Remunicipalization in Latin America: Where are we now and where are we going?

Remunicipalization is one model of public service delivery where the local government takes back provision by ending private concession contracts. In the words of Wollman and Bakker (both of whom have used the “swinging pendulum” metaphor), we’re moving from public to private to public again. While the vast majority of the literature on remunicipalizations has focused on European cases, we have reached a point where there are enough instances of Latin American municipalities taking back drinking water supply back into their hands. This paper uses a unique dataset on global remunicipalizations (Kishimoto, Lobina and Petitjean 2015, N=235) and focuses its analysis on Latin American countries. In the paper, I examine the factors that drove remunicipalization of water supply and discern potential causal mechanisms for this de-privatization movement. I argue that, while we have a larger number of cases of remunicipalization, it is hard to discern if there is enough data for a generalizable enough theory of water supply de-privatization. In light of this insight, I propose a research agenda on the potential effectiveness of remunicipalization as a strategy to strengthen local water utilities, bring the public back in and provide more democratic engagement in water policy in Latin America.

Transcript

1. Remunicipalization in Latin America: Where are we now and where are we going? RAUL PACHECO-VEGA CENTRO DE INVESTIGACIÓN Y DOCENCIA ECONÓMICAS (CIDE) LATIN AMERICAN STUDIES ASSOCIATION (LASA) 2016 NEW YORK CITY, NY, USA, MAY 29TH, 2016
2. Why remunicipalization?  Municipalities are responsible for domestic water provision  “With great power, comes great responsibility” (Ben Parker in Spiderman)  Financial commitments by federal government non visible. Why?  Strong push by transnational corporations (Veolia, Suez Environnement) towards privatized water supply.   But many municipal governments are fighting back and reclaiming their water (>200 cases worldwide, 1 in Mexico)  MacDonald (2012), Kishimoto et al (2015)
3. 0 2 4 6 8 10 12 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total number of public protests against private sector water supply per year (Source: Constructed from a dataset based on Bakker 2010). N=56 cases of protests, M=38 countries. Average number of protests 3.1 protests per year. Zeroes in the dataset do not necessarily imply lack of protest activity.
4. 0 1 2 3 4 5 6 7 8 Total number of public protests against private sector water supply per year (Source: Constructed from a dataset based on Bakker 2010). N=56 cases of protests, M=38 countries.
6. 5 countervailing forces  1) increased push by international institutions and government agencies towards privatizing water supply;  2) continued weakening of municipalities’ financial health through poor intergovernmental cash transfers and low application of fiscal federalism;  3) lack of a systematic approach to identification of potential implementation strategies for a human right to water;  4) strong private interests in the global business of drinking water, whose vested interests in water marketization and commodification pervade any other discussion and  5) disconnect between domestic discussions of human rights, constitutional environmental rights and the human right to water.
7. 3 reasons why remunicipalization is challenging 1) Municipal governments may fear retaliation from private companies (in the form of lawsuits) 2) Municipal governents may be bound by hard-hitting, draconian contracts that make it practically and financially unfeasible to break the contract and rescind concession agreements. 3) Municipal governments may not have enough capital, human resources, infrastructure or capacity to actually provide water supply services in the absence of the private agent.
8. Berlin Paris Grenoble Hamilton Atlanta Buenos Aires Increased societal pushback against privatizing water supply Very strong Very strong Very strong Somewhat visible, but mostly complaints about water service delivery Not so visible Visible, but not a major driving force Strengthening of municipalities’ financial health Relative (purchased back) Strong, in spite of major player present Somewhat weaker Yes (PUMC showed inability to provide service) Yes (it was cheaper for Atlanta to offer public water supply) Yes, it was clear that the system was not able to provide the service Explicit implementation strategies for a human right to water More explicit via social mobilization No No No Not explicit No Source: Own analysis based on secondary sources
9. Ramos Arizpe (Coahuila, Mexico) • Mayor ran on a remunicipalization platform for his mayoral campaign, and did good on his remunicipalization promise. So far, no other Mexican mayor has ran on a political platform overtly establishing policies against water privatization. - Remunicipalization actually worked. Ramos Arizpe was able to get out of a concession contract by terminating its relationship with Aguas de Ramos Arizpe (AGRA). - Civil society played an instrumental role in how remunicipalization processes played out by providing increased pressure.
10. Berlin Paris Grenoble Hamilton Atlanta Buenos Aires Absence of strong private interests in the global business of drinking water Left the process after contract ended Main players Veolia and Suez are located there Veolia and Suez participated in privatization PUMC was a large company but not global enough United was a local company, but could have been a global one Privatization didn’t appear to be driven by strong global interests, but lack of interest on the part of local supplier in offering the service Linkages between domestic discussions of human rights, constitutional environmental rights and the human right to water More explicit through environment al NGOs, but no discussion of constitutional rights. Not visible Not explicitly Not visible in this particular case Not explicit in the conversation, more about fiscal health and general incompetency by the private company Not explicit, more concern for lack of efficiency at the local and provincial levels Source: Own analysis based on secondary sources
11. Conclusions  I argue that remunicipalization could serve as a model of policy implementation of the human right to water if the 5 challenges outlined can be tackled satisfactorily.  I also argue that properly implementing the human right to water would mean the disappearance of water as a commodity, and effectively the closure of bottling plants throughout the world.  Given the current stronghold that bottling water companies and transnational water consortia have on domestic and global water markets, I seriously doubt that we will be able to implement the human right to water as stated in international treaties and domestic implementations. 
12. Thank you!  Dr. Raul Pacheco-Vega CIDE http://www.raulpacheco.org Twitter: http://www.twitter.com/raulpacheco Facebook: http://www.facebook.com/DrPachecoVega raul.pacheco-vega@cide.edu