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A great variety of institutions have responsibilities in water supply. A basic distinction is between institutions responsible for policy and regulation on the one hand; and institutions in charge of providing services on the other hand. Policy and regulation__ Water supply policies and regulation are usually defined by one or several Ministries, in consultation with the legislative branch. In the United States the United States Environmental Protection Agency, whose administrator reports directly to the President, is responsible for water and sanitation policy and standard setting within the executive branch. In other countries responsibility for sector policy is entrusted to a Ministry of Environment (such as in Mexico and Colombia), to a Ministry of Health (such as in Panama, Honduras and Uruguay), a Ministry of Public Works (such as in Ecuador and Haiti), a Ministry of Economy (such as in German states) or a Ministry of Energy (such as in Iran). A few countries, such as Jordan and Bolivia, even have a Ministry of Water. Often several Ministries share responsibilities for water supply. In the European Union, important policy functions have been entrusted to the supranational level. Policy and regulatory functions include the setting of tariff rules and the approval of tariff increases; setting, monitoring and enforcing norms for quality of service and environmental protection; benchmarking the performance of service providers; and reforms in the structure of institutions responsible for service provision. The distinction between policy functions and regulatory functions is not always clear-cut. In some countries they are both entrusted to Ministries, but in others regulatory functions are entrusted to agencies that are separate from Ministries.[citation needed] :))) Regulatory agencies__ Dozens of countries around the world have established regulatory agencies for infrastructure services, including often water supply and sanitation, in order to better protect consumers and to improve efficiency. Regulatory agencies can be entrusted with a variety of responsibilities, including in particular the approval of tariff increases and the management of sector information systems, including benchmarking systems. Sometimes they also have a mandate to settle complaints by consumers that have not been dealt with satisfactorily by service providers. These specialized entities are expected to be more competent and objective in regulating service providers than departments of government Ministries. Regulatory agencies are supposed to be autonomous from the executive branch of government, but in many countries have often not been able to exercise a great degree of autonomy. In the United States regulatory agencies for utilities have existed for almost a century at the level of states, and in Canada at the level of provinces. In both countries they cover several infrastructure sectors. In many US states they are called Public Utility Commissions. For England and Wales, a regulatory agency for water (OFWAT) was created as part of the privatization of the water industry in 1989. In many developing countries, water regulatory agencies were created during the 1990s in parallel with efforts at increasing private sector participation. (for more details on regulatory agencies in Latin America, for example, please see Water and sanitation in Latin America and the regional association of water regulatory agencies ADERASA [4]) Many countries do not have regulatory agencies for water. In these countries service providers are regulated directly by local government, or the national government. This is, for example, the case in the countries of continental Europe, in China and India.[dubious – discuss] For more information on utility regulation in the water sector, see the Body of Knowledge on Infrastructure Regulation [5] and the World Bank's knowledge base on the same topic at [6] Service provision__ Water supply service providers, which are often utilities, differ from each other in terms of their geographical coverage relative to administrative boundaries; their sectoral coverage; their ownership structure; and their governance arrangements. Geographical coverage__ The sole water supply of this section of Wilder, Tennessee, 1942 Many water utilities provide services in a single city, town or municipality. However, in many countries municipalities have associated in regional or inter-municipal or multi-jurisdictional utilities to benefit from economies of scale. In the United States these can take the form of special-purpose districts which may have independent taxing authority. An example of a multi-jurisdictional water utility in the United States is WASA, a utility serving Washington, DC and various localities in the state of Maryland. Multi-jurisdictional utilities are also common in Germany, where they are known as "Zweckverbaende", in France and in Italy. In some federal countries, there are water service providers covering most or all cities and towns in an entire state, such as in all states of Brazil and some states in Mexico (see Water supply and sanitation in Mexico). In England and Wales, water supply and sewerage is supplied almost entirely through ten regional companies. Some smaller countries, especially developed countries, have established service providers that cover the entire country or at least most of its cities and major towns. Such national service providers are especially prevalent in West Africa and Central America, but also exist, for example, in