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Water challenge and institutional response (a cross-country perspective), Volume 1
Author:Saleth, R. Maria; Dinar, Ariel; Country:Israel; Morocco; Spain; United States; Sri Lanka; South Africa; Mexico; India; Brazil; Chile; Australia; China;
Date Stored:2000/02/24Document Date:1999/01/31
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Water Supply and Systems; Decentralization; Water Supply and Sanitation Governance and Institutions; Town Water Supply and Sanitation; Water and Industry; Water Conservation; Water Use
Language:EnglishMajor Sector:Water, Sanitation and Waste Management
Region:Middle East and North Africa; Europe and Central Asia; OTH; Africa; Latin America & Caribbean; South Asia; East Asia and PacificReport Number:WPS2045
Sub Sectors:Other Water Supply & SanitationCollection Title:Policy, Research working paper ; no. WPS 2045
Volume No:1  

Summary: This cross-country evaluation of institutional responses to problems in the water sector shows that changes in the nature of water problems have changed the development paradigm underlying water institutions. There is increasing recognition of how decentralized allocation mechanisms can influence economic forces and stakeholders in water sector decisions. As the notion of water provision as a public good and welfare activity gives way to the concept of water as an economic good and an input of economic activity, there is more policy concern about efficient and equitable use, cost recovery, and financial viability. All of the countries the authors studied (Australia, Brazil, Chile, China, India, Israel, Mexico, Morocco, South Africa, Spain, and Sri Lanka) are committed to changing the policies and institutions that have caused the present water sector crisis, but they are at different stages of institutional reform. Among cases discussed, Australia and Chile (and, in the United States, California and Colorado) are at an advanced (though not ideal) stage of institutional change. Israel, with its technologically advanced water sector, could well be ahead of them when the proposal to allow water transfers and decentralize water development and distribution systems takes practical shape. Tentative conclusions reached by the authors are: 1) Attempts to fix isolated parts of the water sector will influence other dimensions but an integrated approach is best. At the heart of such an approach should be institutional changes aimed at modernizing and strengthening legal, policy, and administrative arrangements for the whole sector. 2) Institutional changes taking place everywhere suggest that the opportunity costs of (and net gain from) institutional change is not uniform, suggesting that opportunity and transaction costs vary. 3) Funding agencies should focus efforts and resources in countries, areas, and subsectors that already have enough critical mass in institution-building to ensure success and lower transaction costs. 4) The sequence and pace of reform should reflect realities of scale economies and political pressures from reform constituencies. When possible, political economy should be exploited to move reform along more quickly.

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