The Role of the Private Sector in Providing Water in Developing Countries

The purpose of this article is to describe the role of the private sector in the supply of water in developing countries. In addition to citing some of the advantages to private supply, the paper discusses some of the objections to private provision, namely 'Natural Monopoly', 'Externalities', and the alleged inability to charge for water. It is concluded that the main obstacles to the private supply of water services are political rather than technical or financial, and that the French Affermage system (or variations thereon) seems to be suitable for many developing countries. There also appears to be considerable scope, in both towns and villages, for consumer co-operatives, and for the enhancement of water vending.     

Universal access to water and sanitation: Why the private sector must participate

Against the background of the current state of provision of drinking water and sanitation in the world — with one billion lacking safe water, and 2.2 billion not having adequate sanitation — this article argues that private participation is necessary. The most important issues for the management of water utilities in the 21^st century are identified as mobilizing investment for the highly capital intensive operation of water supply and sanitation infrastructure, and achieving efficiency in the delivery of services. The article highlights the issues that need to be raised if private investment is to be seriously considered as an alternative. Case studies, especially from Latin America (Argentina, Chile, Peru, Bolivia), illustrate different modes of private participation, and possible reasons for successes and failures are discussed. The article stresses that regardless of the modality of private sector involvement, on‐going government regulatory responsibility in the water sector is crucial. It suggests that regulatory policy must go beyond just setting tariffs, to develop standards for drinking water quality and waste treatment, as well as other standards. In conclusion, the article recognizes that numerous and increasingly difficult challenges face utilities in fulfilling their responsibility to deliver drinking water of adequate quality, in sufficient quantity, and at affordable prices, as well as safe and sustainable disposal of wastewaters for members of urban and rural communities.     

Public-Private Partnerships in China’s Urban Water Sector

During the past decades, the traditional state monopoly in urban water management has been debated heavily, resulting in different forms and degrees of private sector involvement across the globe. Since the 1990s, China has also started experiments with new modes of urban water service management and governance in which the private sector is involved. It is premature to conclude whether the various forms of private sector involvement will successfully overcome the major problems (capital shortage, inefficient operation, and service quality) in China’s water sector. But at the same time, private sector involvement in water provisioning and waste water treatments seems to have become mainstream in transitional China.     

Changes in water resources administration in Latin America

Traditionally, in most countries of Latin America, the management of water and water based services has been highly centralized in the public sector. Recently, as the role of government has been reconsidered, many services have been transferred to lower levels of government or to the private sector. At the same time, the emphasis given to water projects as basic development tools has given way to the environmental significance of good water management. Consequently, the approach to water resources management has been modified and space created for the adoption of some of the basic precepts enunciated in the Mar del Plata Action Plan and Agenda 21. In particular, in various countries consideration is being given to water management through river basin institutions .     

Private sector participation in urban water and sanitation: Realising social and environmental objectives in developing countries

There has been a large increase in private sector participation (PSP) in the urban water supply and sanitation (WSS) sector in recent years. However, even with increased PSP, public authorities will still have to: ensure that the service providers do not use their market power to exploit customers; internalise public health and environmental externalities; provide mechanisms whereby water consumption is sustainable and allocated efficiently between alternative uses; and stand as a guarantor of a level of service provision that is consistent with a basic standard of living. While there is considerable literature addressing the first of these four issues, the latter three are rather less adequately addressed. Through a review of a number of case studies (Abidjan, Buenos Aires/Cordoba, Mexico City and Manila), this paper provides an overview of the issues involved and some of the mechanisms available to the authorities responsible for the regulation of the sector.     

New directions in Mexican environmental policy

Since taking office 1 December 1988, Mexico's incumbent president, Carlos Salinas de Gortari, has introduced important innovations in environmental policy that distinguish his administration from those of his predecessors. Greater administrative continuity, improved regulatory capacity achieved through statutory change, focused priorities centering on pollution abatement in Mexico City, and an aggressive search for external financing for pollution control are hallmarks of Salinas' approach. The success of these environmental reforms depends heavily on economic recovery, however, and environmental policy still suffers from underfunding, bureaucratic fragmentation, and heavy reliance on voluntarist enforcement mechanisms. Recently, U.S. congressional debate on a proposed free trade agreement with Mexico has been a factor in spurring the Salinas government to take new antipollution and conservation measures. Mexico's growing environmental movement is also an important force behind the government's new responsiveness in environmental matters. The Salinas administration recognizes the issue's political salience and has sought to defuse environmental criticism using a large arsenal of resources at its disposal. Salinas' environmental policy strategy may thus be characterized as both proactive and reactive in nature. While the reforms are evidence that Mexico is beginning to take environmental matters more seriously, economic recovery and sustained environmental activism remain vital to further progress.     

