Reforms in the Urban Water Sector: A Vulnerability Analysis of the Main Elements at Risk

The Urban Water Sector has undergone important reforms in recent years, which are creating new risks pertaining to the sustainability of capital investments and the universality of service provision. In this paper we draw together the factors that influence the vulnerability of these two elements at risk, and assess whether the hazards created by the reform affect positively or negatively these vulnerability factors across different institutional arrangements. The literature on New Institutional Economics, and in particular Transaction-Costs Economics, is used as a tool to design the framework for carrying out the vulnerability analyses. The influence of contract design is also taken into consideration because it affects the impact of the vulnerability factors on the elements at risk in certain institutional arrangements. In order to verify whether the identified factors of vulnerability are perceived as important by the management entities and the differences across institutional arrangements, a questionnaire was sent out to 250 operators worldwide.