Water for people.pdf - WHO Thailand Digital Repository

G O V E R N I N G W A T E R W I S E LY F O R S U S T A I N A B L E D E V E L O P M E N T / 3 8 1■ Build-Operate-Transfer (BOT) and the Build-Own-Operate-Transfer(BOOT) schemes: these involve the private sector in thefinancing, construction and operation of works. They are usuallyused for treatment plants and the private investor makes areturn on his investment from the revenue for water sold or feesfor treated wastewater. The private sector is again controlledthrough the terms of the contract by a local government or apublic utility.■ Service contracts: many utilities use service contracts, that is,they will buy in some goods and services from the private sector.In recent years, some utilities have contracted out substantialparts of their operations, e.g. billing and revenue collection,which would have previously been regarded as a responsibility ofthe public utility itself.Pressure from international funding agencies has led to theincreased involvement of the private sector in developing countries,largely through concession contracts for the major Europeancompanies in the field. In Macao, privatization resulted in animproved level of service. In Buenos Aires, private sectorinvolvement has resulted in increased coverage of services and morereliable water supplies. However, it has been criticized because oflack of transparency in the renegotiating of contracts and tariffincreases and decisions to disconnect customers whose paymentsare late. In all cases involving concession contracts and privatesector involvement, success appears to rely on the presence ofeffective regulation by central or local government agencies. Aproblem in many developing countries is the lack of capacity andexperience to develop an adequate regulatory system.There is considerable potential for increased private interventionin the near future in providing services to more affluent urban areasof developing countries. However, participation in the extension ofservice to the urban and rural poor remains more problematic, asthis hinges on pricing and cross-subsidy policies that would enableprivate utilities to generate a fair return on their investments.A further problem in developing countries is the lack of thenecessary skills within the private sector to operate, maintain anddevelop water and wastewater systems. In this case, private sectorparticipation often implies foreign companies taking over utilities.However, the use of smaller service contracts for specific activitiescould employ indigenous private companies, thus encouraging thedevelopment of greater skills within these companies and enablinglocal governments to gain more experience in preparing andmanaging contracts.The rights to abstract water and discharge wastewater areimportant to all service providers and are normally controlled bypublic authorities. However, some economists argue that activetrading in water rights promotes water use efficiency as marketmechanisms allocate water to the highest valued use. Trading ofwater rights takes place in parts of some developed countries, suchas the United States and Australia.An alternative to government provision of services to rural andpoor urban communities is community-based service delivery. It isoften claimed that various civil society organizations are capable ofdelivering services more effectively than government agencies.Community-based organizations, water users’ associations and nongovernmentalorganizations (NGOs) can play important roles,independently or in partnership with government agencies. Inaddition to delivering services, they can act as a link between stateand community, be directly responsible for natural resourcemanagement, or act as a ‘watchdog’. Much of the competence ofcivil society organizations is found in their knowledge about andlinks in the local context, which are important in choosingappropriate solutions. Local knowledge can form a basis for flexible,innovative and dynamic institutional frameworks for sustainablewater development. However, many civil society organizations havelimited funds and membership, and rely on voluntary work andcharismatic leadership. In many cases, the NGOs and other civilsociety organizations have been inconsistent in their work and havefaced difficulties in maintaining and expanding their activities(Tropp, 1998). As previously mentioned, government agencies tendto perceive civil society organizations in a rather narrowinstrumental manner and their involvement is normally sought onlyfor project implementation.Partnership practices have illustrated that there is no blueprintto determine the appropriate model to use. It is obvious that manydifferent kinds of partnerships are needed, ranging from personal orinformal to voluntary or legally binding arrangements. They may beshort-term and project-specific or long-term and broad in scope.They may involve sharing of work or financial costs, or the sharingonly of information. Experience suggests that key ingredients insuccessful partnerships are a shared vision, compatibility, equitablerepresentation, legitimacy, communication, adaptability, mutual trustand understanding, perseverance, fixed formal or informal rules andtransparency. In many parts of the world there is a huge distrustbetween the state, civil society and the market, which does notrender the formation of partnerships any easier.Water governance and financingIn terms of financing, governance is essentially about creating afavourable environment to increase water investments and to ensurethat investment is used correctly. Governance is also concerned withhow capital is being spent and how more can be done with existingresources, or even with less. The economic rationale behindgovernance is that effective water governance is supposed to lower