James Salzman


Nestled in the Andes, the Bolivian city of Cochabamba lies in a fertile valley astride the banks of the Rocha River. Bolivia is the poorest country in South America, with two-thirds of its population below the poverty line. As in many developing countries, over forty percent of Cochabamba's 800,000 residents lack access to a water supply network. And even those who do have pipes cannot depend on reliable service. The poor often live in squatter settlements on the outskirts of town, relying for their drinking and domestic water supplies on private vendors. In a cruel irony, the poorest end up paying much more for their water than wealthier citizens connected to the city's water mains.

As part of a nationwide project to improve provision of municipal services, the government of Bolivia launched a major privatization reform effort in the late 1990s. Prompted by financial institutions such as the International Monetary Fund and World Bank, the Bolivian government actively sought out private investor management for Cochabamba's water and sewage services. Treating drinking water as a priced good under private management, it was widely argued, would improve the water supply system infrastructure and delivery by injecting much-needed capital, greater efficiencies, and increased attention to customer needs. A forty-year concession for water and wastewater services in Cochabamba was granted to an international private consortium headed by Bechtel and known as Aguas del Tunari. In the national law passed to facilitate this transaction, water was declared the property of the state, available for licensing to private companies for distribution.