The small-scale water provider in Paraguay: bringing private sector efficiency to water resource use and the provision of drinking water to the poor

This article provides a case study of small-scale private sector provision of water supply in Paraguay, where the Government has sought sector policy reforms that would encourage private investment in drinking water supply. Ironically, while the Government has focused almost entirely on garnering the interest of large private international water companies, much smaller local firms have already made significant investments in drinking water services for the poor, all without any participation or encouragement from the Government. Outside Paraguay's two major cities, Asunción and Ciudad del Este, large numbers of aguateros currently provide piped potable water to lower-income people. Though the aguateros have little legal footing — they are in many respects informal and unregulated —they have constructed as much as one third of all the new drinking water connections in these two cities over the past 20 years. The small-scale water systems in Paraguay offer a model of financial, economic, and water-use efficiency. This article asserts that an abundance of groundwater resources, cheap access to electricity for pumping, and a spirit of informal investment, among other variables, has spawned widespread use of this approach. This article documents and analyzes the features of these independent small-scale water providers in Paraguay and the efficiency they bring to the use of water resources in meeting drinking water demands among the poor. It also cautions against policies that may trample on such entrepreneurial spirit in the name of State-managed privatization.     

Private Sector Participation in Urban Water and Sanitation Provision in Ghana: Experiences from the Tamale Metropolitan Area (TMA)

African governments, like most countries in the developing world, face daunting tasks in their attempts to provide effective and equitable water and sanitation services for their ever increasing urban populations. Consequently, the past few years have witnessed increased private sector participation in urban water and sanitation provision, as many African governments strive to improve access to water and sanitation services for their citizens in line with Millennium Development Goal 7 (MDG7). Since the early 1990s, the government of Ghana and many local authorities have entered into various forms of public-private partnerships in urban water and sanitation provision. This article examines the outcome of such partnerships using the Tamale Metropolitan Area (TMA) as a case study with the aim of providing policy guidelines for the way forward. The article argues that the public-private arrangement for water supply and sanitation infrastructure management in the Tamale Metropolis has done nothing that an invigorated public sector could not have possibly achieved. It concludes that there can be no sustainable improvement in water and sanitation provision without political commitment, stakeholder ownership, and strong support for community driven initiatives.     

Renewable energy rural electrification

During the last 20 years Mexico has been fertile ground for rural projects using renewable energy technologies. In many cases, however, sustainability aspects were either improperly handled or essentially ignored. Such was the case, for instance, with solar thermal water pumping projects, solar water desalination, and even complete 'solar towns'. Painful but important lessons were learned from such failed projects. Now, sustainability is the focal point of a current rural electrification programme with renewable energy. As of this writing, over 24000 individual home photovoltaic lighting systems have already been installed in different regions of Mexico; another 12000 systems are estimated to have been installed in rural areas as a result of private commercial activities; seven village-size hybrid systems (photovoltaic–wind and photovoltaic–wind–diesel) have also been implemented. With this, the Mexican renewable energy rural electrification programme stands among the largest programmes of its kind in the world today. The question of the programme's sustainability has been a major concern at the Electrical Research Institute of Mexico (IIE), where activities have been under way since the start to lend it technical support. The lessons learned in the process will be discussed in this article .     

DEVELOPMENT OF FEDERAL RESERVE RIGHTS1

ABSTRACT: The concept that has been termed “Indian Rights to Water” is one manifestation of the area of federal reserved rights that is a major concern of states in arid regions. The federal reserved rights are those that are reserved in fact or by implication in federal actions, acts, reservations, and treaties. Federal actions include such things as navigation improvement and flood control projects. The Federal Court System, since the Civil War has been promulgating, developing, and protecting federal reserved water rights. The development of those rights can be traced from early cases through the landmark cases such as U.S. v. Rio Grande and Irrigation Co. (1899); Winters v. U.S. (1908) with the origin of the Winters' Doctrine of Indian Rights; Federal Power Commission v. Oregon, commonly called the Pelton Dam Case (1955); Arizona v. California (1963); U.S. v. District Court for Eagle County (1971); to existing suits on surface water sources such as that on appeal in regard to reserved federal water rights on the Truckee River. It can be shown that the federal position has been consistent through all the years in that the federal rights have been protected, expanded, developed, and preserved in a more or less predictable manner.     

