DP8717 Assessing the impact of Mali?s water privatization across stakeholders

Author(s): Antonio Estache, Emili Grifell-Tatjé
Publication Date: December 2011
Keyword(s): distributional effect, efficiency, equity, privatization, regulation
JEL(s): C60, D24, D33, L32
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8717

This paper offers a unique quantitative evaluation of the distribution of the welfare of a water privatization experience in Mali among labor, investors, intermediate input providers, users and taxpayers. The assessment is based on indicator duality and production theory. The paper shows that users benefited through lower real water prices -although users in Bamako did better than the rest and future users will be hurt by insufficient investment. The firm?s workers, its intermediate suppliers and investors have also clearly benefited during the short privatization duration. However the paper also shows that taxpayers are the main losers as subsidies are still needed. There are also serious efficiency-equity trade-offs, with an uneven gain distribution within factor categories and foreign actors clearly favored over domestic actors. This easily explains the unhappiness of the Malians. The regulatory decision to correct it explains why the private operator lost its incentive to stay in the country.