Water supply and sanitation in Argentina


Water supply and sanitation in Argentina

Argentina faces five key challenges in the water supply and sanitation sector: (i) low coverage with higher levels of service provision for its income level; (ii) poor service quality; and (iii) high levels of pollution; (iv) low cost recovery; and (v) unclear allocation of responsibilities between institutions in the sector.

Access

Argentina has achieved very high levels of access to an improved water source in urban areas (98%), using a broad definition of access. However, coverage using a narrower definition of access (house connections) is much lower at 83%, since many users still only have access through public standpipes. Also, access in rural areas remains relatively low for a country of Argentina’s level of development (80% using a broad definition, 45% for house connections).

Access to improved sanitation, using a broad definition of access including septic tanks and improved latrines, is high at 91%. However, access to sewerage is only 44%.

"Source": Joint Monitoring Program WHO/UNICEF( [http://www.wssinfo.org/en/welcome.html JMP] /2006). Data for [http://www.wssinfo.org/pdf/country/ARG_wat.pdf water] and [http://www.wssinfo.org/pdf/country/ARG_san.pdf sanitation] based on the [http://www.indec.mecon.gov.ar Census] (2001).

According to a study by the "Centro de Implementación de Políticas Públicas para la Equidad y el Crecimiento" (CIPPEC) or Center for Implementation of Public Policies for Equity and Growth, the increase of coverage between 1991 and 2001 was lower in the poorest provinces. [cite web
last=es icon Maceira
first=Daniel
authorlink=
coauthors=Kremer, Pedro; Finucane, Hilary
title=El desigual acceso a los servicios de agua corriente y cloacas en la Argentina
work=
publisher=Centro de Implementación de Políticas Públicas para la Equidad y el Crecimiento (CIPPEC)
date=2007
url=http://www.cippec.org/nuevo/files/bv_222.pdf
format=
doi=
accessdate=2008-02-14
]

Service quality

260px|thumb|right|Map of Argentina. "Source": CIA [">cite web
last=Central Intelligence Agency (CIA)
first=
authorlink=Central Intelligence Agency
coauthors=
title=The World Factbook
work=
publisher=
date=2007-02-12
url=https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html
format=
doi=
accessdate=2008-02-18
]

There are apparently no comprehensive data on water and sanitation water quality in Argentina. In urban areas, service generally is continuos and of potable quality. However, water rationing occurs in some cities during the summer months, and drinking water quality is sometimes sub-standard.

In Buenos Aires, in 2008 there were two water treatment plants and a new one is being built.cite web
last=es icon Rossi
first=Antonio
authorlink=
coauthors=
title=AySA licita obras de cloaca y agua por $ 2.200 millones
work=
publisher=El Clarín Newspaper
date=2008-02-07
url=http://www.clarin.com/diario/2008/02/07/elpais/p-01104.htm?palabras=%22Aguas+y+Saneamientos+Argentinos%22&desde=0&largo=10&op=buscar&como=Y&donde=TIT&secId=&fecha=90&lr=lang_es&q=&pubId=CLARIN&Submit=Buscar
format=
doi=
accessdate=2008-02-14
]

Concerning sanitation, existing sewage collection systems are insufficient to handle the increasing flows as a growing number of households connect to the sewer systems, leading to frequent sewer overflows.

The level of wastewater treatment varies among the Argentinian regions. According to the Pan American Health Organization, at the national level 10% of the collected wastewater was being treated in 2000. Whereas in many regional capitals, such as Mendoza, Córdoba, Tucumán, Neuquén, Jujuy, Salta and San Juan, most of the wastewater was treated, in the two largest urban areas of the country, Buenos Aires and Rosario, there was practically no treatment at all, resulting in serious environmental problems. However, in 2008 a bidding process was launched to build a wastewater treatment plant in Buenos Aires.

