Decentralization and privatization

Lost in some of the discussions of the arrests on terrorism charges of protesters near Suchitoto on July 2 has been a look at what they were protesting. That day President Saca planned to use Suchitoto as a backdrop to talk about his plans for decentralization of water and other public services. The various organizations assembled that day around Suchitoto assert that decentralization is really just the first step to privatizing water resources and selling them off to corporate interests.

But are decentralization and privatization necessarily linked? When he returned to San Salvador after the protests thwarted his speech in Suchitoto, Tony Saca proclaimed that there was no link:

Y quiero reiterar desde casa presidencial que mientras este servidor sea presidente del pais, jamas voy a privatizar el sistema de salud, jamas voy a privatizar el agua potable, ni la educacion, pero si vamos a descentralizar, porque los alcaldes me lo han pedido.

And I want to reiterate from the Presidential Residence that while I am serving as president of the country, I am never going to privatize the health system, I am never going to privatize potable water, nor education, but we are going to decentralize, because the local mayors have asked me to.

And it is worth noting, that Suchitoto, led by an FMLN mayor, has its own decentralized, municipal-run water system, which was the reason Saca decided to speak there in the first place.

Rodrigo Samayoa Valiente is an environmental consultant who previously worked for El Salvador's Ministry of Environment and Natural Resources and who has seen a draft of the proposed decentralization law for water systems. In a post in the blog Siguiente Pagina, he writes that the proposed legislation is not a privatization proposal, although it opens the door for that, if the local municipality wants to delegate its responsibility to a private entity. Under the law there would need to be a mutual accord between the central and local government and a gradual transition of financial and technical resources.

An article titled Private Rivers: Will Transnational Water Companies Swallow El Salvador? explains why civil society organizations claim there is a hidden agenda behind the decentralization rhetoric:

SETA workers say that President Tony Saca is pushing a privatization proposal to comply with requirements couched in a 1998 loan from the Interamerican Development Bank (IDB). The loan provided money to “decentralize” ANDA, set up smaller municipal water companies and open them to public-private concessions. So far, 19 municipalities, representing 18,000 household water connections, are voluntarily experimenting with a variety of concession formats, which contract out water line maintenance and distribution to private companies.

SETA workers argue that concessions are stepping stone to full privatization. “The government is exacting an institutional sacking of ANDA to justify the need for concessions,” says Wilfredo Romero, General Secretary at SETA. He notes that ANDA’s 2006 budget is 15% lower than 2005. Funding is lower than any time in the 2000’s—an amazing fact considering that one-third of the country lacks water in the home.

According to the right-wing daily La Prensa Graphica (12/27/2005), the majority of this year’s cut—$13.3 million—came from the “investment” section of ANDA’s budget, a 37% slash from the 2005 level.

“There’s no way that local municipalities can maintain the level of funding of a national entity like ANDA,” says Oscar Carpio, SETA’s Secretary of Negotiations, “So, in most cases, local water management will eventually be fully concessioned to private investors.”

It may be better to talk about "municipalization" rather than decentralization. As a paper titled Context matters: how state forms and reforms influence water provision in Latin America (Haglund-Gomez, November 2006) points out, the experience in Costa Rica shows that it is possible to combine local, municipal water systems and a national water authority:

This history shapes current dynamics between centralized and decentralized systems. There is recognition of the important role that local communities have played in the development of water resources, while at the same time there are national standards and control mechanisms to ensure that community-run systems are adequate. Despite tensions between local systems and AyA, this arrangement allows for the best aspects of centralized and decentralized management to exist simultaneously. State control allows for coordination among actors using the same river basins, introduces conservation and other broad goals as part of planning decisions, improves regulatory coherence and consistency across regions, and prevents powerful locals from usurping resources. Meanwhile, the contextual knowledge brought by local control allows reforms to respond to local realities and gives local citizens greater decision-making power regarding how resources are allocated and managed.

It's worth noting that in the US, where clean water is largely taken for granted, the paradigm model is decentralized (water systems are usually at the municipal level and there is certainly no national water authority), and it is generally publicly owned and not privatized. While there are certainly all sorts of problems in applying a US model to a developing country, this example does suggest that decentralization and privatization are not inevitably linked.

Decentralization, however, will harm the distribution of potable water to communities if resources are not available to the local community. Resources include both the capital necessary to build and maintain a drinking water system as well as the technical expertise to run the system.

An example of a very decentralized water system is the community water system being built in Las Delicias, El Salvador. The project is sponsored by the Christian group Enlace. When this system is completed, it will bring potable water to almost 1300 households families who currently can only buy water from a local delivery truck, spending as much as 1/3 of household income to do so.

Ultimately, the question of delivering healthy water to El Salvador's communities is primarily an issue of good governance. Democracy, transparency, accountability, responsiveness, and equity are the characteristics which must be required however the system is structured.

Tim at the main water tank under construction for the Las Delicias water project.