Bolivia's Water Tanker: Tracing The Source Of Supply

Bolivia's water supply and sanitation coverage has improved since 1990, but the country still suffers from the lowest coverage levels and quality of services on the continent. In 2015, 90% of the population had access to improved water, but this figure was much lower in rural areas. In 2016, a drought in La Paz and El Alto led to water rationing and a national state of emergency. Bolivia's water issues have been exacerbated by political and institutional instability, which has weakened the sector's institutions at the national and local levels. This instability has also made it difficult to implement a long-term, sustainable sector policy. In the 1990s, the privatisation of water supply and sanitation in Bolivia took place during the second mandate of President Hugo Banzer. This led to protests, known as the Cochabamba Water War, and ultimately, the termination of two major private concessions in 2000 and 2006.

The Cochabamba Water War

Background

In the 1980s, Bolivia was facing economic instability and hyperinflation, which led to a lack of foreign investment in the country. In 1985, the Bolivian government turned to the World Bank for financial aid to prevent an economic meltdown. The World Bank required the privatisation of the country's railroads, airlines, telephone system, and oil industry as a condition for providing loans. They also pushed for the privatisation of water, arguing that local corruption and a lack of subsidies had led to inefficiencies in the water sector.

Protests

In September 1998, the International Monetary Fund (IMF) approved a $138 million loan for Bolivia, which came with the condition that Bolivia sell off its remaining public enterprises, including Cochabamba's local water agency, SEMAPA. In June 1999, the World Bank explicitly discouraged water subsidies in an economic report prepared for the country. This set the stage for the privatisation of Cochabamba's water system.

In September 1999, after closed-door negotiations, the Bolivian government signed a $2.5 billion contract with Aguas del Tunari, a multinational consortium of private investors, to hand over Cochabamba's municipal water system. Aguas del Tunari was the sole bidder for the privatisation and was given a 40-year concession to provide water and sanitation services to the residents of Cochabamba. They also planned to generate electrical energy and irrigation water for the region's agricultural sector.

The privatisation of the water supply led to a significant increase in water rates for the residents of Cochabamba, with some experiencing a doubling or tripling of their water bills. This sparked widespread protests, with demonstrators erecting roadblocks and holding mass rallies and assemblies. The protests brought together a diverse range of groups, including peasant irrigators, retired unionised factory workers, students, and homeless street children.

Outcome

The Bolivian government responded to the protests by dispatching soldiers and police, who used tear gas, clubs, and bullets to disperse the demonstrators. However, the protesters regrouped and their numbers grew. The protests spread beyond Cochabamba to other cities, including La Paz, and outlying rural communities.

In April 2000, the Bolivian government reached an agreement with the protesters, known as the Coordinadora (Coalition in Defense of Water and Life), to reverse the privatisation of the water supply. The Bolivian Congress rescinded the 1999 law that permitted water privatisation, and the government's contract with Aguas del Tunari was cancelled. This victory for the protesters inspired similar movements around the world and raised the profile of Oscar Olivera, the leader of the Coordinadora, who became a sought-after speaker on resource privatisation and a critic of the World Bank.

Water privatisation

Bolivia has struggled with water privatisation since the 1980s. In 1982, civilian rule was restored to Bolivia, ending decades of military dictatorship. However, this did not bring economic stability. In 1985, hyperinflation hit an annual rate of 25,000%, causing most foreign investors to avoid the country.

In the 1980s, investment in the water sector was below $20 million per year. From 1990 onwards, this average increased to approximately $40 million. In 1999, when $69.4 million was invested, annual investment reached its peak.

In 1999, the Bolivian government contracted Aguas del Tunari, a consortium of companies that included the US construction giant Bechtel, to administer water provision in the city of Cochabamba and the surrounding countryside. The new company dramatically increased water rates for municipal customers and took over autonomous drinking water systems in neighbourhoods on the city's outskirts and irrigation networks in farming communities, charging these new "customers" to use water systems they had built and paid for themselves.

In response to the privatisation of the city's municipal water supply company SEMAPA, a series of protests took place in Cochabamba, Bolivia's fourth-largest city, between December 1999 and April 2000. This wave of demonstrations and police violence was described as a public uprising against water prices. The protests, largely organised through the Coordinadora (Coalition in Defense of Water and Life), culminated in tens of thousands marching downtown and battling the police. One civilian was killed.

On 10 April 2000, the national government reached an agreement with the Coordinadora to reverse the privatisation. In April 2000, the Bolivian Congress rescinded the 1999 law that permitted water privatisation, and Hugo Banzer, the former dictator turned elected president, cancelled the government's contract with Aguas del Tunari.

In 2006, Evo Morales became the first indigenous president of Bolivia. He was elected in the wake of a five-year period of popular rebellion that began with mass protests against water privatisation in the Cochabamba Valley.

In 2015, 90% of the total population of Bolivia had access to "improved" water, or 97% and 76% in urban and rural areas, respectively. However, the quality of service in the majority of the country's water and sanitation systems is low. In 2000, according to the WHO, only 26% of the urban systems disinfected water, and only 25% of the collected wastewater was treated.

Despite improvements, Bolivia continues to suffer from the lowest coverage levels and low-quality services. Political and institutional instability have contributed to the weakening of the sector's institutions at the national and local levels.

Water tankers in Bolivia's poorest neighbourhoods

In Bolivia, water tanker trucks are a common sight, particularly in the poorest neighbourhoods. These trucks are often the primary source of water for many residents, who pay far more for water than those with piped water connections. The water is sourced from natural underground reservoirs, filled by water flowing down from the mountains, and is then sold to those without access to the municipal water supply.

