Water

use can be sustained. Sustainable jobs and more green growth follows.15

Increasing private-sector participation As a transition to efficient supply of water at full cost occurs, opportunities for the involvement of private enterprise in the provision of water supply and sanitation services increase. The main reason for considering such arrangements is that research is showing that private-sector engagement can help to deliver benefits at less cost and thereby release revenue for green growth in other sectors. Once again, this opportunity is controversial. Several private-sector

participation arrangements have

15. When water is supplied to businesses at less than full cost, businesses tend to locate in locations chosen on the assumption that subsidised access to water will continue. This, in turn, encourages people to live in and migrate to such places and locks an economy into a regime that becomes dependent upon the subsidy. As each of these steps occurs, opportunities for development are undermined.

failed. Nevertheless, there is little to suggest that the frequency with which these problems occur is less than that found among publicly-run systems (Ménard and Saleth 2010).

Closer analysis is showing that when contractual arrangements are well developed, use of the private sector can offer a wide range of benefits and, when well- designed contractual arrangements are in place, can outperform the public sector. For example, Galani et al. (2002) show that Argentina’s temporary privatisation of approximately 30 per cent of its water supplies met with positive results. Child mortality was found to be 8 per cent lower in areas where water provision had been privatised. Moreover, this effect was largest (26 per cent) in the areas where people are poorest. The experience is equally positive in regions where businesses are allowed to supply water at full cost – operators are finding that many people are prepared to pay for the services they offer (Box 7).

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