History and recent developments

From 1880 until 1980, the national utility "Obras Sanitarias de la Nación" (OSN) was in charge of providing water and sewer services in the main cities, while in smaller cities it was the responsibility of provincial governments, municipalities and cooperatives.

In 1980 the military government under Jorge Rafael Videla decentralized the provision of water and sanitation services in the main cities served by OSN, except for the metropolitan area of Buenos Aires where OSN continued to provide services. In other cities OSN transferred its responsibilities to provincial governments. Each province chose its model of service provision (municipal, public enterprises, cooperatives or others).

Between 1991 and 1999 under the government of Carlos Menem, as part of one of the worlds largest privatization programs covering a range of sectors, water and sanitation concessions with the private sector were signed in 28% of the country's municipalities covering 60% of the population.cite web
last=Galiani
first=Sebastian
authorlink=
coauthors=Gertler, Paul; Schargrodsky, Ernesto
title=Water for Life: The Impact of the Privatization of Water Services on Child Mortality
work=
publisher=
date=2002-08-31
url=http://www.iadb.org/res/publications/pubfiles/pubS-233.pdf
format=
doi=
accessdate=2008-02-14
, p. 9 ] The highest profile concession was signed in 1993 with a consortium led by the French firm Suez for the metropitan area of Buenos Aires. After the 2001 economic crisis, under the government of Nestor Kirchner, many concessions were renegotiated. Some were even terminated and the responsibility for service provision reverted to public entities, as it was the case in Buenos Aires where the newly created public enterprise "Aguas y Saneamientos Argentinos" took over the responsibility for service provision in 2006. [cite web
last=es icon
first=
authorlink=
coauthors=
title=Argentinian government website on Public Services
work=
publisher=
date=2005
url=http://www.argentina.gov.ar/argentina/portal/paginas.dhtml?pagina=377
format=
doi=
accessdate=2008-02-14
] At the beginning of 2008, the government of the Province of Mendoza announced that it is interested in increasing its control of the provincial water utility "Obras Sanitarias de Mendoza", of which it owns 20%, buying another 20% from Saur International. [cite web
last=es icon Los Andes Newspaper
first=
authorlink=
coauthors=
title=El Gobierno busca reestatizar 20% de OSM
work=
publisher=
date=2008-01-09
url=http://www.losandes.com.ar/2008/0109/politica/nota418344_1.htm
format=
doi=
accessdate=2008-02-14
]

Impact of private sector participation

So far there has been no comprehensive, objective assessment of the impact of private sector participation in water supply and sanitation in Argentina. However, there has been some partial evidence. For example, a 2002 study assessed the impact of privatization on child mortality based on household survey data, finding that in the 1991-1997 period child mortality fell 5 to 7 percent more in areas that privatized compared to those that remained under public or cooperative management. It also found that the effect was largest in poorest areas (24%). [cite web
last=Galiani
first=Sebastian
authorlink=
coauthors=Gertler, Paul; Schargrodsky, Ernesto
title=Water for Life: The Impact of the Privatization of Water Services on Child Mortality
work=
publisher=
date=2002-08-31
url=http://www.iadb.org/res/publications/pubfiles/pubS-233.pdf
format=
doi=
accessdate=2008-02-14
, p. 1
] The authors estimate that the main reason is the massive expansion of access to water, which was concentrated in poorer areas that did not receive services before private sector participation was introducted.

The Buenos Aires concession

The largest and best-known case of private sector participation in the Argentinian water and sanitation sector was the Buenos Aires concession, signed in 1993 and revoked in 2006. Its impact remains controversial and in early 2008 an arbitration case was still pending with the International Center for Settlement of Investment Disputes (ICSID) of the World Bank Group.

