How To Develop Sustainable Irrigation Projects with Private Sector Participation

As the impact of climate change on food production for both developed and emerging economies shapes a new set of demands worldwide, there is a need to look at how water resources and irrigation can be optimized to meet the requirements of coming generations. This handbook explores one possible route: the use of public private partnerships (PPPs). PPPs have the potential to facilitate an expanded role for the private sector in irrigation, mobilize expertise in the sector, and ensure medium- to long- term sustainability.

Water Regulation: Self-Regulation

Summary

Under self-regulation, the public service provider regulates its own activities, sets tariffs and performance standards, and monitors performance. The utility is typically accountable to a third party, such as a board of directors (as for many public utilities in the United States, where the municipality—for example, the city of San Francisco—is providing the service) or a monitoring body, such as a city council (with or without a formal contract).

Water Regulation: Regulation by Contract with a Separate Regulator (Hybrid)

Summary

Under the hybrid model, regulation by contract is combined with supervision by an independent regulator. Typically, tariffs agreed upon by the parties to the contract need to be approved by the regulator. This combined approach has been used for public utilities (as in Colombia and Kenya) and private WSPs (as in Colombia and Niger).

Regulation by Contract

Summary

Regulation by contract uses no separate regulatory agency, and the public sector asset holder to a contract monitors the performance of the operator (usually private but sometimes public). A contract typically defines the relationship between the asset owner and the service provider. France is a country with a long history of PSPs contracting with local government. Such arrangements are also in place in Metro Manila, and they are being used increasingly for public utilities through performance contracts in France, Germany, and Uganda.

Water Regulation: Separate Regulatory Body with Licensing Regime

Summary

Under this model, an agency separate from the water service providers issues licenses to them and sets the terms of supply. Traditionally used to regulate private providers (such as in England and Wales and the United States), it features increasingly in the regulation of public service providers (such as some states in Australia and the United States). Regulatory agencies may be at national or regional levels (as in England and in the United States and Australia, respectively) or they may be local.