Strategy and Performance of Water Supply and Sanitation Providers : UNESCO-IHE PhD Thesis

The continuous growth in the demand for water supply and sanitation services has posed decision makers with the challenge to discover new, and to adapt existing, institutions. Since the last two decades, the most prominent institutional change for the water and sanitation sector is neo-liberalism. Neo-liberalism manifests itself in the water sector through privatization, private sector involvement and liberalisation. This book analyses whether neo-liberalism has had an effect on the institutions, the strategies, and the performances of water providers. Strategies are interpreted through what a water provider can do (strategic context), wants to do (strategic plans), and actually does (strategic actions). On the basis of studies in the Netherlands, the Netherlands Antilles, the United Kingdom and Italy, the book concludes that neo-liberal institutional changes matter for the strategies of water providers. However, it also finds that the inherent problems with performance interpretation, measurement and comparison obscure any accurate insight in the effect of neo-liberal institutional changes on performance. In this regard the book opens a window for research both on the relation between institutions and conduct, and between conduct and performance of water and sanitation providers. Table of Contents......Page 11 Abstract......Page 6 Preface......Page 8 Section I. Introductory section......Page 18 1.2 Structure of the thesis......Page 20 2.2 Characterizing WSS services......Page 23 2.2.1 A public and/or a private good......Page 24 2.2.2 A monopoly and/or a competitive good......Page 25 2.2.3 An economic and/or a merit good......Page 26 2.3 Institutions in the WSS sector......Page 27 2.4 The benevolent role of the government in Friesland......Page 31 2.5 Synthesis of the Chapter......Page 34 3.2 Neo-liberalism......Page 36 3.2.1 Welfare economics......Page 37 3.2.2 Contract theory......Page 38 3.2.4 Principal-Agent theory......Page 39 3.2.5 Public Choice theory......Page 41 3.3 Manifestations of neo-liberalism in the WSS sector......Page 43 3.4 The neo-liberal trend in the WSS sector......Page 45 3.5 Empirical enquiries on neo-liberal changes in the WSS sector......Page 48 3.6 The landmark case of Cochabamba......Page 54 3.7 Synthesis of the Chapter......Page 58 Section II: Research Design......Page 60 4.2 Research objective......Page 62 4.3 Introducing 'strategy' as the intermediate variable......Page 63 4.4 The relevancy of the strategic management field to the WSS sector......Page 65 4.5 Defining strategies......Page 67 4.6 Dimensions of strategy......Page 69 4.7 Researching 'strategy' through typologies......Page 70 4.8 The Miles and Snow typology......Page 73 4.9 Strategy for public service organisations......Page 77 4.9.1 Market strategies......Page 78 4.9.2 Products/services strategies......Page 79 4.9.4 Internal organisation strategies......Page 80 4.9.5 External organisation strategies......Page 81 4.10 The relation between 'strategy' and performance......Page 82 4.11 Synthesis of the Chapter......Page 85 5.2 Analytical framework......Page 87 5.3 Research question and hypotheses......Page 88 5.4 Target population......Page 89 5.5.1 Neo-liberalism and institutional changes......Page 90 5.5.2 Institutions and strategic context......Page 91 5.5.3 Institutions and strategic plans of WSS providers......Page 93 5.5.4 Institutions and strategic actions of WSS providers......Page 94 5.5.5 Institutions, strategies and performance......Page 96 5.6.1 The choice of a cross sectional approach......Page 98 5.6.3 The choice for 'ownership'......Page 99 5.6.4 The choice for the data processing methodology......Page 100 5.6.5 The choice for benchmarking indicators......Page 101 5.6.6 The choice for the market to fulfil the governmental mandate......Page 103 5.7 Synthesis of the Chapter......Page 109 Section III. Analysis......Page 112 6.2 Driving and resistance forces......Page 114 6.2.1 The first tier of drivers and constraints......Page 116 6.2.3 The third tier of drivers and constraints......Page 121 6.3 The current European WSS sector......Page 122 6.3.2 Cluster in change to delegated public management......Page 124 6.3.3 Cluster in change to delegated private management......Page 127 6.4 The future Western European WSS sector......Page 