Critics argue that the concessionaire failed to achieve the targets set under the concession contract. When the government rescinded the concession in March 2006, it argued that Aguas Argentinas did not comply with obligations concerning expansion and quality. According to the government, the supplied water had high levels of nitrate, pressure obligations were not kept and scheduled waterworks were not executed by the concessionaire. [cite journal
last=Solanes
first=Miguel
authorlink=
coauthors=
title=Efficiency, Equity, and Liberalisation of Water Services in Buenos Aires, Argentina
journal=Industry, Services & Trade
volume=2006
issue=22
pages=124-148
publisher=Organisation for Economic Co-operation and Development (OECD)
location=
date=
url=
doi=
issn =
isbn=9264028676
id=
accessdate=
, p. 168
] On the other hand, proponents of private participation state that a freeze in tariffs at the time of the devaluation of the Peso during the Argentinian economic crisis in 2001 substantially reduced the real value of tariff revenues and thus made it difficult to achieve the original targets.

One factor which may have caused the cancellation of the concession contract was the precipitate preparation. Alcazar et al. list some features of the concession which indicate an overhasty process: [cite journal
last=Alcázar
first=L.
authorlink=
coauthors=Abdala, A.; Shirley, M.
title=The Buenos Aires Water Concession. Policy Research Working Paper 2311.
journal=
volume=
issue=
pages=
publisher=The World Bank
location=Washington D.C.
date=2000
url=http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2000/05/06/000094946_00042605364386/Rendered/PDF/multi_page.pdf
doi=
issn =
isbn=
id=
accessdate=2008-04-16
, p. 20-23
]
# The regulatory agency ETOSS ("Ente Tripartito de Obras de Servicios de Saneamiento", Tripartite Entity for Sanitary Services) lacked experience, since it was founded quickly as part of the concession process.
# The available information in the concession contract about the state of the existing infrastructure was so poor, that the Argentinian government denied taking responsibility for it. This lack of information could have let the bidder to accept the contract in the expectation of future renegotiation. [cite journal
last=Alcázar
first=L.
authorlink=
coauthors=Abdala, A.; Shirley, M.
title=The Buenos Aires Water Concession. Policy Research Working Paper 2311.
journal=
volume=
issue=
pages=
publisher=The World Bank
location=Washington D.C.
date=2000
url=http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2000/05/06/000094946_00042605364386/Rendered/PDF/multi_page.pdf
doi=
issn =
isbn=
id=
accessdate=2008-04-16
, p. 41
]
# Instead of creating a new and more transparent tariff system, the old one was adopted from OSN.In addition, the inexperienced regulatory agency was repeatedly bypassed when decisions were taken, for example in the renegotiation of the contract in 1997. In that way, ETOSS was further weakened. [cite journal
last=Alcázar
first=L.
authorlink=
coauthors=Abdala, A.; Shirley, M.
title=The Buenos Aires Water Concession. Policy Research Working Paper 2311.
journal=
volume=
issue=
pages=
publisher=The World Bank
location=Washington D.C.
date=2000
url=http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2000/05/06/000094946_00042605364386/Rendered/PDF/multi_page.pdf
doi=
issn =
isbn=
id=
accessdate=2008-04-16
, p. 37
] The concession contract authorized Aguas Argentinas to demand dollars at the old 1:1 exchange rate after the peso devaluation. Solanes points out that without this practice companies may seek financing in local capital markets to avoid currency fluctuations. He also argues that the needs of the poor were not addressed in the concession. No subsidies were provided for the poor and the tariff system did not encourage expansion of coverage to poor areas, since new connections were often unaffordable and new users also had to pay the costs of expanding the network. [cite journal
last=Solanes
first=Miguel
authorlink=
coauthors=
title=Efficiency, Equity, and Liberalisation of Water Services in Buenos Aires, Argentina
journal=Industry, Services & Trade
volume=2006
issue=22
pages=124-148
publisher=Organisation for Economic Co-operation and Development (OECD)
location=
date=
url=
doi=
issn =
isbn=9264028676
id=
accessdate=
, p. 158-164
]

