Economic Regulation of Urban Water and Sanitation Services: Some Practical Lessons (Water Sector Board Discussion Series, Paper No.9 April 2007)

This paper discusses the regulation of water and sanitation services in urban areas. Specifically, it explores ways of thinking about regulatory design as part of a wider, country-specific program to reform the way in which water supply and sanitation services are provided and paid for.
  
This paper draws on lessons learned from a number of in-depth country case studies and other international experience to distill some lessons on approaches to design that can assist with the identification of regulatory objectives, functions, and choice of regulatory instruments and organizations. We explore the use of contracts as effective regulatory instruments, the role of politics in fastering regulatory legitimacy and deciding on policy tradeoffs, the importance of limited discretion for decision makers, and the need for clarity and simplicity in regulatory rules and procedures.

Table of Contents:

Executive Summary

1. Introduction
Objectives of Sector Reform
Regulation of Private and Public Providers
Overview

2. Approach to Regulatory Design
Defining the Problems and Sector Objectives
Assessing Whether Regulation Can Solve the Problems
Defining Specific Regulatory Functions
Choosing Legal Instruments and Organizations

3. Improving Regulatory Design
Working with the Existing Organizational Framework
Create an Appropriate Role for Politics
Limiting the Discretion Given to Regulatory Decision Makers
Trading Off Sophistication in Favor of Simplicity

4. Conclusion

Further Reading

References