Indicators for sustainable energy development in Mexico

This article presents a summary of a study on the application to the Mexican energy sector of a core set of indicators for sustainable energy development (ISED), developed by the International Atomic Energy Agency (IAEA). The study focused on the elaboration of socio‐economic and environmental indicators related to energy production and use, and was aimed at assessing Mexico's existing energy policies and identifying strategies and possible policies that could bring about improvements in major priority areas: energy intensity, atmospheric emissions, energy import dependency and use of renewables. While positive trends have been observed in relation to energy intensity and atmospheric emissions, Mexico is becoming more dependent on imports of gasoline, natural gas and other high‐value secondary energy sources, while exporting significant amounts of primary fuels, such as crude oil. Also, no significant increase has been observed in the use of renewable sources of energy. Social, economic and environmental policies need to be formulated for the energy sector and related investments (public and private) reinforced so that all economic sectors have access to energy from cleaner and more diverse sources.     

The Water Market for the Middle and Lower Portions of the Texas Rio Grande Basin1

Leidner, Andrew J., M. Edward Rister, Ronald D. Lacewell, and Allen W. Sturdivant, 2011. The Water Market for the Middle and Lower Portions of the Texas Rio Grande Basin. Journal of the American Water Resources Association (JAWRA) 47(3):597‐610. DOI: 10.1111/j.1752‐1688.2011.00527.x Abstract: Regional water management on the United States’ side of the middle and lower portions of the Rio Grande basin of Texas has been aided by a functioning water market since the early 1970s. The water market operates over a region that stretches from the Amistad Reservoir to the Rio Grande’s terminus into the Gulf of Mexico. This article provides an overview of the organizations, institutions, policies, and geographic particulars of the region’s water‐management system and its water market. In recent years, this region has experienced high population growth, periodic droughts, and a reallocation of water resources from the area’s agricultural sector to the municipal sector. Demand growth for potable water and a relatively fixed supply of raw water are reflected in increasing prices for domestic, municipal, and industrial water rights. Rising prices in the presence of scarcity and the transfer of water from lower‐value to higher‐value uses indicate that the market is operating as suggested by economic theory. Reasons for the market’s functionality are presented and discussed. Finally, suggestions are presented which might mitigate potential complications to market operations from aquifer depletion and aid the management of instream river flows.     

Public Sector Reform and Governance for Adaptation: Implications of New Public Management for Adaptive Capacity in Mexico and Norway

Although many governments are assuming the responsibility of initiating adaptation policy in relation to climate change, the compatibility of “governance-for-adaptation” with the current paradigms of public administration has generally been overlooked. Over the last several decades, countries around the globe have embraced variants of the philosophy of administration broadly called “New Public Management” (NPM) in an effort to improve administrative efficiencies and the provision of public services. Using evidence from a case study of reforms in the building sector in Norway, and a case study of water and flood risk management in central Mexico, we analyze the implications of the adoption of the tenets of NPM for adaptive capacity. Our cases illustrate that some of the key attributes associated with governance for adaptation—namely, technical and financial capacities; institutional memory, learning and knowledge; and participation and accountability—have been eroded by NPM reforms. Despite improvements in specific operational tasks of the public sector in each case, we show that the success of NPM reforms presumes the existence of core elements of governance that have often been found lacking, including solid institutional frameworks and accountability. Our analysis illustrates the importance of considering both longer-term adaptive capacities and short-term efficiency goals in public sector administration reform.     

EMERGING STATE ROLES IN URBAN STORMWATER MANAGEMENT1

ABSTRACT: The technology of urban stormwater management has far outpaced its actual application in new urban development. This article documents that implementation gap, but shows that state and local governmental measures, particularly storm drainage regulations, can lead to improved performance in the private sector. Although state stormwater management programs are in their infancy, they are already having a measurable effect in stimulating the adoption of local governmental programs to manage urban storm water. Pioneering state programs in Maryland, New Jersey, and Pennsylvania, described in this article, provide models for states contemplating the formulation of stormwater management programs.     

RATES,RIGHTS, AND REGIONAL PLANNING IN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA1

ABSTRACT: The Metropolitan Water District of Southern California has for more than 70 years shaped the development of an immense urban region. The district's current strategic planning process therefore could have substantial effects on regional water planning and management. The rate restructuring phase of the planning process has produced a multiple component, cost of service based framework. This paper describes that framework as well as some criticisms that have been directed toward it. The rate restructuring was shaped, and for a while stalled, by old disputes among member agencies over rights to water supplied by Metropolitan. That controversy has diverted attention from the resource management implications of the rate structure. This paper presents an alternative future focused approach to regional integrated water resource planning for Southern California based on projections of current trends and anticipation of future events. This discussion raises the question of how regional integrated water resources planning of this sort may proceed, and what role Metropolitan will play in that process.     

