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
- Nickson, A., & Vargas, C. (2002). The limitations of water regulation: The failure of the Cochabamba concession in Bolivia. Bulletin of Latin American Research.
- Bechtel (2005). Bechtel perspective on the Aguas del Tunari water concession in Cochabamba, Bolivia.
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