2000 Cochabamba Protests - World Bank

World Bank

According to The Ecologist in 2000, the World Bank declared it would not "renew" a 25 million USD loan to Bolivia unless it privatized its water services. The World Bank said that "poor governments are often too plagued by local corruption and too ill equipped to run public water systems efficiently. ... opens the door to needed investment and skilled management,"

In a 1999 Public Expenditure Review, the World Bank stated that "no subsidies should be given to ameliorate the increase in water tariffs in Cochabamba". The New Yorker reported on the World Bank's motives, "Most of the poorest neighborhoods were not hooked up to the network, so state subsidies to the water utility went mainly to industries and middle-class neighborhoods; the poor paid far more for water of dubious purity from trucks and handcarts. In the World Bank's view, it was a city that was crying out for water privatization."

In a 2002 publication the World Bank acknowledges that one of its loans, the "Major Cities Water and Sewerage Rehabilitation Project", included a condition to privatize the La Paz and Cochabamba water utilities. The privatization was required to allow a two-year extension of the project that was due to close in 1995. The World Bank project that began in 1990 had covered three cities, leading to sharply diverging outcomes: Access increased and service quality improved in Santa Cruz de la Sierra where a successful cooperative provided services, which enjoyed, according to the World Bank, "the reputation as one of the best-managed utilities in Latin America." However, results were mixed in La Paz and poor in Cochabamba. In the latter access to piped water had actually decreased from 70% to 40%, water losses had remained high at 40% and water supply had remained unreliable at about 4 hours a day despite the funds made available by the World Bank to support the public utility. Interestingly, the World Bank did not include a conditionality to privatize water in Santa Cruz where the local utility had been able to improve services, but only in the cities where the utilities had failed to improve services.

The World Bank acknowledges that it provided assistance to prepare a concession contract for Cochabamba in 1997. However, its involvement with water in Cochabamba ended in the same year. At that time the bidding process for the concession had been declared void by the Supreme Court in response to a legal challenge by the municipality of Cochabamba. In the same year the World Bank project in the three cities ended. The World Bank thus was not included any more in the subsequent phase of the privatization. The new concession included the Misicuni project that involved construction of a new dam. The dam had been opposed by the World Bank as being unnecessarily expensive compared to a cheaper alternative, but local politicians favoured the Misicuni project. An alternative, the Corani project, would have supplied water to Cochambamba from an existing dam. The high expected cost of the Misicuni project led to the 38% tariff increase imposed at the beginning of the concession. Had the advice of the World Bank been followed, the construction of the dam would not have been part of the concession, the tariff increase would have been unnecessary and Aguas del Tunari would have had to face competition in its drive to win the Cochabamba concession. Such competition would have made it much more difficult to obtain some of the abusive conditions that were ultimately included in the concession.

The Misicuni project was later pursued by Evo Morales when he became President of Bolivia. It was justified through its benefits for hydropower generation and irrigation in addition to potable water supply for Cochabamba. In 2010 the dam was under construction.