Regulating water and sanitation services

Regulating water and sanitation services can generate much confusion. As essential public services, they need to be regulated from an economic, environmental and public health point of view. Economic regulation of such services includes tariff regulation, service quality, competition and, in some cases, consumer protection. Institutional models for carrying out such regulation include self-regulation, regulation by contract, regulation by agency as well as some hybrid models which combine regulation by contract and by agency and rely on external expert panels or user participation. There is no single model: each of these systems has its advantages and limitations. They must be tailored to the specific circumstances in order to adapt to the institutional context and meet the needs of all consumers, including the poorest. 

As regulation was often seen as a necessary element of introducing private sector participation, the debate on regulation has somewhat abated in the last few years. Despite this, regulation is needed more than ever: to regulate existing private sector contracts, but also public utilities or small-scale independent providers.

Tremolet Consulting has produced a wealth of resources over the years to assess and explain in more detail how regulation of water and sanitation services can be organised, based on a review of how key regulatory functions (such as setting tariffs or regulating service quality) can be allocated to a variety of institutions, which are either pre-existing or established for a specific purpose. One particular area of focus is also to see how regulatory mechanisms can be adapted to ensure that the poor have access to adequate services.