2003 Reports

Water Institutional Reforms in Developing Countries: Insights, Evidences, and Case Studies

Saleth, R. Maria; Dinar, Ariel

While institutional reforms are critical for developing countries to enhance and sustain the economic and environmental contributions of their water sector, undertaking them is not an easy task in view of binding technical and political economy constraints. Despite these constraints, reforms of varying degree do occur in the water sector of many developing countries. What is the nature and extent of these reforms? How can we explain the forces that motive and constrain the reform process? How do countries overcome the reform constraints? What are the policy lessons that these reform experiences offer to other countries at reform threshold? This chapter attempts to address these and related questions by (a) utilizing an institutional transaction cost framework and (b) relying on stylized facts on water institutional reform observed across countries, empirical evidences on how institutional design and implementation principles are used to circumvent technical and political economy constraints, and case studies on the reform process in country-specific context. Based on the discussion and analysis, the chapter, then, concludes by identifying key implications for both theory and policy that could contribute to international policy dialogue on the interface between institutional reform and water resources management.