REPORT REVIEW by www.watermagazine.com

Water Utility Regulation: Issues & Options for Latin America & the Caribbean

This 130 page report was prepared by Andrei Jouravlev of the Natural Resources and Infrastructure Division of ECLAC (Economic Commission for Latin America and the Caribbean). It was completed in October 2000. It is available from Watermagazine (see below).

"...The issues to be confronted and options to be considered in developing an adequate regulatory framework for the water supply and sewerage industry in Latin America and Caribbean countries are the subject of this paper..."

In my opinion this is an intelligent, readable examination of the global history, explanation of the economic analysis, presentation of case studies and regulatory options relating to water and sewerage. It is essential reading for any policy maker or policy analyst interesting in reviewing options and issues relating to the regulation and management of water and wastewater services in an urban environment.

The contents of the paper include:

• Regulation & Information (Modes of regulation, The problem of asymmetric information, Information discovery mechanisms);
• Conduct Regulation (Regulation of prices, Regulation of service quality, Regulation of investment, Diversification, Multiple regulators);
• Structure Regulation (Horizontal restructuring, Vertical restructuring);
• Bibliography;
• 14 boxes containing all sorts of case studies and tabulations of interest (eg franchise regulation in USA, Regulation information in UK and Wales, Guaranteed standards schemes in England, Wales & Jamaica, Competition in England and wales);

Quote from the paper's summary: "...The water supply and sewerage industry is, however, a classic case of a local natural monopoly. It is perhaps the most monopolistic of all public utility industries and, as such, is uniquely resistant to most forms of competition... Private ownership does not make the natural monopoly go away. Simply converting a publicly-owned monopoly into a privately-owned one provides few, if any, incentives to reduce costs, innovate, invest at the efficient level, and respond to consumer demands...".

The paper presents useful arguments from a range of perspectives, and covers the success and otherwise of reforms in other network industries. It draws heavily on recent global experience, and does so in a way which is accessible and useful for those interested or responsible for policy formation in regard to regulation or the establishment of a regulatory agency.

In particular the paper explores in depth the issues of information asymmetry, benchmark or yardstick regulation, technological change, information disclosure, transparency of accounting and much more.

The report is available from watermagazine. The Water Utility Regulation: Issues & Options for Latin America & the Caribbean Report is a 800kb pdf file, which subscribers can obtain from watermagazine. The author has kindly given watermagazine permission to publish this review and to make the report available.

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