Key Topics in Public Water Utility Reform (Water Working Notes No.17, August 2008)

Urban water supply services have traditionally been provided by state-owned water utilities. In the past decades, many governments have tried to turn state-owned water utilities into effective and viable organizations – with mixed success. Why have some public utilities become more efficient service providers, while others have not been able to break the vicious cycle of low performance and low cost recovery. This report presents a framework of attributes of well-functioning utilities and how they choose and apply public utility reform approaches.
  
The report concludes that structural trends are altering the landscape in which water utilities operate and that these alterations offer opportunities for change. The major transition of most utilities in the past decades has not been from public to private operation, but from centralized to decentralized public provision. Fiscal squeeze has hit utilities hard: as public budgets decreased in the 1990’s, infrastructure investments dropped disproportionally as governments have few discretionary spending categories. Under budgetary pressure, many public institutions have adopted new management tools, often borrowed from the private sector, to complement more traditional bureaucratic tools. Many countries have democratized, and an emerging civil society – including a consumer movement – has out pressure to deliver better services.
  
This review is part of a broader program to help utilities in developing countries provide better water supply and sanitation services.

Contents:

Executive Summary

1. Introduction

2. Changing Realities But The Same Old Challenges

3. Attributes of A Well-Functioning Utility and Its Environment

4. Corporatization

5. The Use of Performance Agreements

6. Consumer Accountability Tools

7. Capacity Building

8. The Process of Improving and Institutionalizing Performance

9. Conclusion: Opportunitiesfor Scaling Up Public Water Utilities Reform

Annex 1: Overview of Recent and Ongoing World Bank Knowledge Work on Urban Utility Reform
Annex 2: Reference List