The Regulation of Private Sector Participation in Urban Water Supply and Sanitation: Realising Social and Environmental Objectives in Developing Countries

There has been a significant increase in private sector participation (PSP) in the urban water supply and sanitation (WSS) sector in recent years. However, even with increased PSP, public authorities will still have to: ensure that the service providers do not use their market power to exploit customers; internalise public health and environmental externalities; provide mechanisms whereby water consumption is sustainable and is allocated efficiently between alternative uses; and, serve as a guarantor of a level of service provision which is consistent with a basic standard of living. While there is considerable literature addressing the first of these four issues, the latter three are less adequately addressed. Through a review of five case studies (Abidjan, Buenos Aires, Cordoba, Mexico City, and Manila), this paperprovides an overview of the issues involved and some of the mechanisms available to the authorities responsible for the regulation of the sector.