Planning and Management of Lakes and Reservoirs: An Integrated Approach to Eutrophication


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<Planning and Management of Lakes and Reservoirs:
An Integrated Approach to Eutrophication>

CHAPTER 3. POLICY, INSTITUTIONAL, AND REGULATORY FRAMEWORK

3.5. Institutional Framework

3.5.4. Some Key Issues Concerning Institutional Organization for Eutrophication Management.

Role of the State

The principles of sustainable development of the United Nations Conference on Environmental Development, which deepened and updated those of the Stockholm Conference in 1972, found a great number of developing countries in the process of installing market economy models in which the leading role of the State in planning the economic and social development became less relevant or completely disappeared.

At the same time, the need for regulatory frameworks to ensure common interest social objectives and the protection of user rights appeared while transferring developing initiatives to the private sector. Presently, without abandoning said models, it is recognized that the State should recover the capacity to enforce strategic indicative planning and to establish the "rules of the game" to be observed by private, and even government owned enterprises, particularly in the field of public services.

With regard to State's institutional organization, although a considerable degree of centralization of activity is desirable at the planning stage of management, a high degree of decentralization is usually desirable during implementation, particularly when many water and land resource users are involved.

Therefore, the responsibility for the implementation of projects and the operation of systems, particularly in water supply and sanitation programs, should be delegated to all administrative levels down to the community and individuals served. The utilization of the skills and potential of non-governmental organizations should also be promoted, as well as the private sector and local people, taking into account the strategies and public's interests in water resources.

Administration of water rights, economic incentives, regulations on pollution, and erosion control or groundwater withdrawals are often best accomplished through water- or land-use organizations.

Role of Private Sector

In many countries, economic policies launched during the last decade have induced a shift from the "Government being the provider of water services" to its "being the creator and regulator of an environment that allows involvement of communities, the private sector and non-government organizations in the provision of water supply and sanitation services, as well as in the development and utilization of water in other sectors of the economy".

On the other hand, decentralization of operational responsibilities and the establishment of well-structured regulatory frameworks can be useful tools to improve the functioning of public services, even when operated by public enterprises. These involve the need to devote great efforts in capacity building and institutional strengthening, according to the ongoing experiences in LAC countries.

Box 3.6 presents a brief description of the progress achieved in LAC countries regarding the privatization of their water supply and sewage treatment systems. Although promising, the experience is developing slowly in the water management sector where major opportunities will be available as long as decentralization of government operated public services and the implementation of regulatory frameworks and agencies take place.

Complementary, the introduction of water markets and pricing mechanisms can encourage the private sector to play an increasingly important role in providing the necessary financial resources and management skill needed for the successful development and utilization of the resources.

Box 3.6 Privatization of Water Related Public Services: Experiences in LAC and Argentina
(Progress in the Privatization of Water Related Public Service, 1998).

The participation of the private sector in LAC countries is still in its initial stage in the majority of the countries, and the public sector is still administrating the major part of the infrastructure. Some examples concerning water supply and sanitation services are found, mainly in Argentina, where the responsibility for some large systems has been transferred to private enterprises. In the rest of the countries, the private sector is participating by means of small companies and subcontracting. Major progresses have been achieved in the electric energy sector, particularly in Argentina, Bolivia, Chile, and Peru.

Private participation is still incipient in the region when water related public services are considered, and therefore the experience of private participation in their administration is quite limited in terms of time and space and, although promising, it cannot be generalized to the whole region. Larger experience exist, although more limited in scope, with private participation in operational activities by means of service contracts. These involve maintenance of facilities and infrastructure, invoicing, consulting for the design and supervision of the construction of facilities, and even the administration of systems. This kind of participation obviously does not represent the same challenge as the transfer of responsibilities by concession or sale.

Concession is the mechanism adopted by countries to privatize the operation and maintenance of water-related public services, although in some cases governments are considering the sale of part of the shares of public water supply enterprises. Some countries are allowing private investments in the expansion of public services systems, particularly in the case of electricity generation. It is also becoming more frequent in the case of small water supply and sanitation facilities, such as high level resorts. The lack of a regulatory framework has limited, to some extent, the privatization of public services. As long as the service is provided by the government, such a framework has not been considered necessary. This concept is now changing. In most cases regulatory frameworks have been issued on an enterprise basis. This has occurred in Argentina, where each province has it own regulatory competence. Lack of previous experience and very short learning time had been the main difficulties faced by the staff in regulatory agencies.

Regarding irrigation, the management, maintenance, and operation of most systems in the region have been transferred to the users since 1990. Even minor or secondary infrastructures have been transferred to them, while major facilities continue to be under public sector control. Chile is the only country where, in some irrigation systems, users control all the management process, including river water diversion, demanding large investments in control structures.

The opening of water-related public services to private participation has created many and varied opportunities for investment. Directly purchased or concession arrangements, management contracts by specialized firms, and subcontracting of partial services will provide a variety of options. Decentralization of government-operated public services will create a large market for private service providers.

Starting in 1989, Argentina launched in-depth economic reform in conjunction with decentralization of many activities, including their transfer to the provinces and a privatization program of the largest scope in the region. Water supply and sanitation services in Buenos Aires, as well as a major part of energy sector facilities, have been privatized by the federal government up to date. Some provinces have also privatized the water supply systems of major cities or are in their process of privatization. Sectoral and global regulatory agencies have been created at national and provincial levels to monitor the compliance of the regulatory frameworks by the public and private enterprises in charge of public services and solve conflicts with users.

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