Decentralized Delivery of Water and Sanitation Services

A Synthesis of Selected Country Experiences and Findings.

An important aspect of water and sanitation service provision is the fact that access to water and sanitation is, by its nature, provided at the lowest level of the public sector. As such, regardless of the degree of decentralization and the nature of the decentralization model chosen by a country, the delivery of water and sanitation is, by definition, "decentralized".

Irrespective of the institutional approach with which decentralized water and sanitation services (DWSS) are organized and implemented at the local level, efforts to expand access to water and sanitation services (especially to poor and underserved populations)--as well as efforts to improve operations and maintenance of existing water and sanitation systems--are often hindered by the challenges posed by the "vertical" (intergovernmental or subnational) aspects of water and sanitation provision.

The current study--conducted jointly by the World Bank Water Global Practice and Governance Global Practice--contributes to both the state of knowledge and the state of practice on this topic by developing an organizing framework to shed light on the vertical organization of water and sanitation services. Specifically, it seeks to analyze how DWSS interacts with decentralized governance arrangements in different counties by applying the initial diagnostic framework to six countries (Kerala (India), Indonesia, Kenya, Peru, South Africa and Tanzania). In this context, it considers what can be learned from an analysis of DWSS in these six selected countries.

The approach recognizes that, more often than not, water practitioners are forced to take the nature of decentralization in a country as given. They are tasked with improving the performance of water and sanitation services within the context of the existing governance arrangements. As such, the methodology is agnostic with regard to the decentralization approach: it does not make an a priori assumption that more or less decentralization--or any one specific decentralization model--is more effective or preferred over another.

An important benefit of viewing the delivery of DWSS through a "big picture" lens--which looks not only at the governance arrangements for water and sanitation providers, but also considers the vertical governance arrangements for the water and sanitation sector more broadly--is that it can reveal non-technical constraints to water and sanitation service delivery. The initial application of this assessment framework suggests that broader institutional and political economy forces play an important role in the service delivery failures and should, perhaps, be more explicitly considered in project designs.

The diagnostic framework for decentralized water and sanitation services. The diagnostic framework developed to analyze decentralized water and sanitation services builds on the World Bank's (2012) Approach to Public Sector Management 2011-2020: Better Results from Public Sector Institutions. It also draws on: the local governance assessment framework developed by Serdar Yilmaz, Yakup Beris; Rodrigo Serrano-Berthet (2008), the World Banks's Guiding Principles for Successful Reforms of Urban Water Supply and Sanitation Sectors (Locussol and Fall 2008; and the associated Template for Assessing the Governance of Public Water Supply and Sanitation Service Providers (Locussol and van Ginneken 2010).

A shared understanding of the governance, institutional and fiscal context of decentralized water and sanitation services is required in order to forge a structured, problem-driven assessment of decentralized water and sanitation institutions. It helps to identify whether principles of sound institutional design are met. It can also aid in identifying any binding constraints to public sector effectiveness, as well as any shortcomings in the decentralized delivery of water and sanitation services.

As such, the assessment framework does not judge the structure of DWSS against a norm-based decentralization standard, or certain best practices. Rather, it aims to assess whether the vertical institutional arrangements surrounding DWSS comply with basic principles of sound institutional design in six areas or dimensions of local water and sanitation provision, including:

  • (i) the organizational structure of water and sanitation services;
  • (ii) the assignment of functional responsibilities;
  • (iii) the effectiveness and responsiveness of the (local) political leadership;
  • (iv) the degree of local control over administration and service delivery;
  • (v) local fiscal autonomy and local financial management; and
  • (vi) local participation and accountability mechanisms.

Together, an assessment of these six dimensions should help to inform: whether the organizational structure and functional responsibilities assigned to the various actors in the sector (including the regulatory framework) are clear and effective; whether (political) decision-making authority and administrative authority are aligned with the responsibilities of each actor; whether sufficient and predictable funding for the sector is available (taking into account the difficulties in adopting a full cost recovery model in developing countries and the need for hybrid financing mechanisms that incorporate public funding); and whether mechanisms for holding the various sectoral actors accountable for their performance are in place. This typically requires a wide range of approaches, including democratic oversight at different levels, hierarchical top-down oversight (vertical accountability), performance contracts, and/or horizontal (bottom-up) accountability approaches (including client power).

