Water and sanitation in the Buenos Aires metropolitan region: Fragmented markets, splintering effects?

Geoforum 39 (2008) 1859–1870

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Water and sanitation in the Buenos Aires metropolitan region: Fragmented markets, splintering effects? Sarah Botton a, Bernard de Gouvello b,c,* a

Laboratoire Techniques, Territoires et Sociétés (LATTS), ENPC, 6 et 8 avenue Blaise Pascal, Cité Descartes, 77455 Marne la Vallée Cedex 2, France Centre Scientifique et Technique du Bâtiment (CSTB), 84, avenue Jean Jaurès, Champs-sur-Marne, 77447 Marne la Vallée Cedex 2, France c Centre d’Enseignement et de Recherche Eau Ville Environnement (CEREVE), ENPC, 6 et 8 avenue Blaise Pascal, Cité Descartes, 77455 Marne la Vallée Cedex 2, France b

a r t i c l e

i n f o

Article history: Received 19 July 2007 Received in revised form 6 August 2008

Keywords: Water Sanitation Networks Buenos Aires Urban splintering Aguas Argentinas

a b s t r a c t This paper discusses the provision of water and sanitation services and the related urban impacts in Buenos Aires circa 2005. The first part of the paper focuses on the metropolitan region (BAMR) which is larger than the area served by the Aguas Argentinas S.A. (AASA) concession (i.e. the capital and its conurbano). It highlights a form of institutional fragmentation that is reflected in the diverse management practices of the numerous service providers and results in differentiated levels of and access to services. The paper discusses the technical, economic and regulatory factors that have historically resulted in this institutional fragmentation. The second part of the article focuses on AASA’s water concession agreement. It demonstrates that, although the agreement had an in-built splintering logic, its implementation led to a more ‘‘integrated approach” based on the ‘‘reality on the ground”. On the whole, the conclusion regarding the application of the splintering urbanism concept to Buenos Aires is a mixed one and depends on the scale of observation. Although at regional level (BAMR), a form of ‘‘institutional fragmentation” would appear to be obvious, it is the result of a long and complex historical process and, while recent neo-liberal reforms in service provisions have ‘‘cemented” this fragmentation, they did not actually cause it. If we take the AASA service area in isolation, the trend in the decade following the contracting out of the service has been one of improved service provision and access—although this was not achieved through increased integration of the supply system. Finally, in the case of the Buenos Aires metropolitan region, the splintering urbanism thesis defended by Marvin and Graham needs to be nuanced in several significant ways. Ó 2008 Elsevier Ltd. All rights reserved.

1. Introduction Argentina is often presented as a showcase for the implementation of neo-liberal economic policies because of the methods used and the rapidity with which the government implemented reforms and organised the regulation of utilities in the 1990s. Although it was already present during the military dictatorship (1976– 1983), the pressure exerted by neo-liberal forces on the Argentine economy came to the fore during the authoritarian period (rule by decree) of the Peronist president Carlos Menem, who came to power in 1989. The economic reforms put in place by his administration during the 1990s were largely inspired by the ‘‘water for all” World Bank doxa (Goldman, 2007) and enabled international organisations (International Monetary Fund and World Bank) to implement and appraise the neo-liberal policies they had advocated. These reforms were largely based on a massive influx of for-

* Corresponding author. Address: Centre d’Enseignement et de Recherche Eau Ville Environnement (CEREVE), ENPC, 6 et 8 avenue Blaise Pascal, Cité Descartes, 77455 Marne la Vallée Cedex 2, France. E-mail addresses: [email protected] (S. Botton), bernard.degouvello@cereve. enpc.fr (B.de Gouvello). 0016-7185/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.geoforum.2008.08.003

eign capital, underpinned by a US dollar-based monetary policy (Argentine peso convertibility), and the privatisation of all of the major national utilities, without any regard for the constant and significant deterioration in the key social welfare indicators (unemployment, poverty, healthcare, education, etc.) or the increasing burden of external debt. As a result of these policies, Argentina has frequently been cited by international institutions as ‘‘a star pupil” and thus chosen as the subject for studies that tend to stress the social and economic efficiency of the [neo-liberal] reforms (Abdala, 1996; Alcazar et al., 2002). However, many studies by Latin-American sociologists have tended to focus on the economic and social ‘‘disasters” caused by the policies pursued in the 1990s (Aspiazu et al., 2004). Therefore, the scientific background against which this analysis takes place strongly resembles an ideological battlefield that it is difficult, but nevertheless essential, to avoid. Such an ideologically-charged debate requires studies that are grounded in a balanced and comprehensive assessment of the available empirical evidence. This paper thus seeks to clarify the complex links between recent utility reforms and socio-spatial splintering or integration dynamics. It uses as a case study the provision of water and

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sanitation services in the urban region of Buenos Aires (circa 2005, when this study was carried out), a region which underwent major reforms to its public utilities during the 1990s. In particular, the contracting out of water and sanitation services to Aguas Argentinas S.A. (AASA) in an area covering a significant part of the Buenos Aires Metropolitan Region (BAMR)1 was the first example of a major public–private partnership in the sector and, as such, was showcased at international level. The Buenos Aires case is therefore particularly relevant to any discussion of splintering urbanism. This paper is divided into three sections. Firstly, we introduce the case study in relation to the discussion of the splintering urbanism thesis (Section 2). We then analyse the historical process that led to the current institutional fragmentation in the provision of water and sanitation services at metropolitan level (Section 3). In the next part, based on a study of how the AASA contract was actually implemented, we discuss the splintering or integrative impacts of water provision within the AASA concession area (Section 4). 2. The urban area of Buenos Aires and the debate on splintering urbanism As a consequence of the general tendency to question the efficiency and desirability of public monopolies, sectors such as water and sanitation, electricity, telecommunications and transport have all experienced root-and-branch transformations in the last two decades through a series of reforms involving deregulation, liberalization, contracting out or privatisation. Within infrastructure sectors, the new ‘‘liberal convention” (Batley, 1999) is usually associated with or measured by: the ring-fencing of individual utility sectors; the commercialisation of services (involving full cost pricing, the shift to a for-profit activity in which profit maximisation has priority over service provision, and the substitution of the economic notion of willingness to pay for the more social notion of ability to pay); the privatisation of companies (and its implications in terms of equity financing); and a change in redistributive principles from social equity to economic equity (via the elimination of cross-subsidies). These dynamics have given rise to an abundance of research literature covering different academic disciplines, ideological approaches, services and locations. We will by no means attempt to discuss this literature extensively. Rather, as a contribution to this special issue dealing with ‘‘splintering urbanism”, we will focus on studies of reforms of water and sanitation services in the Buenos Aires region in relation to the splintering urbanism debate. These studies concern the AASA concession and regulations (Alcazar et al., 2002; Thwaites Rey and Lopez, 2003), the social impact of privatisations (Arza, 2002; Aspiazu et al., 2004), pro-poor policies (Botton, 2007; Hall and Lobina, 2007), the historical development of water services in the region (Faudry, 1999; de Gouvello, 2003) and user-related or political conflicts around the provision of water and sanitation services (Schneier-Madanes, 2005). In this section, we will briefly examine the notion of splintering urbanism in the light of this abundant literature and we will demonstrate that the Buenos Aires case is particularly relevant to an empirically-based discussion of splintering urbanism by emphasising four aspects of the concept. First, in Splintering Urbanism, Graham and Marvin (2001) argue that, as the result of the ‘‘collapse of the integrated ideal”2 in infra-