The concessionaire did invest much more than its public predecessor and achieved substantial increases in access to water and sewerage. According to the Argentinian economist Sebastian Galiani, the public company OSN had invested only US$25m per year between 1983 and 1993, while the private concessionaire Aguas Argentinas increased investments to around US$200 m per year between 1993 and 2000. [cite web
last=Galiani
first=Sebastian
authorlink=
coauthors=Gertler, Paul; Schargrodsky, Ernesto
title=Water for Life: The Impact of the Privatization of Water Services on Child Mortality
work=
publisher=
date=2002-08-31
url=http://www.iadb.org/res/publications/pubfiles/pubS-233.pdf
format=
doi=
accessdate=2008-02-14
, p. 15
]

According to Suez, during the 13 year-duration of its concession it extended access to water to 2 million people and access to sanitation to 1 million people, despite the economic crisis. Between 2003 and 2005 alone about 100,000 inhabitants of poor neighborhoods and slums are said to have been connected through a "participatory management model" piloted by Aguas Argentinas. Aspects of the model have been adopted by the government to extend services to another 400,000 people in La Matanza in the province of Buenos Aires in the project "Water plus work" ("Aguas más trabajo"). [cite web
last=Suez Environment
first=
authorlink=
coauthors=
title=Argentinian official website
work=
publisher=
date=
url=http://argentina.suez-environnement.com/en/nos-engegagements/agua-mas-trabajo/sustainable-solutions/sustainable-solutions/
format=
doi=
accessdate=2008-02-18
]

An example of local private sector participation: Salta

The government of Salta Province initiated the reform of its water sector in 1996. At the same time many other Argentinian provinces and municipalities brought in the private sector to improve water and sanitation services. While Salta also followed this approach, the process differed somewhat from the one in many other parts of Argentina. cite web
last=Saltiel
first=Gustavo
authorlink=
coauthors=Maywah, Nicole
title=Argentina: The Salta Public-Private Partnership
work=
publisher=
date=February 2007
url=http://siteresources.worldbank.org/INTENBREVE/Newsletters/21455620/Feb07_102_Salta_EN.pdf
format=
doi=
accessdate=2008-03-20
]

First, the provincial government conducted a series of meetings with municipalities and user organizations to discuss the benefits and risks of the concession before it was bid out. This process of consultations was continued by the private concessionaire after the contract was awarded. Second, the government decided from the onset that water and sanitation services in the poor province could not be financed entirely through tariff revenues. It thus decided to finance much of the investments to be undertaken by the private concessionaire with public grants, in addition to providing consumption subsidies. Third, the regulatory agency allowed the concessionaire to provide services at a lower standard in remote or isolated areas that were deemed unprofitable at conventional service standards. Fourth, the provincial regulatory agency granted tariff increases before and even after the 2001 economic crisis. These tariff increases were lower than it would have been necessary without subsidies or flexible service standards. And fifth, the government "ignored the traditional paradigm of only permitting companies with singificant previous experience in water supply and sanitation to compete in the bidding process". This provision had favored a few large multinational water firms in other bidding processes. In Salta, however, the bid was won by the Argentinian construction, power and toll road enterprise MECON S.A. which signed a technical assistance contract with the Brazilian Paraná State public utility SANEPAR. cite web
last=Saltiel
first=Gustavo
authorlink=
coauthors=Maywah, Nicole
title=Argentina: The Salta Public-Private Partnership
work=
publisher=
date=February 2007
url=http://siteresources.worldbank.org/INTENBREVE/Newsletters/21455620/Feb07_102_Salta_EN.pdf
format=
doi=
accessdate=2008-03-20
]

The private concession led to a substantial increase in access to water and sanitation from the time of concession award in 1999 to 2005. It also provided a significant decrease in service interruptions and improved customer service. 13 more municipalities joined the concession contract after it had been signed in order to share in its benefits, bringing the total number of municipalities served by the concessionaire to 56. cite web
last=Saltiel
first=Gustavo
authorlink=
coauthors=Maywah, Nicole
title=Argentina: The Salta Public-Private Partnership
work=
publisher=
date=February 2007
url=http://siteresources.worldbank.org/INTENBREVE/Newsletters/21455620/Feb07_102_Salta_EN.pdf
format=
doi=
accessdate=2008-03-20
]

