- Advances in New Institutional Analysis series
Edited by Claude Ménard and Michel Ghertman
Chapter 5: From Technical Integrity to Institutional Coherence: Regulatory Challenges in the Water Sector
Claude Ménard INTRODUCTION If we look at the deregulation movement of the last 25 years or so, the pace of reform in the water sector has been remarkably slow, and changes likely the less radical among public utilities. Water was never deregulated. Even in the most spectacular reforms, like that implemented in the UK at the end of the 1980s, the sector remained heavily regulated. Moreover, there was never a significant move towards privatization. At most there has been private participation, supervised by a very visible public hand. A recent survey of 973 major urban water and sanitation systems in developing countries showed only 136 of them involving private sector participation, with divestitures constituting 10 per cent of this subset, while 66 per cent were concessions, 19 per cent management contracts, and the remaining 5 per cent leases or ‘affermages’ (Gassner et al., 2007: 16).1 This reference to the limited role of privatization or private participation does not intend to suggest that privatization would be the solution to water problems. It rather points out that resistance to changes in the regulation and mode of organization of the sector, beside other changes that may be needed as well, is particularly striking if we take into account the essential character of water provision for human beings and the huge needs in that respect. According to the UN Millenium project (2005), confirmed by several reports from the World Bank and other institutions, over one billion human beings do not have access...
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