Tunisia, Jordan and Uruguay (see also water supply and sanitation in Uruguay). In rural areas, where about half the world population lives, water services are often not provided by utilities, but by community-based organizations which usually cover one or sometimes several villages. Sector coverage__ Some water utilities provide only water supply services, while sewerage is under the responsibility of a different entity. This is for example the case in Tunisia. However, in most cases water utilities also provide sewer and sewage treatment services. In some cities or countries utilities also distribute electricity. In a few cases such multi-utilities also collect solid waste and provide local telephone services. An example of such an integrated utility can be found in the Colombian city of Medellín. Utilities that provide water, sanitation and electricity can be found in Frankfurt, Germany (Mainova), in Casablanca, Morocco and in Gabon in West Africa. Multi-utilities provide certain benefits such as common billing and the option to cross-subsidize water services with revenues from electricity sales, if permitted by law. Ownership and governance arrangements__ Water supply providers can be either public, private, mixed or cooperative. Most urban water supply services around the world are provided by public entities. As Willem-Alexander, Prince of Orange (2002) stated, "The water crisis that is affecting so many people is mainly a crisis of governance — not of water scarcity." The introduction of cost-reflective tariffs together with cross-subsidization between richer and poorer consumers is an essential governance reform in order to reduce the high levels of Unaccounted or Water (UAW) and to provide the finance needed to extend the network to those poorest households who remain unconnected. Partnership arrangements between the public and private sector can play an important role in order to achieve this objective[17] Private sector participation__ An estimated 10 percent of urban water supply is provided by private or mixed public-private companies, usually under concessions, leases or management contracts. Under these arrangements the public entity that is legally responsible for service provision delegates certain or all aspects of service provision to the private service provider for a period typically ranging from 4 to 30 years. The public entity continues to own the assets. These arrangements are common in France and in Spain. Only in few parts of the world water supply systems have been completely sold to the private sector (privatization), such as in England and Wales as well as in Chile. The largest private water companies in the world are Suez and Veolia Environnement from France; Aguas de Barcelona from Spain; and Thames Water from the UK, all of which are engaged internationally (see links to website of these companies below). In recent years, a number of cities have reverted to the public sector in a process called "remunicipalization."[18] Public water service provision__ 90% of urban water supply and sanitation services are currently in the public sector. They are owned by the state or local authorities, or also by collectives or cooperatives. They run without an aim for profit but are based on the ethos of providing a common good considered to be of public interest. In most middle and low-income countries, these publicly owned and managed water providers can be inefficient as a result of political interference, leading to over-staffing and low labor productivity. Ironically, the main losers from this institutional arrangement are the urban poor in these countries. Because they are not connected to the network, they end up paying far more per liter of water than do more well-off households connected to the network who benefit from the implicit subsidies that they receive from loss-making utilities. We are still so far from achieving universal access to clean water and sanitation shows that public water authorities, in their current state, are not working well enough. Yet some are being very successful and are modelling the best forms of public management. As Ryutaro Hashimoto, former Japanese Prime Minister, notes: “Public water services currently provide more than 90 per cent of water supply in the world. Modest improvement in public water operators will have immense impact on global provision of services."[19] Governance arrangements__ Governance arrangements for both public and private utilities can take many forms (Kurian and McCarney, 2010).[20] Governance arrangements define the relationship between the service provider, its owners, its customers and regulatory entities. They determine the financial autonomy of the service provider and thus its ability to maintain its assets, expand services, attract and retain qualified staff, and ultimately to provide high-quality services. Key aspects of governance arrangements are the extent to which the entity in charge of providing services is insulated from arbitrary political intervention; and whether there is an explicit mandate and political will to allow the service provider to recover all or at least most of its costs through tariffs and retain these revenues. If water supply is the responsibility of a department that is integrated in the administration of a city, town or municipality, there is a risk that tariff revenues are diverted for other purposes. In some cases, there is also a risk that staff are appointed mainly on political grounds rather than based on their professional credentials. |
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