1 The area covered by the Aguas Argentinas concession covers the capital city and 17 of the 37 surrounding municipalities that make up the BAMR (see Map 2). 2 In the authors’ opinion, the main factors that led to this collapse are: (1) the urban infrastructure ‘‘crisis”; (2) changes in the political economies of urban infrastructure development and governance; (3) the collapse of the comprehensive ideal in city planning; (4) new urban landscapes (physical decentralisation, motorisation and ‘‘polynucleated” cities); (5) new ‘‘structures of feeling” (social and cultural change). (Graham and Marvin, 2001, p. 91).

structure provision, public utility networks are increasingly unbundled, thus contributing to the splintering of the social and material structures of cities. The so-called ‘‘modern ideal of (attempted) standardisation” (1850–1960) was aimed at organizing the expansion of ‘‘black-boxed infrastructure” creating ‘‘foggy geographies of technical systems” so as to contribute to the construction of ‘‘the modern networked city” (Graham and Marvin, 2001, p. 57). According to the authors, it was part of the construction of the modern nation state and, as such, justification for legitimising infrastructure networks as standardised monopolies. The Buenos Aires region constitutes an interesting case in this debate over the putative demise of the modern integrated ideal, being a region where the water supply network was transitorily ‘‘universal” (at least within the capital city limits), before it was ‘‘de-universalised” in a context of uncontrolled urban growth and rampant inequalities—long before the advent of neo-liberal reforms (Faudry, 1999; de Gouvello, 1999, 2001a). Secondly, the splintering urbanism thesis holds that disparities in access to services are always exacerbated by deregulation. In a comment on Graham’s article on ‘‘premium network spaces” (Graham, 2000), Coutard argues that in many contexts and especially in developing countries, during the golden age of utilities monopolies, differences between users remained stark and that ‘‘many different reasons [. . .] led to uneven access to basic utility services” (Coutard, 2002, p. 167–168) and he further suggests that ‘‘the outsourcing or unbundling of such utility services may help rather than hamper the generalization of access to these services” (Coutard, 2002, p. 168). In his response to these comments, Graham remarked that ‘‘water is the network sector with the strongest and most resilient ‘network monopoly’ characteristics [meaning that] real alternatives to monopolistic network provision tend not to materialise even after privatisation, liberalisation or unbundling” (Graham, 2002, p. 177). The splintering urbanism debate is therefore of especial relevance to the water services sector where debates have been fuelled by previous studies on ‘‘competition for/within the market” (ever since Demsetz, 1968). Moreover, Buenos Aires appears to be particularly relevant, being a region where many ‘‘alternatives to monopolistic network water provision” materialised long before the reform of the sector in the 1990s (de Gouvello, 2001a,b). Thirdly, Graham and Marvin further argue that infrastructure networks combine ‘‘global connections and local (dis)connections”. In their view, unbundling processes have tended to favour ‘‘powerful” users and territories thus resulting in ‘‘premium network spaces” and in by-pass mechanisms that symmetrically exclude other users and territories, considered to be less valuable. As a result, recent reforms have tended to exacerbate the urban and social polarization inherent to the globalisation of capitalism. Again Buenos Aires appears as a particularly relevant example as the Argentine capital has been typical of global(izing) cities affected by a massive increase in intra-urban, socio-spatial disparities at the same time as major reforms of water and other urban services were being implemented (Aspiazu et al., 2004; Botton, 2007). Finally, in a reflection on the factors that could possibly attenuate the splintering process inherent to neo-liberal reforms, Graham and Marvin emphasize the importance of civic resistance to the most socially or spatially unfair implications of reforms. In Buenos Aires, civic resistance tended to occur in opposition to, rather than in support of more integrative regulatory devices (Faudry, 1999; Schneier-Madanes, 2005). In this respect too, the study of the Argentine capital is a meaningful contribution to the attempt to ‘‘nail down splintering urbanism”. 3. The origins and implications of institutional fragmentation in the water sector in the Buenos Aires metropolitan region The Buenos Aires metropolitan region (BAMR) covers a heterogeneous area but constitutes a continuous urban agglomeration. It

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is a vast territory extending over 130 km from the North-West to the South-East and is composed of the Federal Capital and 37 municipalities (partidos). Moving out from the centre to the periphery, four administrative levels may be distinguished (see Map 1): the municipality of Buenos Aires (Capital Federal), the only level with its own specific legal status; Greater Buenos Aires (GBA): inner ring + second ring; Buenos Aires metropolitan area (BAMA = Capital Federal + GBA); and the metropolitan region (BAMR = BAMA + third ring). The BAMR is included within the Province of Buenos Aires. Management of water and sanitation services in the BAMR is split between a large numbers of suppliers. From an institutional perspective, in 2005, there were nine main official suppliers (five municipalities and four private companies, see Map 2). Furthermore, we must also include the presence of a number of ‘‘de facto” suppliers acting at local or neighbourhood level in areas where the official suppliers do not provide any services. There is no overall financial or technical regulation or coordination between the various suppliers. As a result, we may consider that the water and sewerage services in the BAMR are highly fragmented. In this section we will first analyse the origins of this fragmentation before discussing its implications in terms of access to services. 3.1. The failure of the OSN model The institutional fragmentation of water and sanitation services in the metropolitan territory is the result of a long historical pro-

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cess (de Gouvello, 2003). In accounting for this process, we need to bear in mind the federal structure of Argentina, enshrined in the constitution of 1853. This meant that management of water and sanitation services usually fell to the provinces. In most cases—as in the province of Buenos Aires—the Provincial Constitution places responsibility for such services with the municipality. However, as we can see from Map 2, many municipalities no longer exercise this responsibility directly: it has been subcontracted to a different (public or private) actor. It is precisely this delegationbased approach—so essential to the Argentine model—that we need to explain. 3.1.1. The first networks in the Buenos Aires and La Plata areas In the middle of the 19th century, Buenos Aires had neither a water nor a sewerage network. The deplorable standards of hygiene in the city resulted in two epidemics—cholera in 1867 and yellow fever in 1871—which killed 28,000 inhabitants (Bodard et al., 1987). As part of the ‘‘federalisation” of the city in 1880, central government began building water and sanitation networks. OSN (Obras Sanitarias de la Nación), which was set up in 1912 as a national entity in charge of developing these infrastructures throughout Argentina, continued the construction of such networks outside the confines of the capital. Many municipalities in Greater Buenos Aires, including the Capital Federal, handed over responsibility for management of their water systems to OSN. This was not the case with La Plata, the capital of the Province of Buenos Aires. Established in 1882 as a planned city, it was granted its own specific public supplier by the provincial government. In 1913,

Map 1. The different administrative levels of the Buenos Aires metropolitan region (BAMR). Source: based on a map designed by the SIG research laboratory of the Instituto del Conurbano of the UNGS.

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Map 2. Institutional fragmentation: operators of water and sanitation services in the BAMR. Source: based on a map designed by the SIG research laboratory of the Instituto del Conurbano of the UNGS.

