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PUPs for sustainable water development

Emanuele Lobina , David Hall | 06 February 2013

Partnerships have much to contribute to develop capacity. Yet, not all partnerships are the same. Where public-private partnerships have failed to meet the expectations, public-public partnerships are emerging as valuable alternative.

In the last 25 years, Public-Private Partnerships (PPPs) have failed to meet expectations of greater efficiency and effectiveness in developing water supply and sanitation systems. This was recognized in June 2004 by the World Bank, who admitted to some ’irrational exuberance’ on the potential benefits of PPPs.1

PPPs have also failed to meet expectations in terms of capacity development. The private sector’s imperative to achieve profit maximization is incompatible with the need to build capacity in developing countries. Knowledge transfer from private operators to local managers, local authorities and civil society would in fact preclude long-term business prospects and undermine the very raison d’être of PPPs.2

Public-public partnerships (PUPs) are emerging as a preferable alternative to PPPs for developing capacity in the water sector.3 PUPs are the collaboration between two or more public authorities or organizations, based on solidarity, to improve the capacity and effectiveness of one partner in providing public water supply and/or sanitation services. PUPs are peer relationships forged around common values and objectives, which exclude profit-seeking. The absence of commercial considerations allows public partners to reinvest all available resources into the development of local capacity, to build mutual trust which translates in long term capacity gains, and to incur low transaction costs. The comparative advantage of PUPs over PPPs extends to more ample opportunities for replication and scaling up. PUPs are far more diffused globally and induce less social resistance than PPPs. In addition, public operators that have benefitted from PUPs tend to support other public utilities in need of capacity development, thus producing a multiplier effect.4

PUPs have made and are continuing to make tangible contributions to sustainable water development both in the global North and South. Historically, Japan expanded sewerage coverage from 8 per cent to 69 per cent using domestic PUPs.5 In Riga, Latvia, an international PUP transformed the municipal water and sanitation operator into an autonomous, self-financing enterprise. Over 80% of wastewater treatment plants in China have been developed by municipalities through PUPs with local public sector companies. Domestic PUPs also enabled Costa Rica to achieve water supply coverage of more than 75% in rural areas as early as 2000. In Lilongwe, Malawi, an international PUP led to unaccounted-for-water falling to 16%.6 And a network of international PUPs allowed the city of Phnom Penh, Cambodia to increase water supply coverage from 20% to 90% between 1993 and 2010.7

Well-designed international programmes can, with relatively limited financial resources, significantly contribute to the achievement of a critical mass of capacity in the global water and sanitation sector. In recent years international programmes such as the ACP-EU Water Facility’s Partnership Initiative and the UN Water Operators’ Partnerships have made possible the establishment of dozens of new PUPs. Promisingly, public water operators and other stakeholders are showing more and more interest in participating in PUPs. But opportunities come with challenges. Neither ACP-EU Water Partnerships nor Water Operators’ Partnerships enjoy adequate financial resources to match the scale of the need.8 More substantial and sustained financing for PUPs will have to be made available, the institutional design of existing international programmes will have to be improved, and new innovative programmes will have to be established, if PUPs are to credibly contribute to achieve a critical mass of capacity in the global water and sanitation sector. Sustainable finance for PUPs means a sustainable future for water and sanitation. 

Footnotes

  1. Lobina, E., Hall, D. (2009) Thinking inside the box: the World Bank position on the private and public sector. PSIRU Reports, March 2009; Lobina, E. (2005) Problems with Private Water Concessions: A Review of Experiences and Analysis of Dynamics, in International Journal of Water Resources Development, Vol. 21, No. 1, pp. 55-87.
  2. Lobina, E., Hall, D. (2006) Public-Public Partnerships as a catalyst for capacity building and institutional development: lessons from Stockholm Vatten’s experience in the Baltic region. Paper presented at the IRC and UNESCO-IHE Symposium on Sustainable Water Supply and Sanitation: Strengthening Capacity for Local Governance, 26-28 September 2006, Delft, The Netherlands (pdf); Lobina, E., Hall, D. (2008) The comparative advantage of the public sector in the development of urban water supply, in Progress in Development Studies, 8(1), pp. 85-101.
  3. Tucker, J., Calow, R., Nickel, D., Thaler, T. (2010) A comparative evaluation of Public-Private and Public-Public Partnerships for urban water services in ACP countries. Study requested by the European Parliament's Committee on Development, EXPO/B/DEVE/FWC/2009-01/Lot5/01, May 2010. Brussels: Directorate-General for External Policies of the Union, Policy Department; European Commission (2012) Confronting scarcity: managing water, energy and land for inclusive and sustainable growth. European Report on Development 2011-2012, (pdf)
  4. Hall, D., Lobina, E., Corral, V., Hoedeman, O., Terhorst, P., Pigeon, M., Kishimoto, S. (2009) Public-public partnerships (PUPs) in water. Report commissioned by the Transnational Institute and Public Services International, March 2009: Lobina, E., Hall, D. (2006) Public-Public Partnerships as a catalyst for capacity building and institutional development: lessons from Stockholm Vatten’s experience in the Baltic region. Paper presented at the IRC and UNESCO-IHE Symposium on Sustainable Water Supply and Sanitation: Strengthening Capacity for Local Governance, 26-28 September 2006, Delft, The Netherlands.
  5. Hall, D., Lobina, E. (2009) Public policy options for financing sewerage systems, in Castro, J. E. and Heller, L. (eds.) Water and Sanitation Services: Public Policy and Management. London: Earthscan, pp. 88-105.
  6. Hall, D., Lobina, E., Corral, V., Hoedeman, O., Terhorst, P., Pigeon, M., Kishimoto, S. (2009) Public-public partnerships (PUPs) in water. Report commissioned by the Transnational Institute and Public Services International, March 2009:  Lobina, E., Hall, D. (2006) Public-Public Partnerships as a catalyst for capacity building and institutional development: lessons from Stockholm Vatten’s experience in the Baltic region. Paper presented at the IRC and UNESCO-IHE Symposium on Sustainable Water Supply and Sanitation: Strengthening Capacity for Local Governance, 26-28 September 2006, Delft, The Netherlands.
  7. Chan, E. S. (2011) PPWSA – Profiting from Partnership. PPWSA presentation at the 1st Global Water Operator Partnership Congress (Cape Town, 22nd March 2011).
  8. Lobina, E., Hall, D. (2012) ACP-EU Water Facility – Partnerships Initiative. Report for the European Commission, Service contract 2010/236-444 (2010-2012), August 2012. 

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About the author

Emanuele Lobina

Emanuele Lobina is Principal Lecturer at the Public Services International Research Unit (PSIRU),...

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David Hall

David Hall is director of the Public Services International Research Unit (PSIRU), at the Busines...

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