Economics 539Presentation 1

Presenter: Skye Root

1. Central Question2. Background3. Economic of Water Services4. Data5. Methods/Model6. Results7. Policy Implications8. Questions and Comments…

In Argentina, did the massive privatization of water services of the 1990’s (60 % population affected) influence the reduction of the country’s child mortality rate?

•“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” (Galiani, 83)

•Argentina (1990’s) Privatization Campaign

• Historical Context

• Why did local governments privatize water services?

•NATURAL MONOPOLY• Large Fixed Cost• Little Competition• Significant Economies of Scale • Externalities • Human Life depends on it,

therefore it has perfect inelastic demand at the survival level.

•Private versus Public Incentives• Cost reductions, productivity enhancements,

regulation in both directions, non benevolent governments, and project prioritization…

• Government Ministry Data

• Census Data (INDEC)

• Permanent Household Survey

Formally, the difference-in-differences model can be specified as a two-way fixed-effect linear regression model:

• yit is the mortality rate in municipality i in year t

• αdIit is an indicator variable that takes on the value one if municipality i’s water services are privately provided in year t and zero otherwise.

• βxit is a vector of control variables that vary across both municipalities and time

•μi is a fixed effect unique to municipality I.

•λt is a time effect common to all municipalities in period t.

•εit is a municipality time-varying error and is assumed to be distributed independently of all μi and λt .

• Although this is historical information, this paper resurfaces the public versus private debate? At many levels…

•In this case, properly regulated private companies have the potential of better outreach than public utilities.

• There is a direct correlation between clean water and children dying, that could be an important relationship to focus on.

•Do you think this is Argentina specific or are other countries possibly like this?

•How might you do the study differently? Likes and dislikes?