The privatization of public water utilities

Latin America has kept in step with the worldwide trend towards the privatization of public utilities. Its motivation for doing so stems from a number of factors: an economic philosophy, its quest for greater efficiency, macroeconomic situations, debt-equity swaps, decisions to bring private capital into the management of public utilities during times of economic crisis, and others. This article analyses the characteristics and components of public utilities, the differences existing between one utility and another (particularly in terms of their capital/revenue ratio), the rigidity of supply and investment, the possibilities of giving consumers a choice, the concept of economies of scale and how it ties in with the notion of monopolies, and the legal implications of monopolistic systems.