B1.7 Strengthening public sector water utilities
Most water services - including regulation and ecosystem protection, as well as water supply and sanitation and irrigation infrastructure - are provided by public utilities. Improved efficiency of operation in public sector service providers is an important means of improving the effectiveness of financial resources, and indeed, many public water service and irrigation agencies are inefficient and need reform. Reform can yield efficiency gains of the sort normally associated with the private sector (see B1.8).
There are several types of public utility, with varying levels of autonomy. This affects the way in which they can operate. In ascending order of autonomy the main types are:
Water supply and sanitation are provided by all of the above in different places. However, irrigation agencies are usually highly centralised, and reform here is often impeded by strong vested interests.
Because each public water organisation is different, it requires a unique and tailored package of solutions. A clear definition of the respective responsibilities of service providers and regulatory bodies is essential. There are some common elements for reform (improved efficiency) for service providers which include:
"Benchmarking" has been successfully used (e.g. by the Asian Development Bank and through the WUP) to set performance targets using comparative data drawn from other relevant systems, or in "yardstick competition" by regulators, to compare the performance of both private and public service delivery organisations relative to domestic or international equivalents.