OSBA (Obras Sanitarias de Buenos Aires) took over this work and began to build networks in other municipalities throughout the province. OSBA used an approach comparable to OSNs across the rest of the national territory. However, the technical choices differed greatly: in Buenos Aires, OSN opted for a centralised system based on water laid on from the Río de La Plata, whereas in La Plata, the OSBA decided to use scattered wells. The two administrative structures functioned side-by-side. 3.1.2. The disengagement of OSN and the rapid increase in the number of suppliers During the first 30 years of its existence, OSN networks grew at the same pace as Buenos Aires itself before gradually slowing down in the 1950s. Disengagement began in the 1960s due to poor forecasting of urban expansion in terms of the projects undertaken by the national enterprise, coupled with a sharp reduction in investment (Coing et al., 1989). Thus, urban development and infrastructure development went their separate ways, resulting in a ‘‘deuniversalisation” of the water and sanitation networks. Some municipalities which had transferred their services to OSN were now only receiving a partial service. OSN continued to propose expansion projects however their actual implementation became increasingly uncertain. Nevertheless, OSN, which intended to remain as the single legitimate actor in the sector, adopted a rigid stance: it vetoed and blocked all initiatives for alternative plans to provide services throughout ‘‘its territories”. Furthermore, residents’ associations (mainly cooperatives) which created their own networks to compensate for deficiencies in the national network were forced to remain ‘‘semi-clandestine” from an institutional perspective (de Gouvello, 2001a). Certain municipalities in Greater Buenos Aires which were no longer linked to the OSN network sought to become a branch of the OSBA. Others were forced to build their own networks directly and to manage these via a municipal entity. However, as the required amount of investment frequently appeared to be beyond the budgetary capabilities of the

municipalities, the networks were limited to the municipality’s main localities.3 Lastly, in many isolated localities and peri-urban areas cooperatives had been set up to access subsidies proposed under the National Programme for Drinking Water from 1964.4 3.1.3. The ‘‘provincialisation” of OSN’s services At the beginning of the 1980s, OSN transferred responsibility for the services that it had previously provided in the interior of the country to the provinces in order to focus exclusively on the Buenos Aires urban agglomeration. In order to partially compensate for the deficiency of OSN, the National Programme for Drinking Water was relaunched and its scope enlarged to include municipal sewage projects and not merely those related to cooperatives and drinking water; the maximum size of eligible projects was increased first to 15,000 inhabitants, and, from 1988, to 30,000 inhabitants. In the province of Buenos Aires, OSBA enlarged its scope by acting as an interface for project development between the National Programme for Drinking Water and Sewage and local bodies (municipalities or cooperatives). At the beginning of the 1990s, approximately fifteen projects designed by the technical departments of OSBA had been implemented within the scope of the National Programme for Drinking Water and Sewage in three municipalities of the Conurbano (Gral Sarmiento5, Merlo and Moreno). Thus the BAMR was split into two main infrastructure supply areas: the OSN’s territory was organised around a centralised net-

3 Argentine municipalities cover large areas and generally include several poorlyconnected urban centres. 4 Set up by the Inter-American Development Bank to assist small rural communities, the scope of this programme was extended during the 1970s to include localities of up to 10,000 inhabitants, (de Gouvello, 1999, 2001a). 5 The municipality of General Sarmiento was subsequently split into three municipalities: Jose C. Paz, San Miguel and Malvinas Argentinas.

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work, managed by a single supplier and including vast areas that were ‘‘officially not provided with services”; the OSBA territory contained many actors at different levels working on technically separate networks. Moreover, some municipalities managed their own services directly via a management contract (Quilmes, Berazategui Marcos Paz, etc.). This fragmentation process can to a large extent be seen as a failure of the OSN model and the modern ideal of socio-spatial integration that it represented, albeit for a short time. Neo-liberal developments in the provision of water and sanitation services mainly came later: they consolidated and, to a certain extent increased fragmentation in the regional space, but they did not cause it. 3.1.4. The neo-liberal turn in public service management In 1993, as part of its neo-liberal policy involving privatisation of public services, the Federal Government ultimately granted the concession for the services previously managed by OSN to a consortium led by Aguas Argentinas S.A. (AASA). This event was to trigger reforms in various sectors within the country and led to a gradual increase in the use of concessions.6 A number of municipalities in the Province of Buenos Aires began to grant concessions for their water and sanitation services. In 1992, the partido of Pilar signed an agreement with Agua Sudamericana S.A. In 1999, the Province of Buenos Aires decided in turn to grant concessions for all of the services for which it was responsible:7 Fifty-six municipalities were concerned with a population of 3.5 million. For the purpose of organizing the tendering process, six zones were set up (A, B and C1–C4), three of which contained municipalities in the BAMR.8 In order to ensure that there were ultimately at least two different service providers, no single tender could be submitted for all zones. In May 1999, Azurix (a company belonging to the Enron Group) submitted a grouped tender ‘‘zone A + zones C1–4”. The corresponding concession agreement was signed on June 30, 1999 when the company began providing the services in question. Six months later, zone B was allocated to Aguas del Gran Buenos Aires S.A. (AGBA: a consortium led by the Impregilo group). 3.1.5. The crisis era In October 2001, following the Enron crisis and after a series of dramatic developments (de Gouvello, 2002), Azurix decided to pull out of its concession agreement: the Province recouped the services that had been granted to this company and created Aguas Bonaerenses S.A. (ABSA), a corporation which was 90%-owned by the Province and 10%-owned by its own employees. This was almost the final twist in the story of how the BAMR evolved in the wake of the 2005 institutional shake-up, as described in Table 1. Nevertheless the stability of this complex institutional arrangement had yet to be ensured. By the end of December 2001, Argentina faced a huge economic and political crisis with a massive wave of strikes that culminated in the resignation of the entire government. In January 2002, a currency devaluation precipitated the collapse of the economic model and wrecked the economic and financial equilibrium of the Aguas Argentinas concession agreement (signed in US dollars). In 2003, following the election of President Nestor Kirchner, negotiations between the enterprise and the gov6 Santa Fe and Tucumán in 1995, the city of Córdoba in 1997 (drinking water network only) and the province of Mendoza in 1998. 7 At the same time as it put out this call for tenders, the Province created a regulatory body, ORAB, which was tasked with ensuring that the suppliers eventually chosen complied with regulatory standards and contractual agreements. 8 Zone B (Escobar, Gral. Rodríguez, Malvinas Argentinas, Merlo, Moreno, San Miguel and José C. Paz with approximately 1.8 million inhabitants); zone C1 (La Plata, Berisso and Ensenada with approximately 600,000 inhabitants); zone C2: Florencio Varela, Presidente Perón and San Vicente with approximately 450,000 inhabitants).

