Private Water, Public Good: Water Privatization and State Capacity in Chile

Abstract

In the global policy debate over whether water services in developing countries should remain public or be privatized, advocates for privatization call for reducing the role of the state in water services, while civil society groups argue that privatization violates the human right to water. This article examines water privatization in Chile, a crucial case in the debate over the role of markets and states in water services. Chile is known as a water privatization success story due to its high coverage of drinking water and sanitation under a fully privatized system. The article addresses two questions: How effectively does Chile meet the standard for fulfilling the human right to water within the privatized system? To what extent has privatization in Chile reduced the role of the state in water service provision? I find that the human right to water, narrowly defined, is fulfilled in Chile; however, this outcome is not attributable to the merits of privatization. Chile’s strong state capacity to govern the water sector in the public interest by embedding reforms in state interventions explains the relative success of the Chilean water sector. These findings support the argument that a strong state role is necessary to fulfill the human right to water, even in a privatized water sector.

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Notes

  1. 1.

    General Comment 15 was issued in 2002 by the UN Committee on Economic, Social and Cultural Rights. It is a legally nonbinding document that recognizes the human right to water and offers clarification on state obligations to fulfill this right.

  2. 2.

    This article focuses on policy reforms in the capital city of Santiago. A focus on urban water supply is called for because the majority of private sector participation in water services takes place in cities, and privatization was proposed specifically to solve urban water problems (Bakker 2010: 3–4).

  3. 3.

    It is important to distinguish between privatization of water resources (which refers to the ownership, use, management and/or regulation of bodies of water, such as lakes, rivers and underground aquifers) versus privatization of water services (which refers to ownership and/or management of the infrastructure and entities that deliver water and sanitation services to consumers), which are the subject of this article.

  4. 4.

    The term privatization is appropriate to describe the case of Chile because the Chilean water sector was sold through divesture.

  5. 5.

    Although Kurtz and Brooks do not apply their theory to the water services sector, they find that the Chilean state has embedded other neoliberal reforms in state interventions.

  6. 6.

    Manzetti finds that weak post-privatization regulation was also a problem in Brazil and Peru (Manzetti 1999).

  7. 7.

    However, Kurtz finds that Concertación governments provided some highly targeted public assistance in an attempt to ameliorate poverty (Kurtz 2004).

  8. 8.

    This is not to suggest that the human right to water is fulfilled everywhere in Chile. In the Northern and Southern areas of the country, indigenous and environmental groups claim that water shortages resulting from groundwater extraction by mining and logging companies are violations of their right to water.

  9. 9.

    In April 2007 pesos.

  10. 10.

    Cross-subsidies take the revenue earned in excess of costs from some consumers and use it to subsidize the costs for those who cannot afford to pay for the service.

  11. 11.

    See Trevett and Franceys 2008 for details on this law.

  12. 12.

    For analyses of the good performance of the Chilean water sector, see Valenzuela and Jouravlev 2007, Alfaro 2008, Yepes 1990, Shirley et al. 2000, and Sjodim 2006.

  13. 13.

    Environmental groups continue to criticize the La Farfana plant as poorly designed and negatively impacting the environment (see http://www.olca.cl/oca/chile/regionmp/farfana05.htm).

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Acknowledgments

I would like to thank Alison Brysk, Cecelia Lynch, David Meyer, Helen Ingram, Carew Boulding, Kristen Hill Maher and two anonymous reviewers for helpful comments on earlier drafts of this article. Rachel Barry provided excellent research assistance. Portions of this research were funded by The Newkirk Center for Science and Society and the Don Owen Water Science and Policy Fellowship.

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Correspondence to Madeline Baer.

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Baer, M. Private Water, Public Good: Water Privatization and State Capacity in Chile. St Comp Int Dev 49, 141–167 (2014). https://doi.org/10.1007/s12116-014-9154-2

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Keywords

  • Chile
  • Privatization
  • Water policy
  • State capacity
  • Human rights