A Sourcebook - UN-Water

10.3 Holding Providers Accountable
The main elements of a system to hold monopoly providers accountable would generally include the
following:
• A “regulatory” or “management
performance” compact—that
is, a clear written
understanding as to what
service the provider is expected
to provide; and the
resources the provider may
reasonably use in providing
those services (usually a mix
of tariffs and subsidies)
• A provider (or providers)
with sufficient autonomy to
achieve the results for which
it is being held accountable
• A trustworthy monitoring unit
to monitor the provider’s
performance against the compact
• Establishes a merit-based system that rewards the provider managers for performing well
against the contract, and punishes them for performing badly
• A means of providing information on provider performance to both the government and consumers.
The basic regulatory structure that results from the elements set out above is illustrated in the figure to
the right. However, various sector structures can display these features, if properly designed. For example,
the “oversight body” may be an independent regulator, a semi-autonomous contract monitoring
unit, or a government department.
The following sections discuss each of the elements of this accountability framework, identifying various
structural options. Section 11 provides advice on how to implement recommended options in
more challenging situations where government capacity may be limited.
10.3.1 A compact on service targets and allowed resources
This section sets out why setting service targets and the resources available to achieve them, in a written
compact, helps in promoting accountability and reducing corruption. It reviews how this can be
done in practice in a variety of situations.
The benefits of a compact for both private and public providers
Generic Accountability Framework for Regulation
Regulatory or Management
Performance
Contract sets subsidies,
tariffs & service
standards + provides
incentives for efficiency
Government
Autonomous
Provider
Public/
Consumers
Monitors adherence
to compact
Monitoring
unit
Provides services + information
on performance
Practitioners have long recognized the benefits of developing a (regulatory) compact that defines
service standards and tariffs or other resources for private providers. With private providers, the
need to specify required service standards and allowed tariffs and subsidies is clear—without such
a compact, government and the citizenry have little control over the services provided, or the tariffs
charged.
With publicly-owned providers the benefit of setting service standards and allowed resources is at first
less clear—after all, the government, by virtue of its ownership and control rights over the provider,
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