Did private sector participation improve water services in Tumbes, Peru?

The Tumbes concession, active from September 2005 to November 2018, was the only private operator among Peru's 50 water utilities. Its termination offers an opportunity to assess the performance of the private operator relative to the predominant municipal utility model in the country. Using the synthetic control method, this paper finds that, compared to its counterfactual, access indicators stagnated and underperformed in Tumbes, while quality indicators (service continuity and metering rate) showed improvements. These heterogeneous outcomes are explained through an in-depth analysis of the contractual design—which combined features of a management contract, a concession, and an affermage—and the regulatory framework. The contract design failed to secure large-scale investments needed to expand coverage (either by the public or private sector). However, smaller investments and management improvement, enabled by development and private financing as well as regulatory action, contributed to measurable gains in quality indicators.