The Paradoxical Politics of Water Metering in Argentina

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This article is based on an article in Poverty In Focus Number 18, August 2009 (from the International Policy Centre for Inclusive Growth (IPC-IG)) by Alison E. Post (University of California, Berkeley). It emphasises the benefits of water metering but highlights problems of implementation and poor design in Argentina.

Key Messages
  1. Metering consumption provides strong disincentives against wasteful consumption, reducing total demand and thereby helping utilities maintain adequate pressure levels in outlying districts.
  2. Introducing water metering on a more widespread basis in developing countries promises to have numerous positive effects, especially for poorer city-dwellers living on the urban fringe.
  3. Metering should lower overall demand, thereby allowing utilities to expand services and improve pressure levels in outlying districts with fewer major new investments in system capacity.

Contents

Water Metering in Argentine Cities

Two contrasting yet related scenes can be observed in Argentine cities during hot summer months. In affluent central districts, apartment building superintendents begin the day by washing off the sidewalks in front of their residences, waving hose nozzles from side to side as if water were free. Meanwhile, in outer and often less affluent districts, water pressure falls to such low levels that utilities must ration service; running water may only be available a few hours a day.


Water metering systems can help rectify such unfair allocations of a scarce resource. Metering consumption provides strong disincentives against wasteful consumption, reducing total demand and thereby helping utilities maintain adequate pressure levels in outlying districts. Reducing total demand, where there is shortage of water, also enables utilities to use existing infrastructure more efficiently, thereby freeing up system capacity for expansion into the urban fringe, where the urban poor tend to live in many developing countries. This is very important, because the construction of facilities such as water and sewerage plants does not tend to be accorded political priority; after all, they are not as visible as bridges or schools and do not deliver concrete benefits to individual constituents. As a result, governments tend to underinvest in such “invisible” infrastructure.


Water metering, along with private sector management and regulation, was advocated by international institutions under the Washington Consensus reform programme of the late 1980s and 1990s. Despite the aforementioned benefits for overall system efficiency and for poorer city residents in particular, efforts to introduce water metering have met keen political resistance in developing countries. This article examines efforts to introduce water metering by privatised utilities in the Argentine provinces. It highlights the types of political resistance encountered and the strategies identified by utilities and political officials to address household concerns.

Water Metering Provisions in Argentina under Washington Consensus Reforms

In response to pressure from the national government, most of the Argentine provinces chose to “modernise” their water and sanitation systems during the 1990s: 11 provinces granted 30-year management and investment contracts (concession contracts) to private operators, and two others established state-owned private companies that would be monitored by independent regulatory agencies.[1] Contracts and the enabling laws establishing regulatory agencies stipulated very ambitious water metering targets for the new service providers in many cases.


Table 1 shows the eight provincial concessions granted during the 1990s that had stringent targets. Note that these contracts typically required concessionaires to install meters for between 50 and 100 per cent of their residential customer base within the first few years of the contract or face financial penalties.

Table 1: Argentine Concessions from the 1990s with Stringent Water Metering Targets* and Progress toward Water Metering Goals, Source:Source: a.: Pliego de Bases y Condiciones, Capítulo 10; b.: Pliego de Condiciones Particulares, Anexo V, Parte E; c.: Pliego de Bases y Condiciones, Anexo V, Artículo 14.5; d.: Pliego de Bases y Condiciones, Anexo XIII, Artículos 1.14, 1.15; e.: Contrato de Concesión, Artículo 4.2.1; f.: Contrato de Concesión, Anexo II, Capítulo III; g.: Contrato de Concesión, Anexo F, Artículo 2.2; and h.: Contrato de Concesión, Anexo I.
Table 1: Argentine Concessions from the 1990s with Stringent Water Metering Targets* and Progress toward Water Metering Goals, Source:Source: a.: Pliego de Bases y Condiciones, Capítulo 10; b.: Pliego de Condiciones Particulares, Anexo V, Parte E; c.: Pliego de Bases y Condiciones, Anexo V, Artículo 14.5; d.: Pliego de Bases y Condiciones, Anexo XIII, Artículos 1.14, 1.15; e.: Contrato de Concesión, Artículo 4.2.1; f.: Contrato de Concesión, Anexo II, Capítulo III; g.: Contrato de Concesión, Anexo F, Artículo 2.2; and h.: Contrato de Concesión, Anexo I.

Problems of Implementation

Between 10 and 15 years after the start of the Argentine concession contracts, as Table 1 indicates, no concessionaire has met its contractual targets. Only two have come close to meeting their goals: Aguas de Corrientes and Servicio de Aguas de Misiones (SAMSA).[2] Importantly, this lack of progress is observable in concessions that have been widely regarded as successful in terms of extending services to new users, such as Aguas de Salta.