Bolivia has long struggled with providing adequate drinking water and sanitation services to its citizens, particularly in rural areas. While the country has made significant improvements since 1990, it still suffers from the lowest coverage levels and poor service quality on the continent. Political and institutional instability have contributed to the sector's weaknesses, with privatisation efforts in the late 1990s and early 2000s ending in failure due to popular uprisings.

The World Bank had pushed for privatisation, arguing that the sector was plagued by local corruption and that subsidies should not be used to lower water tariffs. However, privatisation led to increased water rates, with many residents, especially the poor, unable to afford the higher prices. This sparked the Cochabamba Water War in 1999-2000, a series of protests against the privatisation of the city's municipal water supply company, SEMAPA. The protests culminated in tens of thousands of people marching downtown and clashing with police, resulting in one civilian death.

In the wake of the protests, the national government reversed the privatisation and the Water Ministry was created, with a leader of the protests, Luis Sánchez-Gómez Cuquerella, appointed as the country's first water minister. Despite these changes, Bolivia continues to face challenges in providing universal access to water and sanitation services. As of 2018, San Pedro became the first district in Bolivia to achieve water services for everyone, and the country's president has set ambitious goals for universal access to drinking water by 2020 and sanitation by 2025.

The role of the World Bank

The World Bank has played a significant and complex role in Bolivia's water supply. In 1985, with hyperinflation at an annual rate of 25,000%, the Bolivian government turned to the World Bank to prevent economic collapse. For the next two decades, Bolivia followed the World Bank's provisions to qualify for continued loans.

The World Bank advised against subsidising water in Cochabamba, stating that "poor governments are often plagued by local corruption" and that "no subsidies should be given to ameliorate the increase in water tariffs in Cochabamba". The World Bank believed that privatisation was necessary to improve water access and quality.

In 1999, the Bolivian government, under pressure from the World Bank, privatised the state water agency, SEMAPA, and sold it to Aguas del Tunari, a consortium of private investors, including the US construction giant Bechtel. This privatisation led to dramatic increases in water rates and sparked the Cochabamba Water War, a series of protests that took place between December 1999 and April 2000.

The World Bank approved a $150 million loan in February 2024 to improve water resource management in 15 basins and 256 municipalities throughout Bolivia. The project aims to help 30,000 rural families enhance their capacity to address the impacts of climate change, improve agricultural productivity, and promote gender equality in water management.

The World Bank has also financed the Bolivia Climate Resilience - Integrated Basin Management Project, which focuses on strengthening institutional capacity and improving hydrometeorological forecasting and infrastructure. This project aims to protect vulnerable groups, such as the poor, women, children, and the elderly, from the negative impacts of climate change on water availability.

Overall, the World Bank's role in Bolivia's water supply has been controversial. While the organisation has provided significant financial support and promoted privatisation as a solution to improve water access and quality, its policies have also been criticised for prioritising economic growth and foreign investment over the needs of local communities.

The Bolivian government's response

The Hugo Banzer Administration (1997-2001)

During the second mandate of President Hugo Banzer, the Bolivian government privatized the country's water supply and sanitation sector, granting two major concessions to foreign private companies: Aguas de Illimani in La Paz/El Alto and Aguas de Tunari in Cochabamba. This privatization was done under pressure from international financial institutions like the World Bank and the International Development Bank, which made it a requirement for the Bolivian government to retain ongoing state loans. However, this decision led to widespread protests and two popular uprisings, known as the "Cochabamba Water War," in April 2000 and January 2005, respectively. The protests were met with violence, and the Bolivian Army killed a 17-year-old student, Víctor Hugo Daza, during the 2000 uprising.

In response to the protests, the Banzer administration initially dispatched soldiers and police to quell the demonstrations with tear gas, clubs, and bullets. However, the protests continued to grow, and in April 2000, the Bolivian Congress rescinded the 1999 law that permitted water privatization. As a result, President Banzer canceled the government's contract with Aguas de Tunari and declared a "state of siege" to restore order.

The Evo Morales Administration (2006-2019)

Evo Morales, Bolivia's first indigenous president, was elected in 2006 on a platform of social and economic justice, including a commitment to ensuring that "water cannot be a private business because it converts it into a merchandise and thus violates human rights." The Morales administration took several significant steps to increase citizen participation in the water sector and improve access to water and sanitation services:

• Created the Water Ministry and nominated leaders from the protests against water privatization as ministers
• Dissolved the regulatory agency SISAB, citing its failure to properly regulate tariffs and lack of accountability
• Considered passing a new water and sanitation services law called "Water for Life," which would eliminate the legal concept of the concession and introduce preferential electricity tariffs for community water providers
• Published a National Basic Sanitation Plan in 2008, setting targets for increasing access to water and sanitation and defining the necessary investments
• Responded to a severe drought in 2016 by declaring a national state of emergency and coordinating efforts to drill wells and transport water to affected areas

Recent Developments

Since Morales' presidency, Bolivia has continued to face challenges in providing universal access to water and sanitation services, particularly in rural areas. In 2018, the district of San Pedro became the first in Bolivia to achieve water services for everyone through a partnership between Water For People and local district partners. The Bolivian government has set ambitious goals to reach universal access to drinking water services by 2020 and sanitation services by 2025. However, achieving these goals will require substantial increases in investment financing and addressing issues such as low visibility of community service providers, lack of respect for indigenous customs, technical and institutional difficulties, and the impact of climate change on water quantity and quality.

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