While most other private water concessions in Argentina were rescinded in the aftermath of the 2001 economic crisis, the Salta concession has been upheld. Nevertheless, the concession is not without problems. For example, in February 2008 the regulatory agency initiated penal proceedings against the concessionaire because one of its wastewater treatment plants discharging to the Arenales River was not functioning. [ [http://noticias.iruya.com/content/view/3190/412/ Aguas de Salta denunciada penalmente por vertido de líquidos cloacales al río Arenales] ]

Responsibility for water supply and sanitation

Policy and regulation

Provinces have responsibility for setting rules and policies in the sector for their area. Institutions are weak, subject to political interference and lacking in enforcement powers. 14 out of 23 provinces have regulatory bodies, but they often have limited capacity and unclear institutional responsibilities. In most cases, they act as supervisors of private concession contracts, not covering public and cooperative service providers. This autonomy of provinces resulted in a highly heterogeneous system of water supply and sanitation.cite web
last=World Bank/Interamerican Development Bank (IDB)
first=
authorlink=
coauthors=
title=Infrastructure in Latin America: Recent evolution and key challenges. (Seven country briefs) -C.B. 1/7: Argentina
work=
publisher=
date=July 2005
url=http://www.worldbank.org/transport/transportresults/regions/lac/cb-argentina-260705.pdf
format=
doi=
accessdate=2008-02-18
, p. 69] Moreover, it hinders to create an overview of the situation at the national level. Despite recent progress in clarifying responsibilities, the institutional framework at the national level still lacks coherence and coordination among federal actors is weak. The [http://www.obraspublicas.gov.ar/ Ministry of Public Works] proposes sector policies to the [http://www.minplan.gov.ar/ Ministry of Federal Planning, Public Investment and Services] which approves them. Within this policy framework the [http://www.enohsa.gov.ar/index.asp National Agency for Water and Sanitation Works (ENOHSA)] , a decentralized agency under the Ministry of Public Works, provides financing and technical assistance to service providers. As an advisor to the Ministry of Public Works it de facto influences sector policies. Recently ENOHSA has been also given the faculty to directly execute infrastructure works. There has been some confusion between its position as conceding power (in the Buenos Aires concession) and as policy-maker for the overall sector. There is no coherent national policy in terms of sector financing, subsidies, tariffs and service standards. Nor is there a sector law for water and sanitation. The federal structure of the country and the dispersion of sector responsibilities between and within various levels of government make the development of a coherent sector policy all the more difficult.

Service provision

Provision of water and sanitation supply in Argentina is organized on a municipal or provincial basis by around 1,650 public, cooperative and private entities of various forms. 14 service providers are provincial (Argentina has 23 provinces), but do not necessarily serve the entire province. Some are multi-municipal, some serve a single municipality and others parts of a municipality. There are at least 990 mostly smaller cooperative service providers in Argentina, [cite web
last=Foster
first=Vivien
authorlink=
coauthors=
title=Ten Years of Water Service Reform in Latin America: Toward an Anglo-French Model
work=
publisher=
date=January 2005
url=http://siteresources.worldbank.org/INTWSS/Resources/WSSServiceReform.pdf
format=
doi=
accessdate=2008-02-18
, p. 3
] making Argentina the country in Latin America where this form of service provision is most prevalent.

