Struggles for Sustainable Urban Development in Cochabamba, Bolivia

numerous examples of efficient publicly owned water utilities in developing countries such as
Ecuador, Chile, Zimbabwe and Botswana (Johnstone et al. 1999). The successful examples
have a certain degree of autonomy and incentives for the staff. Nickson & Vargas (2002) tell
of another such example, a publicly owned water utility praised by the World Bank in Santa
Cruz de la Sierra. Although international finance institutions have started to promote private
sector participation within the structural adjustment framework, the public water utility in
Santa Cruz de la Sierra was still granted a loan for network improvement by the World Bank.
However the Bolivian government refused to guarantee the loan, demanding that investment
into urban water supply should be carried out by private sector only. This reflects how
narrow minded the central government has become with its neo-liberal agenda, conducted
since 1985. Paul Hirst (1997) believed that:
The danger of recklessly pursued internationalization without sufficient regard to
its social effects is that there will be revolts against an open international
economy in both the advanced and the developed world.
If the Bolivian government had considered this, perhaps the bloodshed over water would
have been avoided. On the other hand it might be unjustified to popularly blame neo-liberal
strategies. Perhaps it was not neo-liberalism itself that caused the problems, but the way it
was implemented without adequate social considerations. Privatisation has come to be
considered by the majority of Bolivians as intrinsically bad, although it might, when carefully
implemented, prove a useful development tool.
In line with neo-liberal economic strategy Chanda (2003) argues that:
Trade liberalization in services can result in increased competition, lower prices,
more innovation, technology transfer, employment creation, and greater
transparency and predictability in trade and investment flows’.
Actually service efficiency improved under Aguas del Tunari (see Nickson & Vargas 2002).
Besides the efficiency, however, the equity and government legitimacy gains were far below
expected. Economic literature often ignores social or political aspects of privatisation which
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