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ernment began and lasted almost 3 years. At the end of our research period in 2005, no new concession agreement had been signed9. 3.2. Implications of institutional fragmentation on conditions regarding access to and provision of services Following on from our account of how the institutional fragmentation of the BAMR water sector actually came about, we now turn our attention to the following question: does this fragmentation translate into splintering, i.e. different conditions regarding the provision of, and access to services for present-day users? Or, alternatively, are services similar despite the diversity of suppliers? To answer these questions, we propose to analyse services provided in the different areas within the BAMR from three perspectives: technical access; rates and affordability; and regulations. 3.2.1. Technical access to the services Each of the designated suppliers develops its activities within the scope of a specific institutional and legal framework (concession agreement or municipal decree), which sets out the technical conditions and/or objectives relating to the service. Firstly, regulations may specify the origin of the resource and the technology that must be used. The AASA concession was based on a centralised supply network fed almost exclusively by water from the Río de La Plata; other suppliers, located farther away from the river, use different underground water resources and independent networks. In the first case, access to the service depends above all on the proximity of the centralised network. In the latter case, the quality of service depends essentially on the quantity and the quality of local groundwater10. Secondly, each regulatory framework defines more or less detailed expansion plans and thus determines the conditions governing future access for unconnected users. For example, AASA’s concession agreement contained an objective to achieve universal service within the company’s area by the end of the concession agreement, i.e., within 30 years.11 Due to the approach adopted, the first groups to be connected were the inhabitants of the neighbourhoods closest to the existing network who were frequently the most financially creditworthy. However, there was an alternative for neighbourhoods that wished to be served earlier than provided for in the expansion plans. This alternative is called OPCT (Obras por Cuenta de Terceros, i.e., work carried out ‘‘on behalf of third parties”, in this instance on behalf of AASA). In OPCTs, all of the digging and link-up work is carried out by an external company before AASA actually acknowledges the new neighbourhood as a ‘‘covered area” and the residents as new customers of the company. The other suppliers do not need such schemes because they are using decentralised systems. In the case of the AGBA, ABSA and Sudamaricana de Aguas concession agreements, network expansion schedules had been provided for from the outset in plans contained in the agreements. However, after the economic crisis of 2001 and the devaluation of the Argentine peso, the suppliers suspended these programmes pending renegotiation of the agreements and they have been focusing on managing the existing networks. As a result, network expansion projects have been limited. Apart from a number of one-off projects financed by international cooperation schemes

9 In March 2006, the Argentine President issued a decree to renationalise the firm. Agua y Saneamiento Argentinos (AySA) was created to replace the former AASA (90% of AySA is owned by the State and 10% by the firm’s employees). 10 In Pilar, Sudamericana de Aguas is limited by the poor quality of the groundwater and high levels of nitrates have been found in groundwater in numerous areas of the AGBA’s concession. 11 100% of the population for water services; 95% for sanitation services.

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Table 1 Principal characteristics of water operators in the BAMR (in 2005) Full name

Status and

Department

Concession term

Area covered

Total

AASA Aguas Argentinas S.A. organization

consisting of approximately 25 people divided into two sectors: Agua and Cloaca Thirty-year concession agreement signed in May 1993

Municipality of BA (Federal Capital) + 17 partidos in the GBA (Tigre, San Fernando, San Isidro, Vicente Lopez, San Martin, Tres de Febrero, Hurlingham, Ituzaingo, Morón, La Matanza, Ezeiza, Esteban Echeverría, Lomas de Zamora, Avellaneda, Almirante Brown and Quilmes) 1830 km2 (including 1070 km2 of urban space) population

AGBA Aguas del Gran Buenos Aires

ABSA Aguas Bonaerenses S.A.

SUD AG Sudamericana de Aguas

Municipal service Secretaría de Obras Sanitarias

Private consortium: 39.93% Suez, 25.01% Aguas de Barcelona, 10% PPP, 8.26% Banco de Galicia y Buenos Aires, 7.55% Vivendi, 5% International Financial Corporation, 4.25% Anglian Water (3000 employees)

Private consortium: Grupo IMPREGILO 43%, Grupo DRAGADOS 27%, AGUAS DE BILBAO BIZKAIA 20%, PPP 10%.

Nationally owned corporation: the Province owns 90% of its capital, the company’s employees own 10% (1200 employees)

Private enterprise (52 employees)

Thirty-year concession agreement signed in January 2000

Concession agreement signed in 2002 to run to 2030

Municipal service administered in compliance with a municipal order

Escobar, Malvinas Argentinas, Jose C. Paz, San Miguel, Moreno, Merlo and Gral Rodriguez

48 partidos in the Province of Buenos Aires (including six partidos in the RMBA: La Plata, Ensenada, Berisso, Florencio Varela, San Vicente and Pte Peron)

Concession agreement signed in 1992 (1st municipal concession agreement in Argentina) term: 25 years An area of the partido of Pilar consisting of the following localities: Pilar, Derqui and Tortuguitas (three identical concession agreements)

?1183 km2

?2173 km2 for the six partidos in the BAMR

?470 km2

approximately 10 million

1.8 million

?176 km2 (out of the 400 km2 of the municipality of PILAR) 2.3 million (including 1.1 million in the RMBA)

Total population served = 850,000 users throughout the total area administered. ORAB No renegotiation of the concession agreement

Water: 65,000 inhabitants (60% of the population of the concession area) Sanitation: 48,000 inhabitants ORAB—Municipality Renegotiation of the concession agreement in progress.

Water = 75%, Sanitation = 40%

43,400 Population served

Water: 7.8 million Sanitation: 5.8 million

Total population served = 30%, i.e., 540,000

Regulator Institutional changes

ETOSS Renegotiation of the concession agreement in progress.

ORAB Renegotiation of the concession agreement in progress.

Area of the municipality of Marcos Paz

120,000 (out of the 210,000 inhabitants of the partido of Pilar)

ORAB –

Source: drawn up by the authors using field research data.

(e.g. a UNDP project in the informal settlements of AGBA’s concession area, or a World Bank project in Florencio Varela concerning ABSA), access to the service depends mainly on the financial resources of the inhabitants who bear the full cost of network expansion. In the case of the management contract for the Marcos Paz municipality, there is no predefined expansion programme: each project must be approved by the municipal council. Here again, the expansion takes place on an ad hoc basis in accordance with the financial resources of the residents.12 3.2.2. Rates and affordability There are two main approaches to financing network expansion. The first, which is used in the AGBA, ABSA and Sudamericana de Aguas concession areas, and which was used by AASA before 1997, consists of passing on the cost of investment to unconnected users. In this case, suppliers logically tend to expand their networks primarily in richer areas. Moreover, since the economic crisis of 2001 and the ‘‘pesification” of public service pricing

mechanisms, the recovery of expansion costs is no longer assured and expansion projects have been halted. The second approach consists of getting all users to finance such projects. This approach is less discriminatory from a spatial perspective and was implemented in Marcos Paz (under a municipal management contract), and also by AASA after 1997, as described in the next section. Pricing mechanisms also result in major differences for users. Such mechanisms are of two types (see Table 2). The first, inherited from OSN, is the method most widely used by the suppliers studied (AASA, AGBA and ABSA): rates depend on the value of the user’s property (estimated according to location, quality, size, etc.). This system which is based on the principle of social redistribution, has several drawbacks in practice, especially the difficulty of obtaining up-to-date13 or sufficiently detailed information for estimating the value of the property. The second pricing method is based on actual consumption. This system was recommended by the World Bank for the AASA concession agreement (Alcazar et al., 2002) in order to guarantee ‘‘greater transparency” in the pricing

12 In this case, projects follow a procedure known as ‘‘consorcio vecinal”: the residents band together to submit a request for the service to the municipality which carries out the extension and connections, both of which are paid for by the residents.

13 According to an IIED-AL project manager working in the municipality of Moreno (located in the AGBA concession area) interviewed in August 2004, the classification was based on the municipal land registry of 1950.

