Paying more for less in Lima

Monserrat writes*

In 2010, the UN General assembly and the Human Rights Council declared water a fundamental right. Yet according to SEDAPAL, the state-owned water company, 7% of Lima’s population still lacks access to a basic water service. This figure corresponds to roughly 800,000 people. However, other sources, including the World Bank’s Water and Sanitation Program, indicate that over one million citizens are not connected to the capital’s water utility network. Most of them live in informal settlements on the outskirts of the city.

The inequality that besets the wealth distribution of the capital crosses into the water market, which likewise sees a severe disparity in the tariffs set by the municipal utility. Middle and upper-class citizens connected to the water network pay only one-sixth as much as the poor who, lacking service, must buy their water from trucks for 15 soles (4 USD) per cubic meter.

The inverse relationship between socioeconomic status and water price may seem incoherent – perhaps even more when considering SEDAPAL’s efforts to build an altruistic image by subsidizing water for “lower-income families.” How it fails to address the essential needs of the truly poor while providing financial aid to those with access to the water and sanitation network raises the question of whether their social concern is genuine or a marketing-scheme developed counteract its rising unpopularity over unstable service across districts and regular tariff increases over the past years? Granted, while a new emergency decree was passed last year for SEDAPAL to provide 38 million soles (10 million USD) worth of free water to those relying on the trucks, this program does not solve the problem of slum inhabitants without basic services depending on donations.

So why does it just not extend its piping system to these areas?

It is first necessary to understand the nature of the informal settlements. Their emergence is due to the highly centralized development of the country, which has led to an increasing overflow of migrants seeking better life quality, employment, and education opportunities in the capital. The lack of urban planning meant all newcomers have been automatically directed to the hills surrounding Lima. Alongside their financial situation and the lack of incentives to formalize, this led to ‘invasions’ of land owned by others, leaving squatters with a place to live, but no right to live there.

Homes are poorly built, lacking stable walls, let alone adequate piping. Since they don’t have the capital, they cannot pay the costs of a reliable water connection. Additionally, regional water authorities argue that even if the state intended to extend services to these areas, it would be unsafe due to the the rough terrain of the settlements.

Bottom Line: Sometimes land-squatting is voluntary, seen as a way to evade property costs and taxes; sometimes it’s the only choice. Regardless, the costs that result from informal settlements far exceed any advantages. Combined with the poor urban planning and water management, this ultimately condemns the slum-dwellers to choose between spending most of their income on clean water or taking risks by turning to contaminated sources. Both perpetuate the poverty cycle.


* Please help my Water Scarcity students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

One thought on “Paying more for less in Lima”

  1. Really great read Monserrat I wish you had more space to expand. While reading your paper I was really trying to find any sort of solutions or beginning ground to one day have the piping be extended. But consistently I struggled with the categorization of informal settlements and imagining steps which could be taken to better incorporate them in municipal systems.

    Firstly I wanted to ask if you were aware of any back-tax schemes or debts which squatters hold that might be preventing them from adding to the municipal tax base? While the 10 million USD hand out seems misguided to me as well, do you think this could also be interpreted as a measure to create a relationship with the slums? As water is necessary and without intervention I doubt the truck water is going to become more affordable, I could definitely see future intervention act as an olive branch of sorts.

    Additionally, I would love to know if you think there is any significant influence in the selection of these programs for the slums from corruption. While the poor road structure is certainly a fine reason to stop construction, the strict cash handout and lack of real deliverables is a bit fishy. Would love to know your thoughts!

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