Against the ‘Local’ Grain: Finance and the Centralization of Urban Sanitation Governance

Keywords: water, financialization, infrastructure, governance, Brazil
Session Type: Virtual Paper Abstract
Day: Tuesday
Session Start / End Time: 3/1/2022 05:20 PM (Eastern Time (US & Canada)) - 3/1/2022 06:40 PM (Eastern Time (US & Canada))
Room: Virtual 6

Abstract

This article unsettles a common premise within scholarship on the financialization of urban development, namely that the rise of finance capitalizes on fiscal and administrative decentralization towards local scales, thus stimulating entrepreneurial or speculative urban governance. Instead, I demonstrate that financialization of private water and sanitation provision in Brazilian cities has pushed companies away from local politics and resulted in regulatory centralization. I argue this counterintuitive movement reflected the combination of (1) a long-run, gradual process of market consolidation around a handful of firms, which created an institutional mismatch with a fragmented regulatory context; and (2) shifts in corporate governance and business politics under different types of private investors. Family-owned construction business groups, the original investors, had pursued a politically embedded model of service delivery that accommodated political instability across their consolidated operations. Once financial investors such as private equity groups stepped in, replacing construction groups, they promoted instead what I call centripetal politics. Firms pursued organizational and institutional centralization as strategies for enhancing asset monitoring, increasing regulatory legibility, and ensuring stable returns in a fragmented environment viewed by financial investors as politically unstable. This analysis reveals that financialization is not simply an extension of privatization but may in fact entail changes to the very political logic of private participation in urban infrastructure provision.