Governance failure: rethinking the institutional dimensions of urban water supply to poor households

This paper examines factors that explain the persistent failure of both public and private water supply system operators to achieve high rates of individual network connections to poor households in urban areas.
Much of the recent literature has focused on the “ownership” versus “institutions” debate, and the relative merits of public versus private management of water supply systems. This paper argues that more systematic attention should be given to the institutional dimensions of water supply provision with respect to urban poor households.
Governance failures apply not only to water supply providers and governments, but also to poor households, whose capability to connect may be undermined by a range of economic and non-economic factors. Poor coverage is driven by governance failures pertaining to the water supply utility and municipal government, which include water supply utility governance norms, land use policies and related municipal decision-making processes, the water supply utility business model, and discriminatory connection policies. It is also affected by governance failures pertaining to the capability of individual households to connect to the water supply system, which include connection fee policies, transaction costs, housing and residency status, security of water supply, and perceptions of water quality.
The findings indicate that governance failures produce important disincentives for the water supply utility to connect poor households and for poor households to choose to connect to the water supply system. Governance failures (rather than the possible failures or merits of public or private providers) should be the focus of policy makers. For example, utilities—both public and private—should have clear benchmarks for equity associated with non-compliance penalties. All water supply providers should be subject to robust regulatory frameworks with clear standards for good governance (such as accountability, transparency, participation, inclusiveness, and the rule of law), which should be implemented for water supply systems – whether public or private.

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