Regulatory issues in the water sector: Which institutions matter most?

Water provision has been and remains highly regulated because it is a "critical infrastructure" that requires tight coordination of its core transactions in order to maintain technical integrity as well as economic coherence in the system. If one looks at the history of developed countries, they all have had their water and sewerage systems developed mostly by public bureaus or, to a lesser degree, by private operators tightly supervised by public authorities. It is also noticeable that Public-Private Participation has become fashionable less because of failures in the running of water and sewerage systems in developed countries than because of constraints in public finances, particularly in developing countries. This is not to deny flaws and failures in many SOEs, but to temper their significance.The paper argues that we need looking at intermediate, "micro-institutions" that bridge the gap between institutional environment and organizational arrangements. Of course, these problems by far exceed the urban water sector.