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Byline: Alison E. Post Recent studies of the effectiveness of privatisation programmes in the water and sanitation sector have highlighted the diversity of experiences, especially with respect to the distributional consequences of reforms. This study of water and sanitation privatisation programmes in the city and province of Buenos Aires suggests that the main institutional change achieved by privatisation – the insertion of an agent with a profit motive – can yield pressures for more progressive pricing and expansion policies. Firms, after all, have a strong interest in collecting revenues as efficiently as possible and in avoiding negative publicity, which can lead them to push for policies that shift the burden of payment away from the poor. The potentially progressive effects of these policies, however, are likely to be weakened if host governments or firms shorten their time horizons. Politicians concerned with their short-term political survival can block the implementation of revenue-enhancing policies and measures designed to shift the burden of system financing from the poor to the middle class or business. Firms, on the other hand, invest at lower rates once they lose their long-term commitment to the market.

Byline: Klaas Schwartz The discussion over Private Sector Involvement (PSI) has changed during the last decade. Originally, the debate focused on whether utilities with PSI were more efficient or not. However, when different contractual forms became more important, the functioning of contracts received more attention. Currently, new types of partnership are emerging and may have better chances to be successful. The debate is going beyond the old dichotomy of 'public versus private' forms of water supply. The partnerships are not only between public and private partners, but also between public and other levels of government, or between public and NGOs. Also twinning projects, which are more trust-based, between water utilities and other water operators are emerging.

Byline: Marco A.C. Schouten, Meine Pieter Van Dijk What are the possible scenarios for the drinking water sector in Europe? This paper presents the results of the EU-financed Euromarket project. [For more information on the Euromarket project including all the freely downloadable reports, visit the website: http://www.epfl.ch/mir/euromarket.] On the basis of a transactions framework, five end states (ES) were identified as follows: End state 1 (ES1), Delegated Contracts; End state 2 (ES2), Outsourcing; End state 3 (ES3), Regulated Monopoly; End state 4 (Es4), Direct Public Management (DPM) and End state 5 (ES5), Community Management. The scenarios show more Private Sector Involvement (PSI). A distinction is made between four water markets, and the study points to increased pluralism. In most countries different models for drinking water management exist side by side according to this study. Total privatisation (through divestiture, or selling of all the shares) is not one of the scenarios discussed, for the simple reason that it hardly exists, except for England and Wales and some private water companies in the USA and in Chile. However, all scenarios show a more important role of the private sector in the future, through either Public-Private Partnerships (PPP) or other forms of PSI.

Byline: Juan Pablo Castro This paper analyses the appropriateness of public versus private models of providing and managing water and sanitation services. Better management practices, along with well-suited institutional arrangements, are needed to meet the Millennium Development Goals (MDGs) on water supply and sanitation. There has been Private Sector Involvement (PSI) in the drinking water sector in the four cases studied in this paper: Buenos Aires, Cochabamba, Cartagena de Indias and Santiago de Chile. Each has its own particular history with regards to governance, the institutional arrangements and the particular socioeconomic conditions that were in place at the time of the PSI. The paper concludes that PSI in water services in Latin America may increase the possibility of reaching the targets established in the MDGs, but this can only happen if appropriate financial schemes for water tariffs are in tune with the consumers' ability to pay. Secondly, a solid institutional arrangement and a regulatory framework need to be in place, and finally there should be active citizen participation at the community level.

Byline: Marco A.C. Schouten, Damir Brdjanovic, Meine Pieter Van Dijk This article assesses how a small island state can choose the best option in the process of private sector involvement. It reviews the decision process to involve or not the private sector in water and sanitation supply and in which way. Nine criteria are used to make the choice. A careful weighing process is necessary, taking the history into account, looking at the special institutional situation in the country and involving the stakeholders, and even then there is no guarantee of success! An existing public utility may be better placed to look after the modernisation and extension of the water and sanitation system than a new private firm.

Byline: Kevin Sansom, Annette Bos Inadequate water service provision to the urban poor remains a serious problem in low-income countries. Utilities lack the resources, obligations or incentives for service expansion and there may be a long delay before water utilities are in a position to extend services. Non-state water providers, including both formal and informal local private providers, as well as civil society institutions, play a large role in provision of services to the urban poor and are increasingly recognised as a potential effective means of service provision to the urban poor. Governments should seek to create a better enabling environment for utilities both to overcome disincentives in service provision to the poor and to seek more effective ways of engagement with the non-state providers.

Byline: Meine Pieter Van Dijk What is the theory behind Public-Private Partnerships (PPPs)? In this contribution PPPs are defined as private sector involvement, where a public and a private partner share the risks related to the necessary investments. Besides complementarity, the other factors contributing to the success of PPPs will be analysed. Evidence concerning India will be used to assess which factors played a role and to suggest a PPP dialogue in India, which would involve all stakeholders before actually embarking on PPPs for urban infrastructure projects such as drinking water and sanitation. It would help to do projects in such a way that they would also benefit the urban poor.

Byline: Kwabena Biritwum Nyarko Two approaches by Private Sector Involvement (PSI) in drinking water supply are followed in Ghana. In the urban areas the public utility (Ghana Water Company Limited) now has private sector management via a management contract, whereas in the small towns and rural areas the responsibility for water services is decentralised. The District Assemblies use the Community Water and Sanitation Agency and local expertise in the private sector. These are examples of PSI where the private sector participates without investment risks. The paper compares the two approaches and draws out lessons for improving the design of PSI arrangement.