Private Sector Participation in the Water Supply and Wastewater Sector: Lessons from Six Developing Countries

This study synthesizes the results of six recent experiences with private sector participation in the water and wastewater sectors of developing countries. Its objectives are threefold: 1) to evaluate the results of these six cases and to describe the challenges and opportunities faced by governments and by water utilities, public as well as private, to improve the quantity and quality of services; 2) to assess whether local and national governments have taken full advantage of the potential benefits of private sector participation and to explore why some of those benefits may not be fully realized; and 3) to draw lessons from these experiences that can improve the planning and implementation of these water and wastewater projects and others elsewhere in which the private sector will participate. The report is organized as follows. Chapter 1 reviews the broader economic and institutional context within which private sector providers have participated in the water and wastewater sector in developing countries. Chapter 2 follows a profile of private sector arrangements in the six cases under study and a brief description of other arrangements elsewhere. The impact of these arrangements on service levels and quality as well as the costs of services to consumers are evaluated in chapter 3, and the constraints to implementing more adequate water-pricing systems are discussed in chapter 4. The performance of private firms and the efficiency gains achieved through their involvement are assessed in chapter 5. Chapter 6 discusses the financial aspects of private sector participation. The regulation of private sector arrangements is analyzed in chapter 7. Finally, chapter 8 summarizes the lessons learned and offers recommendations for increasing the likelihood of success of existing and future private sector arrangements.