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Water Nationalization: network access, quality, and health outcomes

  • Fernando Borraz
  • Nicolas Gonzalez Pampillon
  • Marcelo Olarreaga

In the case of natural monopolies there tends to be a trade-off between a higher quality of output provided by private firms, and a better access for poor consumers provided by public firms. This is partly the reflection of differences in objectives by private and public firms. The former tend to be profit-driven, whereas the latter tend to base decisions on political agendas (Chong and Lopez de Silanes, 2005). The objective of this paper is to explore the impact on network access, water quality, and health outcomes of Uruguay’s nationalization of water services. An important advantage of focusing on nationalization rather than privatization is that it avoids selection bias due to cherry-picking by firms or governments at the time of privatization. Indeed, nationalization in Uruguay affected all private firms, as water was declared “part of the public domain”. Results suggest that the change in ownership led to an increase in the sanitation rate, as well as improvements in water quality. It was also accompanied by a decline in water-related child mortality, although this latter effect tends not to be statistically significant across most specifications.

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Paper provided by Institut d'Economie et Econométrie, Université de Genève in its series Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva with number 11051.

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Length: 46 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:gen:geneem:11051
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  1. Michael Kremer & Jessica Leino & Edward Miguel & Alix Peterson Zwane, 2011. "Spring Cleaning: Rural Water Impacts, Valuation, and Property Rights Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 145-205.
  2. NAUGES Céline & WHITTINGTON Dale, 2008. "Estimation of Water Demand in Developing Countries: An Overview," LERNA Working Papers 08.20.264, LERNA, University of Toulouse.
  3. Felipe Barrera-Osorio & Mauricio Olivera & Carlos Ospino, 2009. "Does Society Win or Lose as a Result of Privatization? The Case of Water Sector Privatization in Colombia," Economica, London School of Economics and Political Science, vol. 76(304), pages 649-674, October.
  4. Dale Whittington & Jennifer Davis & Linda Prokopy & Kristin Komives & Richard Thorsten & Heather Lukacs & Alexander Bakalian & Wendy Wakeman, 2008. "How well is the demand-driven, community management model for rural water supply systems doing? Evidence from Bolivia, Peru, and Ghana," Brooks World Poverty Institute Working Paper Series 2208, BWPI, The University of Manchester.
  5. Alberto Chong & Florencio López-de-Silanes, 2005. "Privatization in Latin America : Myths and Reality," World Bank Publications, The World Bank, number 7461.
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