Has Private Participation in Water and Sewerage Improved Coverage? Empirical Evidence from Latin America

Abstract

Introducing private sector participation (PSP) into the water and sewerage sectors in developing countries is difficult and controversial. Empirical studies on its effects are scant and generally inconclusive. Case studies tend to find improvements in the sector following privatization, but they suffer from selection bias and it is difficult to generalize their results. To explore empirically the effects of PSP on coverage, Clarke, Kosec, and Wallsten assemble a new dataset of connections to water and sewerage services at the city and province level based on household surveys in Argentina, Bolivia, and Brazil. The household surveys, conducted over a number of years, allow them to compile data before and after the introduction of PSP, as well as from similar (control) regions that never privatized at all. Their analysis reveals that, in general, connection rates to piped water and sewerage improved following the introduction of PSP, consistent with the case study literature. The authors also find, however, that connection rates similarly improved in the control regions, suggesting that PSP may not have been responsible for those improvements. On the other hand, connection rates for the poorest households also tended to increase in the regions with PSP and in the control regions, suggesting that - in terms of connections at least - PSP did not harm the poor.

This paper - a product of the Growth and Investment Team, Development Research Group - is part of a larger effort in the group to study the impact of infrastructure reform on poor households.