CIAO DATE: 08/2013
July 2013
Institute for Development and Peace
Improving the quality of water services is vital in many developing countries. In order to address the issue, many of them launched a series of reforms of which a major element was the involvement of the private sector. However, private sector participation (PSP) did not prove to be a general panacea. In some cases it has led to improved water service quality, such as increased access and reduced water losses. In other cases it has resulted in deteriorated performance, including high tariffs and potentially negative impacts on health and the environment. The question is under which circumstances PSP can positively or negatively impact on the provision of water services. This INEF Report analyses the varying performance of the two water concessions in Metro Manila through the lens of the theory of Transaction Cost Economics (TCE). It shows that a misalignment of governance structures (organisational constructs) according to the level of transaction costs leads to worse water service provision.
Resource link: A (Mis)alignment of Governance Structures? The Two Water Concessions in Metro Manila [PDF]