Water & Sanitation: Establishing Regulations

Regulations impacting on water and sanitation delivery are usually dispersed among several agencies and ministries bringing a corresponding problem with coordination and consistency. Although in Francophone countries privately managed water supplies are often regulated through contracts, sanitation services are regulated by municipal authorities through one or more departments. Effort is required to introduce coherence among the various regulatory functions (public health, water quality, water utility licensing, etc) and to improve regulatory capacity at all levels. Many countries in Africa have weak regulatory capacity and few have regulatory agencies for water supply or sanitation. The majority of countries regulate water supply and sanitation through government agencies that lack sufficient staff, finances and motivation to carry out their functions effectively. As a result service providers often have weak accountability and transparency to government and none at all to consumers.

Over- regulation, regulations that are too prescriptive or strict, constrain innovation and in particular are used as justification for inability to positively address the service needs of the low income urban communities.

How can the regulations be changed?

Regulations governing the supply of water and sanitation services are made by local government or regulatory authorities supervising utilities. Additional regulations may be found under Ministries such as Health, Housing. A major step is to identify where progress is being hindered by outdated or restrictive regulations, or where additional requirements should be demanded of utilities to serve the poor. Do the regulations match the spirit of the policy and the intention of the legislation?

Objective:

Review the regulations to ensure that serving the low-income urban community is given priority by service providers and that regulations are supportive not inhibitory.

Actions:

Advocacy at a high level will be required to ensure that policy and legal reform are also accompanied by regulations enabling and requiring services to the poor.
Coordinate regulation of sanitation with water supply and ensure independence of the regulator,
Develop guidelines and regulate the activities of all service providers – large and small, formal and informal, whether through contracts or regulations.
Build capacity to develop appropriate regulations, standards and guidelines at local authority level (sample bye-laws)
Enable the main municipal service provider to regulate (through contracts) alternative providers who are connected to their networks, but not to regulate their competitors.
Establish technical and service standards that are broad and provide the right incentives for improving services to all types (low, middle and high income) of consumers.
Regulate price through contracts, encourage competition as a means of improving services.
Create access to information (transparency) as a tool for self regulation and consumer participation in monitoring service standards by requiring accountability to consumers.
Develop enforcement mechanisms that operate at the appropriate levels, involve users and through appropriate channels. (Ref Coin vending Cote d’Ivoire, Box 8 WUP 5 workshop Proc)

Tools:

Checklist: What should be regulated and the options of how.
Sample of contract with service provider.
Sample regulations for utilities (NAWASCO, SODECI)
Curriculum for training local authorities in regulating.
Examples of service and technical standards suitable for low income communities (e.g. tariff setting guide; service performance standards).
Checklist of what should be reported to communities and how often.

See also Case Examples: Alternate service providers.

See: Benchmarking Water & Sanitation Utilities: A Start-Up Kit. Transportation, Water and Urban Development Department: Water & Sanitation Division, The World Bank, Washington, D.C. 1999. (8 page summary; Kit contains interactive CD)

Utility performance information is an important component of effective regulation, whether in the context of private-sector participation or for use by regulators and the public seeking to improve operations of a public service agency. Over the past decade, several "benchmarking" tools have been developed to compare the performance of water and sanitation utilities around the world. The Benchmarking Water and Sanitation Utilities: A Start-Up Kit (PDF) is one such tool. The Kit includes: a set of core indicators on which stakeholders can build their own customized measurement and monitoring system; a data listing complete with robust data definitions; a data capture system that also calculates the complete indicator set; and a route to share information.
(PDF Download of Summary)

See: Economic Regulation of Water Companies. Michael Klein. Policy Research Working Paper No. 1649. The World Bank Private Sector Development Department. September 1996. 44 pages.

This paper provides an overview of regulatory issues in the water sector, focusing on the challenge of setting pricing rules that try to balance incentives to use water efficiently with social concerns. It argues that the key to effective regulation is to generate information that enables the regulator to make good rules and allows interest groups to monitor regulatory activity.
(PDF Download)

See: Designing Pro-Poor Water and Sewer Concessions: Early Lessons from Bolivia. Kristin Komives. Private Participation in Infrastructure, Private Sector Development Division. World Bank, Washington D.C. 1998. 35 pages.

Governments in many developing countries are looking to private concessionaires to improve water and sanitation services in low-income areas. To design pro-poor concession arrangements in the water sector, policy makers must pay careful attention to how the proposed contract and existing or proposed regulations will affect the obligations, ability, and financial incentives of the private concessionaires to serve low-income households.

The Bolivian government awarded a concession for water and sewer services in La Paz-El Alto in 1997. One goal of the process was to expand in-house water and sewer service to low-income households. This paper uses the Aguas del Illimani case as a basis for exploring how the design of typical concession agreements (i.e. monopoly private service supplier) can affect outcomes in poor neighborhoods. The author finds that concession contracts, the contract bid process, sector regulations, and regulatory arrangements all have the potential to affect service outcomes.

Policy makers can increase the likelihood of improvements in low-income areas by (1) making contract objectives clear and easily measurable, (2) eliminating policy barriers to serving the poor (e.g. service boundaries that exclude poor neighborhoods, property title requirements), and (3) designing financial incentives that are consistent with service expansion or improvement objectives for low-income areas. As contracts are subject to renegotiation, expansion or connection mandates alone do not guarantee that concessionaires will serve poor areas. Provisions and standards that reduce service options (e.g. requirement to eliminate all alternatives to inhouse connections) or restrict the emergence of new service providers (e.g. exclusivity in the service area) have the potential to cause more harm than good.
(PDF Download)

Quick Guide
Definitions	Abbreviations	Case Examples	More Information
Advocacy Francophone			Regulations SSIPs

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