What has stood in the way of implementation?

One might suppose that tariff systems did not provide concessionaires with financial incentives to switch consumers from fixed charges to metered consumption. In the Argentine contracts listed above, however, concessionaires could generally charge higher tariffs when consumption was metered and when households consumed above a certain allotment. Rather, the main stumbling block has been consumer resistance. The historically quiescent population of Santiago del Estero province, for instance, took to the streets to march in protest against the installation of water meters, and secured a multi-year delay in the metering programme (Tenti, 2005, p. 165). Meanwhile, in neighbouring Salta province, individuals vandalised newly-installed water meters, staged major protests in the central city, and voted not to accept metering at neighbourhood assemblies.[3]

What prompted these strong public reactions against meter installation?

Let us start with the obvious explanations. First, metering was introduced at the same time as other controversial measures designed to move utilities to cost-recovery, including scaled tariff increases, the more vigorous enforcement of bill payment, and the “regularisation” of clandestine connections.[4] Initially, regulatory frameworks for most of the contracts also required households to pay for the cost of meters in instalments. Governments and firms responded to protests sparked by this second issue by shifting the financial burden for meter installation onto the firm or government in most cases.


There were, however, more subtle reasons why consumers rejected metering, reasons that stem from widespread reservations about the motives of public and private institutions in societies plagued by corruption. The fact that different households paid different rates, for instance, aroused scepticism; who was to ensure that meters functioned correctly and bills were being calculated fairly? Technical difficulties only contributed to such doubts. Invisible leaks in household pipes, for example, could lead to extremely high monthly consumption rates. In areas where companies were unable to provide constant levels of water pressure, customers also wondered if they were paying for air rather than water coming through their pipes.

Ways Forward

The difficulties encountered in the Argentine provinces highlight the importance of approaching the introduction of meters in political terms; consumer expectations and scepticism must be anticipated and addressed pre-emptively. Fortunately, one can glean some effective strategies from the Argentine concessions.

  • Metered tariff formulas must be clear and intelligible to consumers when they read their bills.
  • Rates for modest levels of consumption should be lower than those for higher levels, and a level of consumption adequate for modest family living should cost no more than the fixed rate regime.
  • Meter installation will meet less resistance if firms or governments foot the cost of installation. Users will of course end up funding meters through regular tariffs, presuming the system is not subsidised, but users are unlikely to see this.
  • Utilities can send households bills containing meter readings for several months before metered billing is introduced. This gives individuals a sense of whether they should moderate consumption levels before the new rates come into effect.
  • Utilities can schedule meter installation after stabilising water pressure in given districts, so as to avoid disputes about measurement.
  • Finally—and most effectively, according to officials of the Misiones concession—utilities should proactively identify households with abnormal consumption levels before the introduction of metered billing and send specialised technicians to investigate if households have serious leaks on their property. According to most contracts, fixing such leaks is a household’s responsibility; such proactive efforts by a utility, however, will help neutralise the most likely opponents to metering once it is introduced.

Introducing water metering on a more widespread basis in developing countries promises to have numerous positive effects, especially for poorer city-dwellers living on the urban fringe. Metering should lower overall demand, thereby allowing utilities to expand services and improve pressure levels in outlying districts with fewer major new investments in system capacity. Recent efforts to implement metering under the Washington Consensus, however, have faced significant political resistance.


Future efforts to introduce metering should be preceded by careful thinking about political strategy, particularly the question of how to address longstanding citizen scepticism about the motives of public and private institutions. The aforementioned strategies identified in the Argentine context may be of use in dealing with consumer resistance in other settings.

References

  1. The contract for the Buenos Aires metropolitan area was granted by the national government rather than a provincial government. Three other provincial concessions were granted after the 1990s: Catamarca, La Rioja and a contract encompassing one part of Buenos Aires province.
  2. As Table 1 indicates, only one of the eight contracts was cancelled: the Azurix contract. The rest remained in place as of January 2009.
  3. See the August and September 2004 issues of El Tribuno, the provincial newspaper for Salta, Argentina
  4. While tariff hikes of 100 per cent in the province of Tucumán received international attention, more typical in Argentina were increases of 5-20 per cent at any one time.


Asociación de Entes Reguladores de Agua Potable y Saneamiento de América Latina (ADERASA) (2003, 2004, 2005, 2006). Ejercicio Anual de Benchmarking. Processed data.

ENOHSA-COFES (1999). La Cobrabilidad de los Servicios Sanitarios en Argentina. Buenos Aires, ENOHSA-COFES.

Tenti, María Mercedes (2005). La Reforma del Estado Santiagueña: La Gestión política en los 90’. Santiago del Estero, Argentina: Ediciones Universidad Católica de Santiago del Estero.

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