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Table 2 Pricing mechanisms used by different operators Operators

Pricing mechanism Property-based

Consumption-based

AASA

Pricing based on a fiscal-type system: total surface area, constructed surface area and purpose of the building—all weighted by a location coefficient

AGBA

Pricing mechanism taking into account the real estate value of the users’ dwelling (six subdivisions within the classification), based on the municipal land registry Residential users: rate based on the real estate value of the property (six subdivisions)

Approximately 500,000 meters installed throughout the entire concession area (compulsory for industrial users). The cost of consumption-based invoicing is low No meters

ABSA

Sudamericana de Aguas (Pilar) Service Municipal (Marcos Paz)

No property-based pricing mechanism A (mainly rural) sector with a monthly tasa fija (fixed tax) of $10 per connection

Industrial and commercial users: pricing based on actual consumption. Major customers (>1000 m3/month) are provided with meters Pricing is based on consumption: 95% of users have meters A central, urban zone equipped with meters (60% of connected users) where invoices are calculated on the basis of consumption

Source: from data complied by the authors.

system but was only partially applied. In Pilar, Sudamericana de Aguas installed water meters for 95% of its residential, industrial and commercial customers. As part of the management contract in operation in Marcos Paz, water meters have been installed over the past six years and 60% of connected users now have one, mainly in the downtown, middle-class residential areas. Finally, forms of social pricing may modify the conditions of access to services for poorer sections of the population. Social pricing was introduced in only two concession areas. In 2002, AASA introduced a social pricing programme, based on a regulation adopted by ETOSS, the AASA concession regulatory body, whereby users could benefit from a preferential rate if they complied with specific criteria.14 ABSA, in collaboration with the Province of Buenos Aires, has designed its own social pricing procedure, which consists in granting a reduced rate in accordance with the ‘‘economic circumstances” of the user. The other suppliers do not have a social pricing mechanism. 3.2.3. Regulation There are two water regulators in the BAMR: the Ente Tripartito de Obras y Servicios Sanitarios (ETOSS) and the Organismo Regulador del Agua Bonaerense (ORAB). ETOSS used to regulate AASA’s only concession and the activity coincided with the area covered. ORAB is (still) supposed to regulate all of the other suppliers within the Province of Buenos Aires. The two bodies employ different methods which impact the conditions of the service provided to users. The regulations enforced by ETOSS were clear and strict: ETOSS was mainly concerned with ensuring that the financial resources implemented by AASA complied with the agreement’s terms and, if necessary, it handed out fines (Lentini, 2003). In this respect, users have apparently been able to make their voices heard. User protection has gradually forced its way onto the public agenda through the emergence of users and consumers associations, the creation of a User Commission within ETOSS, and the organisation of public hearings, etc. (Schneier-Madanes, 2005) In comparison, the actions undertaken by ORAB have appeared feeble and unfocused: controls are applied at provincial level to a whole host of suppliers (private concession holders, municipal management contract holders, cooperatives, etc.). The feebleness of ORAB means that the municipalities have become the ‘‘de facto regulators” of water services (de Gouvello, 1999). Thus, residents have begun

by-passing the regulator and addressing complaints directly to the municipalities, which negotiate directly with the suppliers. The two regulators also differed with respect to their tolerance as regards alternative methods of providing water and sanitation services. The BAMR inherited the public service management model from the OSN whereby, due to shortcomings in the public service network, alternative supply methods were implicitly tolerated, i.e., use of private wells, private micro-networks managed by cooperatives, etc. The arrival of AASA put a stop to such practices: its concession agreement stipulated that it was the sole service provider authorised to manage water supplies throughout its concession area and that private wells had to be blocked up in the course of network expansion. In the territory regulated by ORAB, the situation is somewhat different: different methods of supply and suppliers are tolerated by the regulator. Because the networks are fragmented and cover vast areas with generally low coverage rates, and in light of the urgency in terms of sanitary conditions, the regulator is more tolerant of alternative methods of access to water and sanitation services. Thus, given the abundance of the resource, private wells are especially widespread both inside and outside the zones covered by the network. This tolerance is also apparent with regard to illegal connections15 as well as to the existence of desvinculados services (non-official services consisting of small independent collective networks).16 Although desvinculados services have existed throughout the entire BAMR for a long time, they were conferred with a form of institutional recognition through provincial decree 878/2003 which relaxes the regulatory framework applied by ORAB. Thus, the regulatory frameworks applied by ETOSS and ORAB do not result in the same opportunities for access to services for nonconnected users: in the case of ETOSS, users may only use the services of a single supplier whereas in areas regulated by ORAB, they may compensate for the shortcomings of the main supplier by getting connected to an alternative network. In short, we have demonstrated that there is a certain degree of institutional fragmentation of water and sanitation services in the BAMR. This fragmentation has always existed but was exacerbated with time, particularly after the 1950s when the OSN development model began to unravel, leading to the emergence of a diverse assortment of new suppliers. Therefore, the fragmentation observed cannot be interpreted primarily as the consequence of the

14 Depending on income, living conditions and access to urban services, users may benefit from a reduction of 4 pesos on their bi-monthly invoice for water or sanitation services (one reduction per service). The reduction is granted for a renewable oneyear period.

15 In an interview in September 2004, the President of ABSA admitted that when they discover an illegal connection which diverts water to an entire neighbourhood, the company frequently adopts a ‘‘laisser-faire” approach. 16 For example, the NGO, IIED-AL, which works in the municipality of Moreno in the AGBA concession area, has identified 21 such systems, supplying 7% of the local population (Hardoy et al., 2005).

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implementation of the neo-liberal program in the 1990s. Moreover, to put Graham and Marvin’s analysis into perspective, the modern infrastructural ideal for water and sewage services embodied by OSN, first on a national and then a local level, was never achieved—indeed, it was never even really targeted at metropolitan level. Nevertheless, as we have seen, the implementation of the neoliberal program did have important consequences on the development of services within the BAMR. Firstly, the reforms consolidated the regional space in its institutionally fragmented state whereas they could have offered possibilities for unification. Secondly, the number of suppliers (service providers) within the area grew noticeably after the reforms (several municipal concessions, subdivision of OSBA territory into two zones), thus adding to the fragmentation. Thirdly, the stability of the suppliers has become related to the global context, which was not previously the case. The termination of the Azurix concession had its roots in the Enron crisis, which had no connection with economic developments in Argentina or Buenos Aires. Furthermore, the viability of Aguas Argentinas’ concession crucially depended on Argentine peso/US dollar convertibility. We have shown that different suppliers have made different technical and economic choices that have led in turn to differences in the conditions of access to the service. Moreover, we have seen that because of this duality and the feebleness of ORAB, the water regulators are unable to mitigate this splintering trend.

4. Less and less splintering? The implementation of the AASA concession agreement Long-term concession arrangements often evolve in ways that were not anticipated by those who initially drew them up. De Gouvello has shown that, faced with day-to-day and/or unexpected problems, the principles and logic of the new actors in the Argentine water services and sanitation sector have changed substantially (de Gouvello, 2001b). For the purpose of this paper, it is therefore particularly relevant to analyse changes in the modus operandi for providing services with respect to their potential splintering effects. We have chosen to study the AASA concession for three main reasons: it concerns a wide and diversified area; it was the first concession to be handed out in the BAMR and had been in existence for 12 years in 2005; and, the initial rules were set out very clearly in the contract. An analysis of the various developments in the AASA concession agreement reveals the gradual whittling away of the neo-liberal economic model based on the idea that private suppliers, under public authority control, were going to be able to make up for lost time by injecting large amounts of investment into the water sector and still make a profit. The AASA concession agreement and regulatory framework was based on three main principles: the ‘‘user pays”, ‘‘single technology” and ‘‘single provider”. In this section, we will show that these action principles which contained the ‘‘seeds of splintering” (within the concession itself), gradually evolved into more integrative ones. 4.1. The ‘‘user pays” principle The AASA concession agreement was mainly inspired by the ideology of international institutions and the basic precept of full cost pricing and stipulated (logically) that network expansion would be fully financed by newly-connected users. As a result, the first network extensions mainly targeted high-revenue groups (particularly in the north of the concession area) that were able to pay for the major costs involved in developing the infrastructures. This triggered two major forms of splintering: (1) between the cap-