A PARTICIPATORY APPROACH TO WATERSHED MANAGEMENT: THE BRAZILIAN SYSTEM1

ABSTRACT: Brazil is currently facing the challenge of implementing a new water resources management system to promote the rational and sustainable use of the country's waters. This system is based on the following principles of water management: (2) stakeholders' participation; (2) the watershed as the planning and management unit; and (3) the economic value of water. Stakeholders' participation and the involvement of civil society in the decision making process is guaranteed by permanent seats in the watersheds' management committees. These committees are the highest decision level for the establishment of water policy and for planning its use. The executive branch of the committees is the watershed agency or the water agency. This paper presents the recently approved Brazilian water resources management system and discusses the participatory approach followed to validate and to ensure prompt response to decisions regarding water use by all stakeholders. The formulation of the National Water Law (January/1998) was also supported by extensive consultation with civil society, professional associations, state and municipal governments as well as with federal governmental agencies and private sector organizations. It also presents an overview of the formulation of the National Water Law. Finally, as watershed committees have been created and are already operating in a limited number of watersheds, some of the major obstacles to the success of the new system are discussed along with alternatives for overcoming such obstacles.     

Regulation and private participation in the water and sanitation sector

Private-sector participation is widely perceived to be the solution to the failure of many publicly owned and managed water utilities to operate efficiently and make the investments required to meet community needs. However, there are no guarantees that privatisation will actually yield the desired performance improvements. Simply converting a public-sector monopoly into a private one provides no competitive incentives for the utility to operate efficiently, make appropriate investments or respond to consumer demands. Likewise, privatisation per se need do little to improve sector performance if governments are unwilling or unable to tackle such underlying problems as overmanning, uneconomic water pricing policies, financing the provision of public and merit goods, and restricting over-intrusive political intervention.
Given the characteristics of the water and sanitation sector it is inevitable that some form of continued public regulation of the private companies will be necessary. The regulatory burden can be reduced by adopting a competitive form of privatisation, choosing a more competitive sector structure and devising an appropriate regulatory regime. However, it has to be recognised that there will be a trade-off between making a venture attractive to private firms and introducing a notionally 'ideal' regulatory system. Regulation, in practice, is as much about creating the conditions under which private firms can operate effectively and efficiently as it is about protecting specific customer and public interests.     

Private participation in isolated grids in Mozambique

This article presents a case study from Mozambique of the electrification of two selected towns under a World Bank financed project. Low-cost electricity services were extended to the two isolated areas after an enabling framework had been created for private sector participation. The World Bank project also demonstrates that the private sector can be attracted to participate in rural electrification schemes even in a poor country. The example shown in this article is one of the few of its kind in SubSaharan Africa.     

Public–Private Partnerships for Solid Waste Management Services

The increasing cost of municipal solid waste (MSW) management has led local governments in numerous countries to examine if this service is best provided by the public sector or can better be provided by the private sector. Public–private partnerships have emerged as a promising alternative to improve MSW management performance with privately owned enterprises often outperforming publicly owned ones. In Lebanon, several municipalities are transforming waste management services from a public service publicly provided into a public service privately contracted. In this context, a regulated private market for MSW management services is essential. The present study examines a recent experience of the private sector participation in MSW management in the Greater Beirut Area. The results of a field survey concerning public perception of solid waste management are presented. Analysis of alternatives for private sector involvement in waste management is considered and management approaches are outlined.     

Comparing theoretical and actual feasibility of transferring management of river lift irrigation systems in Sudan

This article focuses on agricultural production in lift irrigation schemes along the White Nile in the Sudan. A comparison is drawn between the theoretical forecast and actual practical experience regarding the feasibility of transferring management from government-run parastatal organizations to private farmer organizations. Although the theoretical model indicates that farmers should be able to cover the cost of managing the river lift irrigation systems, field data show, however, that farmers growing wheat are barely able to break even. Even assuming a doubling of the present wheat yields, the cash surplus earned would only suffice for fuel to operate the pumps. Under these circumstances, it is not surprising that, contrary to government expectations, the private sector has been unenthusiastic about taking over management of White Nile river lift schemes. The lessons that emerge from this study indicate that unplanned and rapid withdrawal of state management can lead to negative results. The transfer of management responsibility for the river pumps does not appear to influence economic performance considerably, which depends on the wider context of the country's economic, political and institutional environment, within which the agricultural sector functions.