The experience of Argentinian municipalities in the 1990’s offer lessons for the benefits of privatizing water local government  supplies.  Some municipalities privatized and others did not, yielding a comparison of results.  Those municipalities that privatized the water delivery systems found a greater reduction in child mortality.  Studies suggest that the combination of privatization and effective regulation by the municipalities shaped these positive results.

Water for Life:  The Impact of the Privatization of Water Services on Child Mortality

Sebastian Galiani Washington University in Saint Louis – Department of Economics
Ernesto Schargrodsky Universidad Torcuato Di Tella
Paul J. Gertler University of California, Berkeley – Haas School of Business; National Bureau of Economic Research (NBER)

May 30, 2004

While most countries are committed to increasing access to safe water and thereby reducing child mortality, there is little consensus on how to actually improve water services. One important proposal under discussion is whether to privatize water provision. In the 1990s Argentina embarked on one of the largest privatization campaigns in the world including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services; and that the effect was largest (26 percent) in the poorest areas. We check the robustness of these estimates using cause specific mortality. While privatization is associated with significant reductions in deaths from infectious and parasitic diseases, it is uncorrelated with deaths from causes unrelated to water conditions.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1751702