Financial aspects

Tariffs

In 2000, the Argentinian water and sanitation tariff levels were high, given the low quality of services. According to the Panamerican Health Organization (PAHO), the mean tariff for water and sanitation was US$ 0.79 per m3. There are two different tariff systems. The first method is based on the former OSN tariff system. It estimates the consumption of each user according to characteristic such as dwelling size, location of residence and type of dwelling. The second tariff system contains a fixed charge and a variable part which is based on metered consumption. This latter method was made possible by the extensive introduction of water metering, which was included in many concession contracts in the 1990s. The average household expenditure for water supply and sanitation in 2002 was 2.6%, ranging from 2.1% in the highest (wealthiest) quintile to 3.5% in the lowest (poorest) one. [cite web
last=Foster
first=Vivien
authorlink=
coauthors=
title=Toward a Social Policy for Argentina’s Infrastructure Sectors: Evaluating the Past and Exploring the Future
work=
publisher=
date=October 2004
url=http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2004/10/19/000012009_20041019141854/Rendered/PDF/WPS3422.pdf
format=
doi=
accessdate=2008-02-18
, p. 53
]

Cost recovery

Most service providers barely recover operation and maintenance costs and have no capacity to self-finance investments. While private operators were able to achieve higher levels of cost recovery and to substantially expand services before the crisis, since 2002 their tariffs have been frozen and their self-financing capacity has disappeared. Service providers thus are almost entirely dependent on federal transfers for investment financing. Roughly two-thirds of provincial water and sanitation spending over the period has come from general transfers from the federal government, the remainder coming from various programs directed specifically to the sector, including for flood protection and water resources management.

When the linkage of the Argentinian peso to the US-Dollar was abandoned due to a serious economic crisis in 2002, the tariffs did not increase but converted 1 to 1 to the devalued peso, resulting in various contract renegotiations. This decision worsened the financial situation of the suppliers. The lack of financial resources results in problems concerning even in maintaining the supply system.

Cutting off water services for non-payment is prohibited in Argentina based on a common interpretation of the constitution.

External support

Interamerican Development Bank

* [http://www.iadb.org/projects/Project.cfm?project=AR-L1015&Language=English AR-L1015 : Water Infrastructure: Northern Provinces Development] Approved on January 31 2007 in the amount of US$240 million, the loan will address specific problems of irrigation, drainage, as well as low access to water and sanitation in the northern provinces of: Jujuy, Catamarca, Santiago del Estero, Tucumán, and Chaco.
* [http://www.iadb.org/projects/Project.cfm?project=AR-L1034&Language=English AR-L1034 : PEF:AR-L1031 Potable Water and Sanitation Program] Approved on September 25 2006 in the amount of US$ 180,000, the program will partly finance water and/or sewerage systems for communities up to 50,000 in Argentina.

World Bank

* [http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P105288 Infrastructure Project for the Province of Buenos Aires (APL2)] The US$270 million loan was approved on June 28 2007, and finances 40% sewerage and 16% flood protection for the highly vulnerable and low-income communities in the Province of Buenos Aires.
* [http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P060484 Basic Municipal Services Project] The US$175 million loan approved on April 3 2006, finances water (27%), sanitation (27%), and sewerage (14%) projects in Argentina.
* [http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P088220 Urban Flood Prevention and Drainage APL1] The US$190 million loan approved on May 18 2006, finances flood protection (94%) as well as general water and sanitation sector (2%) in the city of Buenos Aires through the protection of the city's critical infrastructure and the introduction of risk management into the Government investment program.
* [http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P088032 Infrastructure Project for the Province of Buenos Aires (APL1)] The US$267 million loan approved on February 15 2006, finances infrastructure services in sewerage (30%) and flood protection (5%) in the Province of Buenos Aires.

See also

Water supply and sanitation in Mendoza

References

External links

* [http://www.aysa.com.ar/ Water supply and sanitation provider in Greater Buenos Aires]
* [http://www.etoss.org.ar/ ETOSS (Regulatory agency in Greater Buenos Aires)]
* [http://www.argentina.gov.ar/argentina/portal/paginas.dhtml?pagina=377 Government of Argentina page on Water Supply and Sanitation]


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