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New currents in water supply

Tracy Hart's picture

As we head towards World Water Day this Wednesday, we here at the World Bank Group are still mulling over our annual Water Week, held at the end of February. We heard about some emerging issues of importance such as the role of water in climate change adoption, as well as the need to focus more on groundwater as well as water quality. However, in terms of the intersection between water and the private sector, we also took stock of the landscape in water supply and sanitation public-private partnerships (PPPs).

The total number of countries with water PPPs in operation has been growing every year. Sixteen countries have introduced for the first time private sector participation in water since 2000, including Russia. However, 20 countries which had water PPPs have reverted to public-management-only models.

These trends show a more distributed role for public and private actors, as well as for civil society, in the water supply arena. We have been seeing lots of "hybrid" models which work in terms of distributing risks more realistically. Hybrid financing schemes involve the sourcing of financing from both public and private sources, unlike the more conventional private project financings for bulk water and service-level activities.

What else is new in water supply PPP? We are seeing not only...

publicly-owned water utilities in Europe, but also from developing countries, become more active in the water sector. Similarly, there are private operators in the developing world taking on international roles more often than before.

As smaller cities start to see faster population growth in the future, historical roles for large water utility operators in large cities will be challenged. These hybrid management models are likely to be the source of solutions for towns considered too big for rural solutions and too small for traditional utilities. In short, water is anybody's (and everybody's) business ....

Comments

Submitted by Tracy Hart on
Good point! I would have to check on that. I think that the interesting point is that as many countries have flipped from public-to-private (more or less) as private-to-public. So there is no overall trend in moving from public-to-private as a correct solution, but rather a lot of fluidity ...

Submitted by O. Elmi on
I was reading FAO work on global water scarcity (Agriculture and Water Scarcity: A Programmatic Approach to Water Use Efficiency and Agricultural Productivity) and realized some difference between this work and those of the World Bank. The FAO paper makes case establishing a programme based on demand managment rather supply-side ionvestment. The compenents of the program are followings: - Improving on-farm water management - Improving the performance of irrigation system services - Augmenting supply: the use of non-conventional waters - Water Harvesting - National policies for water allocation (including to agriculture) - Trade as a variable in agriculture water management. On the other hand, World Bank study entitled" reengaging Agricultural Management: Challenges and Options" seems to reccomend, in addition to water demand management, an expansion of irrigated areas and mobalization of new water supplies like building new dams (large or small) according to wtare potential of a country or region. My question is my reading and interepretation of the WB's report correct? if so, what are key factors that may explain the difference? please advise.

Submitted by Tracy Hart on
Hello O. Elmi: Well, the easy way out is to say, "both supply-side and demand-side solutions are good ones". As an economist, the demand-side solutions (i.e. the FAO approach) costs a lot less, and is therefore the preferred approach. But I would say that you need to overlay greater potential variability in water supply due to climate change. Not to mention world population growth, no matter how conservative or aggressive you are in adopting growth estimates. Then I think that demand-side at its best only addresses some of the gap. Expansion of irrigated areas will also mean shifting of some crops from some geographical areas to others as climate patterns continue to change. With increases in variability, water storage (insert water harvesting -- or dams -- or groundwater recharge -- here) will all become more and more necessary in order to smooth water supply across wet and dry seasons. Hope that this helps. Feel free to post again, and we can get into the details.

Interesting to see PPP schemes being adopted in the Middle East, including the rich gulf states. The extent to which water supply is subsidized by the government is becoming an increasingly heavy burden. The costs are just nowhere near to being recoupled by current pricing schemas.

Submitted by William Kermode on
I have been asked to represent the viewpoint of the World Bank at a conference this year at my university. While I believe that a debate is needed in this area, I feel as though I am abandoning part of my moral integrity in echoing the mentality of the World Bank in water privatization. Water privatization in developing and developed countries has proven to be an unparalleled controversial field, as UN resolutions have highlighted, but have not required, the right of water as a basic human right. How can the privatization benefit those individuals who have worked so hard to secure public and accessible water for their communities? How can the World Bank continue to state that they are looking out for the best interests for those developing countries who are spending more money on the interest of their loans than on social programmes (including health care, education, etc.)?

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