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Private sector participation and regulatory reform in water supply in the Southern Mediterranean region

Congress: 2008
Author(s):
Edouard Pérard is a consultant for the OECD, where he conducts research on regulatory reform and private sector participation in water supply and sanitation sector. Previously, he worked on various water related issues for the Fondazione Eni Enrico Mattei

Keyword(s): Public private partnerships, Institutional reform, Mediterranean area
AbstractThis research project has been funded by the European Commission within the sixth framework programme (FP6) and is part of the International Research Consortium "Understanding Privatisation Policy: Political Economy and Welfare Effects - UPP Project" co-ordinated by Fondazione ENI Enrico Mattei (FEEM, Italy). More information available at: http://www.privatizationbarometer.net/upp The Southern Mediterranean region faces one of the most important water crises in the world. The combination of aridity, foreign dependency, climate change, misallocation of the resource and escalating human demand make water supply a primary issue for health, economy and poverty reduction. In this context, institutional reform of the water supply sector is of great interest. Thus, the aim of this study is to examine the water regulatory framework in Southern Mediterranean countries and the development of private sector participation in the context of urban water crisis. The first part of the study presents the scope of private sector participation in water supply and its different forms around the world. An extensive review of 22 empirical tests and 48 case studies on the effect of private sector participation in water services has been conducted. This survey shows that private sector participation per se in water supply does not systematically have a positive effect on efficiency. Reforming the institutional framework is an essential prerequisite for delegating water services. Then, the paper focuses on the Southern Mediterranean region. It compares institutional arrangements, recent regulatory reforms and experiences with private sector participation in water infrastructure in the Southern Mediterranean region. Thereafter, the study deals with the development of a new monitoring tool to analyze the institutional organization of the water sector and to assess the future of private sector participation. This Water Sector Analysis Scorecard is based on 10 dimensions (water resource, water use, management of water, water pricing and metering policy, water institutional framework, private sector participation in water supply, desalination, projected investments in water and wastewater services, impact of demography and economic conditions) and on 49 indicators. Finally, the scorecard is applied to selected Southern Mediterranean countries. Based on the experience of different countries in reforming the organization of the water supply sector, the study suggests possible institutional reforms for selected Southern Mediterranean countries and concludes on the future of private sector participation in water supply in each of these countries. The Water Sector Analysis Scorecard developed in this study is intended to be applied to more countries in the future. It is going to be implemented at the OECD for a broad review of private sector participation in water supply and sanitation infrastructure in more than 30 developing countries.
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