Why Cuba is Ready For An Infrastructure Revolution
Cuba is in year 58 of the Cuban Revolution that started with Fidel Castro’s overthrow of the Batista government in 1959. I recently returned from visiting Cuba. I lived in the Caribbean for many years, have many Cuban friends in exile and have read a lot about Cuba. Yet nothing quite prepared me for the reality of a country stuck in time. A crippled economy; an economic disaster.
Cuba is everything you have heard — beautiful, decaying, welcoming, crumbling, impoverished and rebuilding. The people are some of the nicest I have met anywhere in the world. Life is still very, very difficult. Cubans just want what others in the world have — food (state rations barely provide enough food to live on), money (a state salary of $25 a month as a professional just isn’t enough), basic goods and services (long non-existent and mostly unaffordable), and opportunity to make their lives better. How can it be that 11 million people that live just 90 miles off our coastline live in a bubble and have such disparate lives? This is a long, sordid tale of a Marxist revolution + communism + socialism, and a US embargo to try to counteract it all.
Being a water/wastewater/sanitation engineer, wherever I travel I am keenly interested in the state of this infrastructure. Cuba is intriguing in this respect. It was, five decades ago, one of the best examples of infrastructure development in Latin America, if not the leading example. Now is the time for Cuba to pivot and regain lost ground. Here are six areas of focus:
- Infrastructure development — All water resources, water and sanitation infrastructure, and hydropower facilities are owned and operated by the Instituto Nacional de Recursos Hidráulicos. The construction of reservoirs has expanded significantly since the beginning of the revolution. 13 urban centers had service in 1959 and today there are 2,416, with more than 22,000 miles of supply lines and more than 2,000 water treatment facilities under the jurisdiction of 19 regional water and sanitation companies. However, proper operations & maintenance has been a challenge due to low revenue and difficulty getting adequate government subsidies. Over 80% of the infrastructure is over 40 years old. Non-revenue water is high (> 55%). Cuba has lost its position as a leader in Latin American water and sanitation. Interestingly, Havana has one semi-privatized water provider, Aguas de la Habana, which is co-venture of Aguas de Barcelona (Agbar) and the government of Cuba. Aguas de la Habana began a 25-year concession in 2000. This is an attempt to rebuild.
2. Quality of service — Our mission at Water For People is to help develop water and sanitation services that are reliable and provide quality water and safely manage waste. This is sorely needed in Cuba now too. The country is suffering from obsolete infrastructure, inadequate budgets for operations, and insufficient water supply (which leads to rationing).
Today residents in Havana Vieja have limited water service. Where I stayed, people only had access for one hour each day and residents “take” water out of the main line through illegal connections (“ladrones”) to fill their cisterns. The water main isn’t running full, which means there is a lot (> 55%) of water loss. And some residents don’t have any connection and walk to a water tank in the street to fill up their galones and bring them home. Watching this I felt like I was in one of our Water For People countries where we are helping develop water systems and utilities to make the carrying of galones extinct.
3. Coverage — About 94% of Cubans have access to water when it is available — this is high coverage for Latin America and the developing world. Reliable and consistent water supply, and quality, is dubious.
Wastewater is generally collected on the island (91%) but treatment is low — estimated at 19%. Many previously constructed treatment plants no longer function. Havana is served by only raw sewage screens — no wastewater treatment plant.
Water scarcity and climate change are also challenges in Cuba, as they are in other Caribbean nations.
4. Cost of service — residential water is cheap in Cuba — about $0.04 per cubic meter compared to $3.60 in the UK, $0.40 average in the US, and $0.50 average in Latin American cities in 2016 dollars. Rates will need to increase if service is going to improve in Cuba. In Havana, Aguas de la Habana pulled in $9M in revenue for 115 million cubic meters sold to 1.25 million people. That is $0.08 per cubic meter. Very low. A comparable sized city, Denver, had revenue of $239 million in 2014 for 65 billion gallons (246 million cubic meters) sold to 1.4 million people, or $0.97 per cubic meter.
5. Funding — the infrastructure that was built in previous decades in Cuba has not been maintained and there is not sufficient budget for operations. Expansions have also not been constructed, in both water supply and treatment, to keep up with the growing population demand. The capital cost estimate in 2009 for needed water infrastructure upgrades was $2.5B and $0.5B for wastewater infrastructure ($2.8B and $0.6B in 2016 dollars, respectively). Annual operations and maintenance costs need to be added to these estimates.
To be able to jump start Cuba’s economy, the government will need to accelerate economic and monetary reforms started in 2008. This will allow access to funding from international funding institutions (IFIs) like the World Bank, Interamerican Development Bank, and the International Monetary Fund. Access to funding from IFIs will require improving data and transparency, aggressively working to unify the Cuba’s two currencies (1 Cuban tourist peso or CUC is worth 24 times 1 Cuban peso of moneda nacional) and shifting official attitudes to welcome investment. The Cuban government has long been an outspoken critic of the IFIs, criticizing them as agents of imperialism and neoliberalism. Hopefully this rhetoric is dying down with the passing of Fidel Castro. Maybe now the Cuban Government will see that economic support is in the best interest of the Cuban people. Cuba can also help itself by allowing access to microfinance providers and nongovernmental organizations (NGOs).
6. Best interest of the US (and Cuba) — The US and our embargo is one reason why Cuba cannot access funding from IFIs. IFIs have US representatives, and the US embargo opposes multilateral funding for Cuba. There is a growing movement of the US avoiding vocal opposition to Cuba and moving towards normalizing relations. In fact, the US government could make a public statement of support for Cuba’s accession to the IFIs. There is precedence. The US government did advocate for Russia’s engagement and membership in 1991–1992. Time will tell what the new US presidential administration will do on this topic. Interestingly, the US is providing aid to Cuba through USAID to empower Cubans to reduce their dependence on the state. USAID programs reflect the principles enshrined in the United Nations Convention on Human Rights and Inter-American Democratic Charter, such as freedom of assembly, freedom of speech, and freedom of religion.
Many US businesses are interested in Cuba and are finding loopholes to be able to operate in Cuba. The American Water Works Association (AWWA) did a trade mission in September 2015 to see first-hand the state of the Cuban water infrastructure. Hopefully the doors will open soon so the AWWA can gain new members and help business in the US water sector rebuild Cuban. Cuban is loosening its laws to allow foreign businesses to enter. Cuban planners estimate it will take $2.0B to $2.5B of annual foreign investment for Cuban to meet its targeted growth rates and reduce its dependence on foreign imports. As these changes come about, they will pay dividends for the United States’ interests in the hemisphere and beyond.
I hope that the re-engagement between the governments of our two countries will help reintegrate Cuba into global economic systems and open opportunities for Cubans and those wanting to work in Cuba. The world awaits Donald Trump’s and Raúl Castro’s next moves. One of my long-time dreams is to be able to help Cuba rebuild its water and wastewater infrastructure. Oh the work to be done by enterprising engineers. Sign me up for this infrastructure revolution!