Private participation in the provision of water services : alternative means for private participation in the provision of water services

The paper focuses on the benefits of the privatization of water services and on the range of alternatives available for private participation in their provision. These alternatives are analyzed and their possible application in the countries of Latin America and the Caribbean is assessed on the basis of examples from the region and from other parts of the world. The alternatives covered include divestiture, the various forms of franchising, such as contracting out, management contracts, lease contracts and concessions, including many build operate and transfer (BOT) arrangements, and joint public-private arrangements. The strengths and weaknesses of each alternative are discussed, particularly with reference to the demands their implementation is likely to have on the public sector. It is emphasized that the privatization of water services will require the state to readjust its role in water management. The state will have to withdraw from some activities, while at the same time having to take on new ones, often of a very different character. Government it is suggested, will still need to act as a regulator, to ensure for the provision of basic water services, even when the operators of such services are private companies.