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Water nationalization: network access, quality, and health outcomes

  • Fernando Borraz


    (Universidad de Montevideo)

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 partly reflects differences in objectives on the part of both 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 previously privatized 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 specifications.

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Paper provided by Latin American and Caribbean Environmental Economics Program in its series Working Papers with number 201126.

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Length: 45 pages
Date of creation: 2011
Date of revision: 2011
Handle: RePEc:lae:wpaper:201126
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  1. Céline Nauges & Dale Whittington, 2010. "Estimation of Water Demand in Developing Countries: An Overview," World Bank Research Observer, World Bank Group, vol. 25(2), pages 263-294, August.
  2. Alberto Chong & Florencio López-de-Silanes, 2005. "Privatization in Latin America : Myths and Reality," World Bank Publications, The World Bank, number 7461.
    • Florencio López-de-Silanes & Pablo Serra & Paul Gertler & Ernesto Schargrodsky & Francisco Anuatti & Sebastián Galiani & Alberto E. Chong & Carlos Pombo & Federico Sturzenegger & Máximo Torero & Carlo, 2005. "Privatization in Latin America: Myths and Reality," IDB Publications (Books), Inter-American Development Bank, number 59618 edited by Florencio López-de-Silanes & Alberto E. Chong, January.
  3. Michael Kremer & Jessica Leino & Edward Miguel & Alix Peterson Zwane, 2009. "Spring Cleaning: Rural Water Impacts, Valuation and Property Rights Institutions," NBER Working Papers 15280, National Bureau of Economic Research, Inc.
  4. 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.
  5. 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.
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