The small‐scale water provider in Paraguay: bringing private sector efficiency to water resource use and the provision of drinking water to the poor

This article provides a case study of small‐scale private sector provision of water supply in Paraguay, where the Government has sought sector policy reforms that would encourage private investment in drinking water supply. Ironically, while the Government has focused almost entirely on garnering the interest of large private international water companies, much smaller local firms have already made significant investments in drinking water services for the poor, all without any participation or encouragement from the Government. Outside Paraguay's two major cities, Asunción and Ciudad del Este, large numbers of aguateros currently provide piped potable water to lower‐income people. Though the aguateros have little legal footing — they are in many respects informal and unregulated —they have constructed as much as one third of all the new drinking water connections in these two cities over the past 20 years. The small‐scale water systems in Paraguay offer a model of financial, economic, and water‐use efficiency. This article asserts that an abundance of groundwater resources, cheap access to electricity for pumping, and a spirit of informal investment, among other variables, has spawned widespread use of this approach. This article documents and analyzes the features of these independent small‐scale water providers in Paraguay and the efficiency they bring to the use of water resources in meeting drinking water demands among the poor. It also cautions against policies that may trample on such entrepreneurial spirit in the name of State‐managed privatization.