In Colombia the private sector has historically participated in the water and sanitation sector both as service provider and subcontractor for the provision of infrastructure. Participation through management or concession contracts is however more recent, and started only after the issue of Law 142 in 1994. During the last decade private sector participation in the Colombian water sector has expanded significantly. There is a wide diversity in the scope of these experiences, some being merely management contracts while others involve investment commitments under a BOT framework and still others are outright concessions.
In this paper we use two waves of the Living Standards Households surveys (1997 and 2003), and econometric techniques from the modern policy evaluation literature, to identify the impacts of private sector participation (PSP) in the Colombian water sector on access, quality and affordability. Overall, the results indicate that PSP in the Colombian water sector has had a strong and positive impact on the poor as far as quality of service is concerned; which in this paper is measured by the continuity of service of water supply. We also find a positive effect on sewerage connection rates among the poor. The evidence is less robust for piped water connection rates, where PSP either had a positive or neutral effect on connection rates among the poor. As regards affordability of service, as measured by the proportion of poor households that pay more than 3% of their monthly income on water bills, there is no statistically significant effect of PSP. We also find that different types of PSP schemes had different impacts on these performance variables.