131 6.4.1 Scenario 1: delegation contracts......Page 133 6.4.2 Scenario 2: outsourcing......Page 134 6.4.3 Scenario 3: regulated monopoly......Page 135 6.4.5 Scenario 5: community management......Page 136 6.5 Synthesis of the Chapter......Page 137 7.1 Introduction......Page 139 7.2.1 Accessing the resource......Page 140 7.2.2 Producing and distributing drinking water......Page 142 7.2.3 Collecting and treating wastewater......Page 144 7.3 Regulatory institutions along the strategic components......Page 146 7.3.1 Market strategic context......Page 147 7.3.2 Products/services strategic context......Page 150 7.3.3 Seeking revenues strategic context......Page 151 7.3.5 External organisation strategic context......Page 152 7.4 Synthesis of the Chapter......Page 153 8.2 Case study St. Maarten......Page 156 8.2.2 Strategic products/services plans......Page 163 8.2.3 Strategic seeking revenues plans......Page 164 8.2.4 Strategic internal organisation plans......Page 166 8.3 Synthesis of the Chapter......Page 167 9.2 Survey population......Page 170 9.2.1 The participating English and Welsh WSS operators......Page 173 9.2.2 The participating Scottish WSS operator......Page 174 9.2.4 The participating Dutch WSS operators......Page 175 9.2.5 The participating Italian WSS operators......Page 176 9.3 Survey methodology and response......Page 180 9.4 Analysis of self-description and aggregated multi-item scores......Page 182 9.5 Analysis for each of the 5 strategic components......Page 185 9.5.1 Strategic market actions......Page 186 9.5.2 Strategic products/services actions......Page 189 9.5.3 Strategic seeking revenues actions......Page 191 9.5.4 Strategic internal organisation actions......Page 193 9.5.5 Strategic external organisation actions......Page 197 9.6 Synthesis of the Chapter......Page 200 10.2 Strategy and performance for the English and Welsh WSS providers......Page 203 10.2.1 The strategy scores, overall performance and the individual key performance indicators......Page 204 10.2.2 The relation with financial performance indicators......Page 207 10.3 Strategy and performance of Dutch WSS providers......Page 209 10.4 Synthesis of the Chapter......Page 212 Section IV: Synthesis......Page 214 11.2 The research relations reviewed......Page 216 11.2.1 Institutional dynamics (1)......Page 217 11.2.2 The relation between institutions and strategic context (2a)......Page 218 11.2.4 The relation between institutions and strategic actions (2c)......Page 219 11.3 Conclusion......Page 221 11.4 Discussion......Page 222 11.5 Future research......Page 223 Bibliography......Page 226 Dutch Summary (Nederlandse samenvatting)......Page 244 Annexes......Page 248 Annex 1: Overview empirical enquiries strategies and performance......Page 250 Annex 2: The Miles and Snow typologies......Page 252 Annex 3: Overview regional benchmarking initiatives......Page 254 Annex 4: Standard Performance Indicators Water Service Providers......Page 255 Annex 5: Overview regulatory regimes UK and the Netherlands......Page 256 Annex 6: Questionnaire Strategy Survey......Page 257 Annex 7: Comparison of Self-Typing and Multi-item measurement......Page 266 Annex 8: Overview outcome ANOVA analysis......Page 268 Annex 9: Weighing factors OPA......Page 270 Annex 10: Curriculum Vitae Marco Schouten......Page 271 This thesis concerns governmentally motivated institutional changes in the water supply and sanitation (WSS) sector, and more specifically the changes associated with the adoption of the neo-liberal agenda. The continuous growth in the demand for WSS services has posed decision makers with the challenge to discover new, and to adapt existing, institutions. Institutional change in the WSS sector is a hazardous enterprise for any policy maker in view of the public interest at stake, the externalities associated, and the ambiguous nature of the good. The most prominent institutional change for the WSS sector is neo-liberalism. This change that started at the beginning of the 1990s entailed essentially a call for more competition and more private sector involvement. Neo-liberalism manifests itself in the water sector through three complementary forms: a shift in ownership of the water services supplier (privatisation), enhanced competition (liberalisation), and involvement of private parties through partnership arrangements (private sector involvement)