Improving Water Supply and Sanitation Institutions and Incentives to Strengthen Sector Performance

By Norhan Sadik and Gustavo Saltiel

from the Global Water Practice


Since 1990, an additional 2.1 billion people worldwide have gained access to improved sanitation and 91 percent of the global population is now using an improved drinking water source. Yet, those who have access still often cope with poor service quality, including intermittent supplies, and many of the poorest are still without access.  Continued environmental degradation and financially weak service providers also put into question the sustainability of the services that are being provided.


Misaligned incentives have led Governments to opt for investments in highly visible infrastructure projects and to allocate less resources for improvements in quality of service delivery. Policy and institutional arrangements for WSS services are oftentimes ineffective at empowering service providers to deliver sustainable, quality WSS services. In this context, achieving the Sustainable Development Goal on Water and Sanitation (SDG 6) that sets out to “ensure availability and sustainable management of water and sanitation for all” is a major challenge. This global challenge demands a new integrated approach that addresses the institutional, policy and incentive aspects of service delivery to achieve sustainable WSS services for all.


In addition, the world-wide trend for decentralization of service delivery responsibilities and increasing demands for accountability in service delivery is also impacting the water sector. The traditional centralized model that places emphasis on capital investments, asset creation and regulation has not been found to be very effective in addressing these demands as it does not create the necessary incentives for accountable service provision and cost recovery. Therefore countries are looking for alternative institutional, financial and accountability structures and relationships that would strengthen service delivery and reinforce accountability by the state as well as the service providers to citizens, consumers and other stakeholders.


Addressing institutional and incentive constraints to WSS service delivery is not an uncommon challenge to the majority of the World Banks’ client countries.  To better serve our clients, and to unlock institutional and incentive bottlenecks in WSS service delivery, the Water Supply and Sanitation Global Solutions Group (WSS GSG) of the Water Global Practice, working closely with the Governance Global Practice, is currently exploring the institutional and incentive constraints to sustainable WSS service delivery and will work towards developing a number of tools that would allow client countries to analyze, identify and address institutional and incentive problems through comprehensive solutions that would address institutional, incentive, policy and regulatory aspects of service delivery in parallel. Analytical work is underway that includes the development of a global study on policies, institutions and incentives – to provide an in-depth analysis of the policies, institutional structures and financing mechanisms that, if addressed in an integrated manner, could provide an adequate set of incentives to achieve sustainable universal access to water and sanitation services. The work will look at international experiences in relation to regulation, financial instruments, decentralization, fiscal transfers and incentives, and the role of civil society. Learning from the findings of the global study, the intention is to work with one client country to design a detailed plan of how to implement a model based around improving policies, institutions and incentives to raise performance within the WSS sector nationwide.