Table 3 Comparison of the average costs before/after the renegotiation of 1997 (in Pesos, per bi-monthly bill)

Average cost for users already connected

Average costs for new users (water only)

Water and sanitation services Regulatory charges SUMA Tax VAT Total Water and sanitation services Regulatory charges SUMA tax CIS charge Infrastructure Charge VAT Total

Before

After

30.00

30.00

0.80 5.46 37.26

0.80 6.00 7.72 44.52

6.00

6.00

0.16 – – 44.00 10.53 60.69

0.16 3.00 4.00 – 2.76 15.92

–

Source: data from La Nacion, 24/2/98 cited by Alcazar et al. (2002).

ital (already being served and which benefited from higher quality service at no extra cost) and the periphery (which had to bear the enormous cost of expanding the network); and (2) between residents in peripheral areas (related to the extension priorities set by the firm based on expected profitability17). This ‘‘user pays” principle was challenged by a combination of factors, leading to a certain degree of catching-up and more integration. 4.1.1. Challenging the splintering between the centre and the periphery: the creation of SUMA Following significant economic distortions and concerted action by those excluded from the network who were unable to pay, the methods of financing the concession were renegotiated in 1997 (Faudry, 1999). Since then, network expansion has been financed via the participation of all network users (based on two new concepts: the service incorporation charge (CIS), and a new ‘‘universal service and environment tax” called SUMA).18 The result has been a slight increase in water bills for users who were already connected and a significant fall in the cost of connection for new users (see Table 3).19 In spite of a strategy focused on renewed solidarity at territorial level, the creations of the SUMA was the subject of numerous debates—widely covered in the media—between local political representatives, as well as numerous legal actions involving groups opposed to its implementation (Schneier-Madanes, 2005). In actual fact, the implementation of SUMA altered the splintering capital/ periphery effect for many users. Nevertheless, this finding is shared neither by the anti-privatisation analysts, who interpret it as a means for the company to pass on the financial cost of its network expansion promises by increasing the bills of users already connected (Aspiazu et al., 2004), nor by fervent partisans of neo-liberal doctrine who see SUMA as inefficient since it ‘‘removed the company’s main incentive for extending the service to poorer sections of the population (who now paid less than the marginal cost)” (Alcazar et al., 2002). Neither of these two interpretations acknowledges the fact that in 1997 the concession agreement had reached a dead end due to the inability of future users to pay the cost of connection, and that the introduction of SUMA reinvigorated the network expansion process.

17

Obviously, this was not an official policy. The SUMA was made up of two components: SU for universal service and MA (medio ambiente) for ‘‘the environment” 19 Calculations by pro- and anti-privatisation analysts highlight the same basic trends. 18

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4.1.2. Analysing splintering in terms of the financial solvency of future users Splintering patterns of network expansion based on assumed profitability, which were inherent in the concession agreement, were challenged by two further developments: the adoption of the new concept of ‘‘urban sanitary vulnerability” (VSU) explicitly aimed at mitigating financial profit motivation in expansion plans; and the development of a programme for deprived neighbourhoods which was clearly based on a catching-up approach. 4.1.2.1. Introducing the concept of Vulnerabilidad Sanitaria Urbana (VSU). The concept of VSU20 emerged in 2000 at a forum that included representatives from all of the municipalities of Greater Buenos Aires (except the capital city itself). It aimed at redefining water network expansion priorities based on sanitary and environmental urgency and not on potential profitability, which had been the de facto criterion previously used (albeit not officially) by AASA. In 1997, the Ombudsman denounced the introduction of the SUMA as a new tax because it increased the bills of customers already connected (in the city of Buenos Aires). This declaration halted all expansion work for over a year. The conurbano municipalities concerned by the interruption of expansion projects interpreted this declaration as an expression of the vested interests of the City of Buenos Aires and they banded together to take legal action. This concerted action also provided a forum for the conurbano municipalities to initiate debates on water and sanitation services and constituted a significant step in the shift of power away from the national sphere to a more local level.21 This forum was to decide on the allocation of an investment fund (constituted by the SUMA), and refocus expansion programmes on priority areas based not on the economic but on the socio-sanitary criterion of VSU (Botton, 2004). As such, it was indicative of less splintering in the water infrastructure expansion policy as new priorities were set for connecting poor and vulnerable neighbourhoods to the service. 4.1.2.2. The Desarrollo de la Comunidad programme. The AASA’s community development (Desarrollo de la Comunidad, DC) programme also contributed to a change in focus for expansion projects within the concession area by integrating poorer residents into a ‘‘traditional” service management framework (Botton, 2005). The AASA concession agreement provided that new users should be connected to water and sanitation services wherever ‘‘urban realities make this possible” (which actually meant ‘‘legally urbanised zones”). In practice, this meant that the shanty towns were excluded (Botton, 2007, p. 184). The responsibility for supplying this type of neighbourhood, whose populations totalled approximately half a million people (Mazzucchelli et al., 1999) was entrusted to the municipalities. Yet, for AASA, the main technical and commercial challenge still lay in expanding services to the more disadvantaged (and legal) zones in the concession area.22 Thus, the company focused on problems of urban poverty from a very early stage. When the DC programme unit was set up in 1999, it was asked to define and implement expansion project support methodology in deprived neighbourhoods. Little by little, the team’s activities and area of responsibility expanded23 and led to the adoption of a

‘‘participative management model” (‘‘modelos participativos de gestion”, MPG) at company level for the deprived neighbourhoods of the concession area. All of the operating mechanisms (decision-making processes, project operational phases and commercial management) were tailored to the specific features of the poorer districts. In addition, it proposed specific rates for these areas which were approved by the regulator.24 This programme contributed to improving both economic and technical access to water services as it tailored rates for poorer users and connected 520,000 inhabitants of deprived neighbourhoods to the service.25 Thence, the operational requirements of the AASA’s concession agreement resulted in the creation of new commercial and managerial concepts such as SUMA, VSU or the MPGs which modified or clearly challenged the ‘‘user pays” principle and its splintering implications. 4.2. The single technology principle The concession agreement provided for full coverage of the agglomeration (see Table 4) via a centralised network supplied by water drawn from the Río de la Plata.26 This single technology approach may at first appear integrative, given that it calls for equal treatment of all users (quality of service throughout the network). Nevertheless, its splintering potential was significant: the agreement implied that most isolated zones in the concession area would be connected by 2023 at the earliest and the plan was contingent on the (bold) assumption that universal coverage would not undermine the financial equilibrium of the concession. As regards connection to the network, the agreement stipulates that this is ‘‘obligatory, individual and domiciliary”.27 The ‘‘single technology” standard is presented as a guarantee of the quality of the service provided and the water resources used, based on centralised control. In practice, however, as we shall now see, it results in a certain degree of technical splintering, with detrimental implications for the quality of the water used and supplied.28 4.3. Questioning the (potential) technical splintering inherent in the principle of one ‘‘single network” From the moment it took over the concession agreement, the utility wished to develop an image based largely on continuity of service, in contrast with the intermittent supply that had characterised the previous period. This strategy was aimed at sending out a strong signal to users regarding the quality of the service that the supplier was intending to provide. But shortages encountered during the first summer after the start of the concession rapidly led the supplier itself to question the single technology principle and the universal network paradigm that it had advocated. In the summer of 1993, AASA rushed to dig new wells29 in order to avoid a generalised water shortage throughout the entire network due to the inability of the technical system to deal with a high level of demand (as experienced during the last years of the OSN

