy Wonk

Cochabamba's water privatization

Headline result
35%
average water rate rise from January 2000, per Bechtel
Observational
Implemented by
Government of Bolivia and Aguas del Tunari consortium
Type
National government
Where
Bolivia
Region
Latin America & Caribbean
When
1999–2000
Evidence
Observational / administrative data

The challenge

Cochabamba's water system was underfunded and failed to reach many residents.

The case

In 1999, under pressure to privatize, Bolivia granted a 40-year concession for Cochabamba's water system to Aguas del Tunari, a consortium including a subsidiary of US firm Bechtel. Water bills rose sharply soon after, and the law appeared to cover even community-built wells. Months of protests, the 'Water War', ended in April 2000 when the government cancelled the contract. The public utility that took back control struggled for years to expand service. By Bechtel's own account, water rates in Cochabamba rose by an average of 35 percent from January 2000, with protesters reporting far larger increases on some bills.

Why it didn't work

Raising prices before improving service, with no protection for poor households, destroyed public consent. Neither privatization nor its reversal fixed the underlying lack of investment.

Sources