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›› Introduction to Enabling Environment©giz2012 It is important for utility managers to understand these four building blocks: the utility operates within this framework; the framework impacts the utility; and the utility can access the framework’s legal and policy re- sources to guide its strategic and operational decisions. D. Water Sector Management Water sector management is perhaps best explained by the concept of Integrated Water Resources Manage- ment (IWRM) which is defined as “a process which promotes the coordinated development and manage- ment of water, land and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sus- tainability of vital ecosystems.”[4] A water utility is often at the junction of management of bulk water and the provision of water services that meet standards for access, quantity and quality. It is therefore important for a water utility to understand how the resource that is at the core of its business is managed at the country level. Then, the utility is bet- ter able to align its efforts to achieve national objec- tives. A water utility’s vision and strategic plans must be consistent with the national framework and water sec- tor management approaches in the country. Its activi- ties are guided by the need to contribute to the socio- economic development of the country and the well being of the population that it serves. This chapter covers the building blocks of a sound Water Sector Management: • Macro Planning • Sector Development Planning • Sector Performance Monitoring • Sector and Intersector Coordination E. Regulatory Framework Regulation is the process by which oversight and rules are set for public or private companies in an industry. The oversight and rules often have to do with econom- ic factors (tariffs or pricing) and service level factors (water quality, pressure, access to services, etc.). References [1] “Capacity Development Practice Note”, United Nations De- velopment Programme, New York, NY, USA, October 2008 [2] GWP 2000, Solanes and Jouravlev 2006, Tartajada [3] Prof. Olli Varis, Helsinki University of Technology, Finland, InWent & AWC 2006 [4] Global Water Partnership Technical Committee, Back- ground Paper No 4: Integrated Water Resources Management, 2000: background/tac_4_english.pdf Because the regulator’s role is to set and require com- pliance with rules, the role of regulation, is often de- scribed as a “referee” or a “watchdog”. The rationale for regulation is usually to balance vari- ous competing interests such as the utility’s needs to be financially sustainable with the public’s need to have adequate services at an affordable price. This chapter provides a basic understanding of the functions and procedures of regulation. The chap- ter also aims to communicate what a utility manager can expect when being “regulated”, focusing on how to work together with a regulator. The chapter is based on international “good practice” standards.