24

Deduction of 4–6.5 pesos per service (per bi-monthly bill). Between 2000 and 2005, 120,000 people were connected through the MPG model and 400,000 through the Agua mas Trabajo programme (we will come back to this in the next section). 26 Where the water collection and treatment plants are located. 27 Water fountains or collective taps are not allowed. Moreover, despite high-quality groundwater in much of the urban agglomeration, the solution of drilling a bore hole and drawing water from a well was not initially considered. Nevertheless, this is very common practice in zones that are not supplied by the centralised network. 28 In this respect, the influence of the local context (at intra-urban level) is considerable: possible drop in pressure at the end of the network, possible pollution due to rusting old pipes, etc. 29 Main treatment plants and re-injection wells. 25

20 This conceptualisation of the VSU was entrusted to a university team who defined it in accordance with a certain number of socio-economic, environmental and sanitary criteria. 21 We should recall that the concession agreement had been signed between the Argentine State (grantor of concession) and AASA (concession holder), with no participatory role for local authorities (Province or municipalities). 22 In 1993, the objective was to connect 3.5 million additional customers to the networks (including 2.3 million users in deprived neighbourhoods) within 30 years. 23 To include inter alia vocational training for company staff, regularisation of services, even in illegal neighbourhoods, etc.

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Table 4 Performance objectives incorporated into the concession agreement (as a percentage) Year of concession agreement

0 5 10 20 30

Population served

Water treatment

Renovation of networks

Water

Sanitation

Primary

Secondary

Water

Sanitation

70 81 90 97 100

58 64 73 82 90

4 64 73 88 93

4 7 14 88 93

0 9 12 28 45

0 2 3 4 5

Losses through leaks

45 37 34 28 25

Source: 1993 concession agreement.

operation). This move was in complete contradiction to the technical approach set out in the concession agreement. In addition, the universal network principle gradually gave way to contractual work carried out in zones where the ground water was of good quality. The 2004 ‘‘Agua + Trabajo” programme gives a clear illustration of this development. This programme30 consisted of the construction of local networks fed by groundwater which would subsequently be connected to the primary network after a few years, once the expansion of the centralised network had been completed. Thus, in situations where physical distance from the main network implied long delays prior to connection and where groundwater was of good quality, the centralised network principle appeared to be insufficiently integrative, at least for a transitory period that could last several decades; the introduction of alternative technical solutions was thus promoted as a more integrative ‘‘catching-up” approach. 4.4. The single provider principle The concession agreement stipulates that AASA is the sole authorised provider for the entire concession area. Just like the single technology principle, this single provider principle was put forward as an integrative factor in the concession agreement. It was meant to guarantee a standard quality of service throughout the concession area. But just like the single technology principle, under certain conditions, it has proved instead to be a splintering factor via-à-vis those areas that were and were not served. This was the case in particular in instances where an alternative supplier was economically and technically ready to offer an equivalent service within a shorter time, but was prevented from doing so by the agreement’s single provider clause. This led the company to introduce some flexibility in the implementation of this principle, especially through new participatory management methods31 involving alternative suppliers or users. MPGs, such as the ‘‘Agua + Trabajo” project discussed previously, are typically participatory schemes. They are based on the search for a tripartite agreement32 that defines the responsibilities of each party. This approach partially challenges the single supplier principle as AASA allowed certain phases in the process to be shared out or delegated (‘‘steered outsourcing” approach)33. However, this ‘‘opening

30 This project provided for the connection of almost 500,000 residents in the municipality of La Matanza (one of the poorest in the concession area) based on propoor methods similar to those contained in the MPG model. 31 For example, delegating the work to the residents of the neighbourhoods to increase the mutual benefits of the service. This practice is similar to OPCT (obras por cuenta de terceros) which consists of delegating and financing the work involved in network expansion to a different company, upon request by a group of residents, for the purpose of being connected more rapidly to the network. 32 Between the company, the neighbourhood community group and the municipality — and validated by the regulator. 33 For instance, municipalities and neighbourhood representatives would chose the next zones to be connected; the neighbourhood inhabitants would provide labour force for the digging works, etc.

up” remained partial as AASA remains in charge of the service once the network has been installed. Nonetheless, the principle of a single supplier was also challenged by the (albeit small number of) alternative suppliers that operate within the AASA’s concession area. This is the case, for example, with the COMACO cooperative in the neighbourhood of Tres de Febrero. As we discussed previously, complex historical developments originating in the inability of the former public supplier (OSN) to extend the network have produced a significant degree of institutional fragmentation within the concession area. This inherited situation was not properly addressed in the concession agreement and the alternative suppliers have been facing a tricky situation. There was no specific clause in the AASA concession agreement to deal with the coexistence of two suppliers in the same concession area, apart from the possibility of a ‘‘subconcession”, defined in the agreement but rejected by AASA.34 Hence a supplier such as COMACO, i.e., a water and sanitation services cooperative which has existed since the 1970s in what became the AASA’s concession area in 1993, enjoyed de facto operational autonomy (technical and commercial management) under the supervision of ETOSS. This current ‘‘half-way house” arrangement only serves to illustrate AASA’s (and the regulator’s) reluctance to fully address a situation that is contrary to the single supplier principle (De Gouvello, 1999). Despite activities and networks being initially partitioned, which could have resulted in small suppliers being forced out by the all-powerful AASA, efforts appear to have been made to open up a dialogue and to link activities.35 Hence participation programmes have partially challenged the single supplier principle: they introduce a certain degree of flexibility but have not resulted in a total overhaul. We may wonder if they would have become significant in quantitative terms as they only concerned a small part of the concession area and have had quite a marginal impact. This echoes a more general critique of participatory approaches in the provision of urban services (Jaglin, 2005). Nevertheless, some analysts (Botton, 2005) have claimed that AASA’s social engineering approach might have led to the implementation of a major programme if combined with the (very) necessary condition of the State’s political will. In light of this discussion, we may therefore conclude that within the Aguas Argentinas’ concession area the potentially splintering mechanisms inherent in the concession agreement have been adapted and a more integrative approach has been progressively implemented (see Table 5). As a contribution to the splintering urbanism debate, the Buenos Aires example thus clearly illustrates the need to go beyond the potentially splintering impacts ‘‘built into” organisational or regulatory reforms and to analyse how these reforms are actually implemented. 34 As it makes the concession holder liable for managing the cooperative even though it has no actual say in the way the sub-concession is run. 35 However, care is needed in assessing how such tolerance on the part of the supplier is likely to evolve.

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Table 5 Summary of action principles and challenges to them Action principle

Splintering or potential splintering impact

Factors constituting a challenge

Degree of modification

Conclusion with respect to splintering/integration?

‘‘The user pays principle”

Splintering between the capital/periphery

SUMA

Total

Splintering related to assumed profitability

VSU

Total

GDC – MPG

Total

‘‘zero disconnection” objective A+T

Partial

More equitable financing of expansion; towards less splintering based on water networks. More equitable redistribution (reorientation) of expansion objectives in the concession area towards less splintering based on networks. ‘‘Catching up” approach, towards less splintering based on networks. Certain non-connected zones are offered the possibility of using approved wells. Towards less technical splintering.

