The Buenos Aires Water Concession

The signing of a concession contract for the Buenos Aires water and sanitation system in December 1992, attracted worldwide attention, and caused considerable controversy in Argentina. It was one of the worlds largest concessions, but the case was...

Full description

Bibliographic Details
Main Authors:	Alcázar, Lorena, Abdala, Manuel A., Shirley, Mary M.
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	CONCESSION AGREEMENT CONCESSION AREA CONCESSION CONTRACT CONSTRUCTION CONSUMER SURPLUS CONTAMINATION OF GROUNDWATER COST OF WATER CPI CREEKS CUBIC METER CUBIC METER OF WATER DEBT DECISION MAKING DEFICIT SPENDING DISCHARGE DIVIDENDS DOWNSTREAM USERS DRINKING WATER ECONOMIC GROWTH ECONOMIC POLICIES EFFLUENT EMPLOYMENT EXCHANGE RATE EXTERNAL COSTS EXTERNALITIES GAS GROUNDWATER HEALTH PROBLEMS HOUSEHOLDS INCOME INFLATION INFORMATION ASYMMETRIES LITERS PER CAPITA PER DAY MAINTENANCE COSTS MARGINAL COST MUNICIPAL SYSTEM MUNICIPALITIES NATURAL WATER RESOURCES NEIGHBORHOOD ASSOCIATIONS NUMBER OF CONNECTIONS OIL PERFORMANCE IMPROVEMENTS PERVERSE INCENTIVES PIPED WATER POLITICAL ECONOMY POLLUTION POOR WATER QUALITY POPULATION GROWTH POPULATION GROWTH RATE POTENTIAL INVESTORS PRIVATE PARTICIPATION PRODUCTIVITY PROFIT MARGIN PROGRAMS PROVINCIAL WATER PUBLIC HEALTH PUBLIC TRUST PUBLIC WORKS RAW WATER REGULATORY FRAMEWORK RIVERS SANITATION COVERAGE SCARCE WATER SEPTIC TANKS SEWERAGE SERVICES SEWERAGE SYSTEM TRANSPARENCY UNEMPLOYMENT URBAN WATER URBAN WATER SUPPLY WAGES WATER COMPANIES WATER COMPANY WATER CONNECTIONS WATER CONSUMPTION WATER COVERAGE WATER NEEDS WATER PRICES WATER PRODUCTION WATER RESOURCES WATER SECTOR WATER SECTOR REFORM WATER SHORTAGES WATER SUPPLIES WATER SYSTEM WATER SYSTEMS WATER TARIFF WATER TARIFFS WATER USAGE WATER UTILITY WELLS
Online Access:	http://documents.worldbank.org/curated/en/2000/04/437846/buenos-aires-water-concession http://hdl.handle.net/10986/21922

Description
Summary:	The signing of a concession contract for the Buenos Aires water and sanitation system in December 1992, attracted worldwide attention, and caused considerable controversy in Argentina. It was one of the worlds largest concessions, but the case was also interesting for other reasons. The concession was implemented rapidly, in contrast with slow implementation of privatization in Santiago, for example. And reform generated major improvements in the sector, including wider coverage, better service, more efficient company operations, and reduced waste. Moreover, the winning bid brought an immediate 26.9 percent reduction in water system tariffs. Consumers benefited from the systems expansion and from the immediate drop in real prices, which was only partly reversed by subsequent changes in tariffs, and access charges. And these improvements would probably not have occurred under public administration of the system. Still, the authors show information asymmetries, perverse incentives, and weak regulatory institutions could threaten the concessions sustainability. Opportunities for the company to act opportunistically - and the regulator, arbitrarily - exist, because of politicized regulation, a poor information base, serious flaws in the concession contract, a lumpy and ad hoc tariff system, and a general lack of transparency in the regulatory process. Because of these circumstances, public confidence in the process has eroded. The Buenos Aires concession shows how important transparent, rule-based decision-making is to maintain public trust in regulated infrastructure.

The Buenos Aires Water Concession

Similar Items