Observations from the country cases. Drawing on the six in-depth studies of institutional arrangements with respect to decentralized water and sanitation services, we observe a considerable degree of diversity in the nature of decentralized water and sanitation arrangements and outcomes across the countries, including diversity in: the subnational (intergovernmental) country structures; the institutional approaches to decentralized water and sanitation delivery; the local political systems; and sectoral outcomes and performance.

One area of considerable similarity, however, is the way in which local water and sanitation providers are funded. In all but one of the country cases, higher-level governments do not provide systematic grant funding for the recurrent operations of local water and sanitation services. Likewise, on the development side of the budget, only discretionary, earmarked grants from higher levels of government are provided to fund the capital requirements of local water and sanitation services. This suggests that--under the conventional division of funding responsibilities--improvements in access to water and sanitation are primarily determined by the extent to which the central government is willing to (directly or indirectly) fund expansion of water and sanitation infrastructure. At the same time, operational performance and sustainability is primarily driven by the institutional capacity, incentives and accountability mechanisms within which local governments and/or local service providers operate. While this is the typical model in the sector, it may not be the best way to ensure the long term sustainability of services as the ability to absorb new infrastructure at the local level may not match the pace at which infrastructure is supplied from the national level.

Although the case studies do not offer in-depth political economy assessments of the system of decentralized water and sanitation services in each country, a second area of similarity noted across the country cases is the important role that political economy forces play in shaping intergovernmental arrangements and local dynamics.

Tentative lessons and conclusions. Although the country sample reviewed is non-random and too small to draw any definite conclusions, the comparative overview of country cases is anecdotally consistent with the working assumption that institutional weaknesses related to the vertical (intergovernmental or subnational) organization of water and sanitation services have a negative impact on sectoral outcomes and performance. Although this does not mean that improved vertical institutional arrangements regarding water and sanitation will necessarily lead to better sectoral outcomes, it does suggest that further analysis of the vertical aspects of decentralized water and sanitation services is warranted.

Another pattern that seems to emerge from the initial comparative analysis is the fact that it is not so much the approach to decentralization that seems to matter in achieving improved sector outcomes or performance. Rather, it is the extent to which the chosen approach is properly implemented. In three of the six case studies considered (Indonesia, Peru, South Africa), devolution reforms were implemented in a relatively sound manner and seem to play, on balance, a positive role in improved water and sanitation services. In these countries, local governments are responsible for the operation and maintenance of water and sanitation systems. Yet, they also play a role in the development and construction of additional water and sanitation infrastructure.

In the three other cases (India, Kenya, and Tanzania), there are considerable "vertical" tensions between different government levels and/or competition between different central-level stakeholders that have resulted in: unclear, duplicative or inefficient organizational structures; unclear, duplicative or inefficient assignment of functional responsibilities; inadequate administrative authority and weak institutional capacity at the local level; inadequate, fragmented and inefficient funding; and weak or ineffective participation and accountability mechanisms.

The initial review of country experiences suggests that any decentralized approach to water and sanitation service delivery requires political will to transfer service delivery power and responsibility from higher-level governments to lower-level governments or entities. However, it also requires a recognition of the fact that every other aspect of the vertical institutional arrangements for decentralized water and sanitation provision will be shaped by the political economy motives of central government officials and local government actors.

As such, a tentative argument could be made that while devolution may be able to improve sectoral performance in the long run as economies grow and develop (as evidenced by the almost universal reliance on devolved DWSS in Organization for Economic Co-operation and Development [OECD] countries), in the short term, the key determinant of effective water and sanitation provision is not the nature of the decentralization model per se. Rather, it is the extent to which the countries are able to manage the (central and local) political economy forces that are likely to oppose or frustrate the introduction of an effective devolved approach to DWSS. Unless there is sufficient political will--and the necessary alignment of political economy forces--to ensure the effective implementation of a more decentralized (devolved, deconcentrated or delegated) approach to water and sanitation services, it may in fact be better to pursue a more centralized organizational structure for the provision of such services.

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