MPG/A + T

Partial

Tentative linkup with COMACO

Low

‘‘The single technology principle”

‘‘The single provider principle”

(potential) network/groundwater technical splintering

Among unconnected users: (potential) splintering between tolerated individual/ collective solutions

Partial

‘‘Catching up” approach, towards less splintering based on networks. ‘‘Delegation” approach steered by the operator. Towards less splintering based on networks. Uncertain and unsustainable tolerance of the cooperative by the operator. Difficult to draw a conclusion.

Source: data compiled by the authors.

5. Conclusion In conclusion, let us summarise the contribution of the Buenos Aires case study to the splintering urbanism debate. The central argument of the splintering urbanism thesis is that, through processes of unbundling, reforms of urban services have reinforced trends of socio-spatial fragmentation within urban regions. In the case of the Buenos Aires metropolitan region, this splintering narrative needs to be nuanced in several significant ways. First, the provision of urban water and sanitation services has been fragmented for a long time. This is primarily the result of the failure of the OSN model which to some extent embodied the ‘‘modern integrated infrastructural ideal” that Graham and Marvin refer to. The reforms carried out in the 1990s inspired by neo-liberal policies consolidated, and to a lesser extent accentuated the institutional fragmentation of the water supply in the BAMR. But they did not cause it. Secondly, our careful empirical examination of the provision of and access to water services suggests that, contrary to the splintering urbanism thesis, the reform of the water sector in the 1990s did not aggravate socio-spatial segregation (or disparities) within the agglomeration. Thus, our case study clearly demonstrates the need to place detailed historical and empirical approaches at the centre of analyses of urban developments, especially within the context of ideologically-charged debates. Thirdly, and related to the previous point, we have shown that within Aguas Argentinas’ concession area, the trend since privatization of water services has been towards less urban splintering. Although they were presented as integrative, the neo-liberal principles on which the concession agreement was based initially had a strong splintering potential. But within a few years, as the company had to cope with and adapt to the local context, these principles evolved into more integrative rules. Obviously, this outcome cannot be interpreted as an expected effect of the reform. Rather, it reflects the crumbling away of the economic model that underpinned the reform. This points to one limitation of the splintering urbanism thesis, namely that it offers a plausible view of what the model could have produced in a passive environment but fails to account for what actually happened as the reform unfolded and had to cope with the real world—in this case the real Buenos Aires. Fourthly, despite a detailed analysis, many questions remain as regards the integrative vs. splintering properties of network-based urban services. Would users in an isolated neighbourhood not pre-

fer to get water from a private well supplied by good quality groundwater than to wait for the uncertain arrival of the water network some time between now and 2023? Should they therefore be regarded as negatively affected by a splintering process? How would their situation compare to that of a user in a shanty town in the city centre, recently connected to the network, whose dayto-day life has greatly improved? Would the latter, who has ‘‘benefited from integration via the network” cease to be in a situation of (urban) splintering? A network-based analysis may make it possible in certain cases to highlight ‘‘catch-up” strategies (connection of a shanty town to the network) or to confirm approaches based on auto-segregation (private networks in closed neighbourhoods). Nevertheless, there are a whole host of intermediate situations where it is more difficult to draw conclusions regarding the ‘‘integratory” or splintering impacts of networks on the urban fabric as those impacts are actually bound up with the wider dynamics of social segregation that appear in some cases to be much stronger. Therefore, we come up against a conceptual limit of the splintering urbanism thesis: the difficulty in articulating the various (socioeconomic, technical, regulatory. . .) characteristics of urban services and in drawing conclusions with regard to the overall splintering vs. integrative outcomes of a reform. Fifthly, we have shown how the Enron crisis (a global crisis which had nothing to do with the local Argentine context) triggered the hasty departure of Azurix, thus threatening the service in a large area in the South of the agglomeration. Conversely, global considerations led the Suez Group to stand by its ‘‘showcase” concession for more than 3 years after the beginning of the economic crisis. Its ultimate departure appears to have been bound up more with local politics than with the company’s financial calculations. Here again, we cannot draw a definitive conclusion as to how this local-global process affects integrative or splintering dynamics within the metropolitan region. Let us close by looking at three implications of our research for future studies. Firstly, as a whole, the Buenos Aires case strongly suggests that only strong political will and effective regulation can lead to predominantly integrative urban dynamics. This focus should be central to urban splintering/integration studies. Secondly, in Buenos Aires, service differentiation (i.e. the deliberate promotion of different standards of service so as to achieve universal access more rapidly) and, in particular, pro-poor policies (i.e. the provision of specific services for poorer users) seem to be crucial to achieving decent living conditions for all Porteños. Does

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this point have a broader validity as other case studies focusing on this issue suggest? If so, how does this affect the splintering urbanism thesis which is based on the assumption that only homogeneous, integrated services can produce urban integrative effects? Ultimately then, our differences with Graham and Marvin can be summarised as follows: we consider that in many developing cities today, the will to universalise water services in the medium-term requires pragmatic short-term solutions. This point of view is shared with Jaglin (2008), as developed in her paper on Cape Town in this special issue of Geoforum. In practice, this may mean ceasing to focus on universal standards for all. Indeed, we consider that the definition of uniform standards should not always be a pre-requisite for action (in this case, providing water) and that such standards may in the context of many developing cities even be detrimental to the objective of providing a decent water supply. This could open up new perspectives in the equity vs. equality debate vis-à-vis the provision of water (a decent service for all vs. the same service for all). Just like the authors of Splintering Urbanism, we are in favour of targeting equality as a long-term objective. However, in our view this may also involve providing temporary equitable solutions whereas Graham and Marvin argue for sticking to equality objectives regardless of the time horizon. The merits and limitations of each approach need to be tested in the light of explicit conceptual and empirical research. Acknowledgments The authors wish to thank: Anne Zimmermann and Mary Senkeomanivane (IFU) for their invaluable assistance in gathering field data; Olivier Coutard for his advice, time and encouragement; and Neil O’Brien for the translation into English. References Abdala, M.A., 1996. Welfare Effects of Buenos Aires’ Water and Sewerage Services Privatization. Universidad San Andrés/Expectativa: economic consultants, Buenos Aires/Cordoba. 26p. Alcazar, L., Abdala, M., Shirley, M., 2002. The Buenos Aires water concession. In: Shirley, M. (Ed.), Thirsting for Efficiency: The Economics and Politics of Urban System Reform. The World Bank, Pergamon, Washington, pp. 65–102. Arza, C., 2002. El impacto social de las privatizaciones El caso de los servicios públicos domiciliarios. Segunda serie de documentos de informes de investigación. Flacso, Buenos Aires. Aspiazu, D., Catenazzi, A., Forcinito, K., 2004. Recursos públicos, negocios privados. Agua y saneamiento ambiental en el Amba. Ungs, colección investigación, informes de investigación 19, Buenos Aires. Batley, R., 1999. The Role of Government in Adjusting Economies: An Overview of Findings. The International Development Department, University of Birmingham. Bodard, T., 1987. Du réseau au bombeador: l’alternative critique pour l’eau potable. In: Dupuy, G. et al. (Eds.), La crise des réseaux d’infrastructure: le cas de Buenos Aires. Enpc-Latts, Noisy-le-Grand, pp. 25–93. Botton, S., 2007. La multinationale et le bidonville. Privatisations et pauvreté à Buenos Aires. Karthala, Paris. Botton, S., 2005. Privatisation des services urbains et desserte des quartiers défavorisés: une responsabilité sociale en partage. Le cas des services d’eau et

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