«The water crisis is not about water or financial scarcity, it is mainly a crisis of governance»[GWP 2000, Solanes and Jouravlev 2006, Tartajada]

What happens when a water sector lacks good governance? Funds are diverted to personal use or uses that are not a high priority. Customers do not receive reliable services at an affordable price. Employees are not treated fairly and this affects their motivation. Infrastructure is constructed poorly and the assets do not last as long as they should. Well functioning countries, water sectors or organizations are always built on good governance. 

As we can see, governance is an overriding influence on the enabling environment and is carried out through the sector framework, sector management and regulation to ensure that the people receive access to dependable water services at a fair price. This chapter covers the basic principles of good governance and how they can be applied at the national level as well as at the water utility level.

Water Integrity

Water is life. Water utilities serve the common good. Yet, sometimes, people take advantage of this situation to serve themselves instead of the common good. When they do this, they harm the water utility and all of the people it serves because they undermine the sustainability of the utility.

Water integrity means establishing accountability and transparency so that water is allocated and distributed in fair and efficient ways for all water users. It also means ensuring that the financial resources of the utility are protected.

A lack of integrity, accountability and transparency often leads to corruption – the abuse of entrusted power and resources for personal gain. It can be found in a huge range of interactions at all levels of decision-making and in all aspects of the water sector, along the “water value chain” from water allocation to the end user and – as wastewater – back to the environment. This chapter discusses the situation and offers potential solutions to corruption in your workplace.

Water Sector Framework

Even if a country has sufficient funds to invest in the sector and enough expertise, the sector will not thrive unless the roles and duties of all players and institutions are well defined and well designed in relation to each other. This is important to ensure the smooth execution of all the tasks required to have an effectively functioning sector. 

A classic role for government is to provide the policy, institutional and legal framework in the water sector that will achieve public health and safety. That is why most water sector frameworks are largely made up of various levels of government, including:

  • Ministries in charge of overall planning and Water Resources Management
  • Regulator
  • Local government as the responsible authority for the provision of water services
  • Water and wastewater service providers

These main players often work in cooperation with other bodies such as the Ministry of Finance for budget allocations, the Ministry of Public Works that may be in charge of infrastructure development and maintenance and Water Boards that act at local or regional levels. In many countries, the private sector also plays a role.

The water sector framework considers the ways in which these agencies work together to ensure that the public is well provided with the water and wastewater services that are so essential to public health, safety, environmental protection and economic prosperity. Usually, legislation is enacted to give authority to the agencies to play their roles.

Water Sector Management

Water sector management is perhaps best explained by the concept of Integrated Water Resources Management (IWRM) which is defined as a

«Process which promotes the coordinated development and management of water, land and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.»[Global Water Partnership Technical Committee,Background Paper No 4: Integrated Water Resources Management, 2000]

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 better able to align its efforts to achieve national objectives.

A water utility’s vision and strategic plans must be consistent with the national framework and water sector management approaches in the country. Its activities 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. 

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 economic factors (tariffs or pricing) and service level factors (water quality, pressure, access to services, etc.).

Because the regulator’s role is to set and require compliance with rules, the role of regulation, is often described as a “referee” or a “watchdog”.

The rationale for regulation is usually to balance various 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 chapter 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.