Economic Regulation of Urban Water and Sanitation Services : Some Practical Lessons

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 sanitat...

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Bibliographic Details
Main Authors:	Ehrhardt, David, Groom, Eric, Halpern, Jonathan, O'Connor, Seini
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTABILITY ADEQUATE WATER ADEQUATE WATER SUPPLY APPROACHES TO REGULATION AREAS OF REGULATION BARRIERS TO ENTRY BASIC SANITATION CAPITAL EXPENDITURE CAPITAL INVESTMENT CAPITAL INVESTMENTS CASH FLOW CONCESSION CONTRACT CONCESSION CONTRACTS CONSUMER PROTECTION CONTRACT ENFORCEMENT CORRUPT PRACTICES CORRUPTION COST RECOVERY CRISES CROSS-SUBSIDIES DECISION MAKER DECISION MAKERS DECISION MAKING DRINKING WATER ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC REGULATION ECONOMIES OF SCALE EFFECTIVE REGULATION ENVIRONMENTAL ENVIRONMENTAL PROTECTION FINANCIAL CAPACITY FINANCIAL INFORMATION FORM OF REGULATION GOOD REGULATORY SYSTEM GOVERNANCE ARRANGEMENTS GOVERNMENT ACTION GOVERNMENT DEPARTMENT GOVERNMENT DEPARTMENTS GOVERNMENT ORGANIZATIONS HOUSEHOLDS INDEPENDENT REGULATOR INDEPENDENT REGULATORY INFRASTRUCTURE SECTORS JURISDICTIONS LARGE CITIES LEGAL INSTRUMENTS LOW-INCOME HOUSEHOLDS MINISTERS MUNICIPAL SERVICE PROVIDERS MUNICIPALITIES NATIONAL UTILITY NEED FOR REGULATION NONGOVERNMENTAL ORGANIZATIONS OPERATING COSTS PERFORMANCE IMPROVEMENTS POOR MANAGEMENT POOR PERFORMANCE POOR WATER QUALITY PRIVATE PARTICIPATION PRIVATE PROVIDERS PRIVATE SECTOR PRIVATE SECTOR PARTICIPATION PRIVATE UTILITIES PROVISION OF WATER PROVISION OF WATER SUPPLY PUBLIC PRESSURE PUBLIC UTILITIES REGULATION BY CONTRACT REGULATORS REGULATORY ACTIONS REGULATORY ADVISORS REGULATORY AGENCIES REGULATORY APPROACHES REGULATORY ARRANGEMENTS REGULATORY COMMISSION REGULATORY DECISION REGULATORY DECISIONS REGULATORY DESIGN REGULATORY EFFECTIVENESS REGULATORY ENVIRONMENT REGULATORY FRAMEWORK REGULATORY FUNCTION REGULATORY FUNCTIONS REGULATORY GOALS REGULATORY INSTITUTIONS REGULATORY INSTRUMENT REGULATORY INSTRUMENTS REGULATORY ISSUES REGULATORY OBJECTIVES REGULATORY OPTIONS REGULATORY PERFORMANCE REGULATORY PROBLEMS REGULATORY PROCESSES REGULATORY REFORM REGULATORY REGIME REGULATORY REGIMES REGULATORY REQUIREMENTS REGULATORY RULES REGULATORY SOLUTION REGULATORY SYSTEM REGULATORY SYSTEMS REVIEW OF REGULATION SAFETY SAFETY REGULATION SANITATION SANITATION PROVIDERS SANITATION SECTOR SANITATION SERVICES SELF-REGULATION SENIOR REGULATORY SERVICE PROVIDER SERVICE PROVIDERS SERVICE QUALITY SERVICE STANDARDS SMALL SMALL PRIVATE PROVIDERS TARIFF ADJUSTMENTS TARIFF DECISIONS TAX INCENTIVES TAXPAYERS TRANSPARENCY URBAN AREAS URBAN WATER URBAN WATER SUPPLY WATER DEPARTMENT WATER DIRECTORATE WATER OPERATORS WATER PARTNERSHIP WATER QUALITY WATER RATES WATER REGULATION WATER SECTOR WATER SECTOR REGULATION WATER SERVICE WATER SERVICE PROVIDERS WATER SERVICE PROVISION WATER SERVICES WATER SUPPLY WATER SYSTEM WATER SYSTEMS WATER UTILITIES
Online Access:	http://documents.worldbank.org/curated/en/2007/04/7680938/economic-regulation-urban-water-sanitation-services-some-practical-lessons http://hdl.handle.net/10986/17239

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Summary:	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. In the past, regulatory advisers often focused on the need to introduce international best practice- generally in the form of an independent regulatory organization-to solve a wide range of performance problems. However, this approach was seldom straightforward, nor was it always successful. There is no one-size-fits-all regulatory design that can be reliably applied to resolve performance problems. Rather, regulation is best developed on a country-by-country basis through answering questions such as the following: a) What are the real sector problems, and which of these can regulation solve? b) What specific objectives is regulation aiming to achieve? c) What combination of organizations and instruments is most suitable and would work best for achieving these regulatory objectives? This paper is not intended to be a detailed guide for regulatory design. Rather, it discusses how to approach regulatory design. This approach encourages decision makers and their advisors to apply sound principles within country-specific settings, rather than advocate best-practice models without a thorough analysis of whether these are suitable for the country's context. The best combination of rules and institutions for setting tariffs and service standards3,-and indeed, the best reform options in general-will vary from country to country. Regulatory designers should select this combination by first focusing on the principal sector objectives and working with institutions that may already be responsible for achieving them.

Economic Regulation of Urban Water and Sanitation Services : Some Practical Lessons

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