• Water risks are hampering sustainable development in Argentina. Floods are responsible for 95% of annual economic losses caused by disasters, severe droughts have a devastating impact on an economy where agriculture accounts for 6.4% of GDP, and the country is home to some of the most polluted basins in the world.

• Serious gaps in access to water services are also noteworthy, with only 54.7% of the rural population connected to drinking water supply (versus 87% for urban dwellers) and only 6.4% and 58.2% of the rural and urban population respectively connected to sewerage, while only 15-20% of wastewater is treated before disposal (2015).

• Megatrends such as climate, demographic change and urbanisation (informal settlements, in particular) will exacerbate further water risks as well as competition across domestic, industrial, agricultural and environmental uses. The current macro-economic downturn and fiscal consolidation efforts also seriously hinder the country’s investment capacity in hard, costly grey infrastructure.

• The outstanding structural challenge linked to the fluctuating nature of the Argentinean economy both affect continuity and predictability of public policies at large, and water is no exception. However, this also means a unique momentum to transition faster and better from crisis to risk management, and set the right incentives for greater water use efficiency and enhanced demand management.

• Argentina’s multi-level governance system implies a highly decentralised and complex water policy setting, which is primarily driven by the 23 provinces and the city of Buenos Aires, including for shared rivers. Nevertheless, it also provides opportunities to tailor policies to the diversity of places, and align strategies in a shared responsibility across levels of government.

• Argentina has achieved important milestones in improving water policy. The 2003 Federal Water Agreement laid down the foundations of a state water policy with a strong focus on water resources management with 49 guiding principles acknowledging the value of water, the historical importance of each jurisdiction and need to reconcile local, regional and national interests.

• Legal frameworks for water resources management vary widely across the country. Some provinces have well-developed legislations while others neither regulate important aspects such as irrigation systems, users organisations, water rights nor enforce the polluter-pays or user-pays principles. Seven provinces still do not have legal provisions for conjunctive management of surface and groundwater resources.

• Often, basin management is reactive, remedial and unplanned, rather than proactive, pre-emptive and planned. Key reasons include the insufficient use of economic instruments, patchy and insufficient data and information to guide water allocation, regulation and investment decisions, and insufficient stakeholder engagement.

• Although the efficiency of water service providers varies across the country, their performance remains low on average when compared to their Latin American peers, for instance in terms of staff efficiency (3.33 employees per 1 000 connections vs. 2.94) or micro-metering levels (27% vs. 70%).

• The prevailing tariff setting system does not encourage rational use of water, nor promote demand management since most users pay according to a “canilla libre” system under which a fixed rate is charged regardless of the water volume consumed. As a result, domestic water consumption averages 300 litres per inhabitant per day in the 20 largest service providers of the country, including in semi-arid areas of the country.

• With the termination of concessions contracts in the second half of the 2000s, water services were often transferred back to the public sector, but the regulatory framework remained largely unchanged. As a result, regulatory authorities tend to be control agencies, and find themselves hampered by economic and political interference, notably when tariffs continue to be reviewed and approved by political authorities.

Argentina must take critical decisions regarding its current and future water policy direction to fit for the future and better cope with pressing and emerging risks:

• Incentivise inter-governmental co-operation through a rejuvenated multi-level, enduring mechanism for better planning and strategic investment, basin governance, and regulation of water services. Federal Pacts, Councils or other co-ordination mechanism set by federal countries such as Australia, Brazil or Canada provide a valuable source of inspiration.

• Establish an ambitious long-term planning framework at all levels to address issues of federative management, and factor in short-term economic, social and environmental considerations, as well as long-term projected impacts:

  • Federal planning should link water policy and the country’s broader development strategy and provide strategic guidance to provinces.

  • Inter-jurisdictional basin planning should harmonise management criteria to encourage increased co-operation between the provinces sharing the river.

  • Provincial planning should translate national priorities at territorial level, and link water planning to regional development strategy.

• Strengthen the enabling environment for water-related investment to maximise their contribution to inclusive and sustainable growth, by:

  • Improving the efficiency of existing infrastructure by: seeking opportunities to capture economies of scale; shaping investments to build resilience to climate change; promoting investments in nature-based solutions; and improving cost recovery of water services operations

  • Selecting investment pathways that reduce water risks at the least cost over time, and effectively co-ordinating infrastructure investments across levels of government and sectoral ministries.

  • Scaling up financing through better risk allocation across parties, better and more strategic use of public funds, and adequate de-risking instruments; and introducing obligations in relation to long‑term, risk-based asset management, planning, operational and financing strategies.

• Enhance cross-ministerial co-ordination to ensure decisions taken in other sectoral domains - such as agriculture, environment, health, mining, urban development or energy - do not work against water policy, and vice versa. Argentina counts with a wide range of federal councils (COHIFE, COFEMA, CONAL, COFESA, COFEMIN, CFE or CFA) that are well-placed to foster policy coherence and complementarities across these domains.

• Develop an integrated water information system building on the National Hydrological Network and the National Water Supply and Sanitation Indicator System to better reflect overall quality and performance of utilities.

• Shift from the old paradigm focusing on infrastructure solutions to more systematic strategic basin planning to address socio-economic, urbanisation, environmental pressures on water bodies, and drive water allocation and investment decisions while managing trade-offs among competing uses.

• Inter-jurisdictional river basin committees should also shift from mere conflict resolution mechanisms with often a single-issue focus, to effective basin governance entities. In the medium and long-term, they should turn into lasting and autonomous institutions, with financial capacity to invest in governance functions and implementation of plans.

• Leverage the potential of economic instruments as a key policy tool to drive water use efficiency improvements. To that effect, provinces should consider co-producing a methodological guidance that is fit to different places, addresses local needs and induces behavioural change and rational water use to ensure that those who generate future liabilities or benefit from resources also bear the related costs.

• Provide a national overarching legal framework to set common water supply and sanitation policy criteria across the country and support regulation consistency. The framework should provide minimum requirements for the quality of the service and suggest institutional and regulatory features.

• Consider making result-based plans (Plan de Gestión de Resultados) by water services operators compulsory to incentivise better performance and accountability. These tools are key to prioritise investment requiring national and provincial budget as well as to establish control and conditional mechanisms for granting transfers while considering the compliance with performance and efficiency indicators.

• Foster financial sustainability of water services, not only through revenues raised through tariffs (in addition to subsidies), but also by:

  • Seeking efficiency gains in operations and maintenance;

  • Developing a sound accounting system to enable an optimal accounting management and a documented tariff calculation;

  • Changing the tariff structure (towards progressive schemes) in areas where metering level is high; “canilla libre” system should be gradually phased out.

  • Improving and strengthening the subsidy scheme to ensure that vulnerable families have access to water services through better targeting and coordination with social policies