Many countries in Latin American are in the process of making changes to legislation and to organizations that deal with water management. These reforms vary a great deal from one country to another in their advances, goals and content. Some countries, like Brazil, Chile, Colombia, Jamaica and Mexico, have already made reforms in water sector institutions; the vast majority of others are in the process of proposing legal and institutional changes. In many, the debate has carried on for over a decade and still persists.

The reasons behind these changes differ from country to country. However, the main reason relates to current global changes in ideology and interests, especially government policies designed to increase national and transnational private participation, as well as the decentralization of water resources management, in general, and provision of public services, in particular. At the same time, there is growing interest in the use of economic and market instruments such as tariffs, fees, transferable rights, etc., to improve water use and allocation. The quest for an integrated approach to water resource management is not necessarily the main factor that dominates these changes. Instead, more influential factors include: (i) the desire to make possible, protect and promote private participation and investment; (ii) the imperative to reduce pressure on public budgets and spend public money in areas that are politically more urgent; and (iii) the drive to improve the economic efficiency of water resource management and the provision of public services.

We also have to acknowledge the influence of the outcome of international events and agreements signed by countries of the region related to water resources – such as the United Nations Conference on Environment and Development (Rio de Janeiro, Brazil, June 3 - 24, 1992), and more recently, the Second World Forum on Water (The Hague, Holland, March 17 - 22, 2000) – as well as the impact that the active participation of non-government organizations and society as a whole have had on a growing awareness of the urgent need to improve water management, especially in relation to social and environmental demands.

Above ideologies and interests, the most important aspect to push the current reform process is the need to improve water management to face growing competition for multiple water use, especially increasing demand in large urban concentrations as well as in agriculture and hydroelectricity. Rising water contamination and extreme natural phenomena make the water demand situation worse and have an influence on government policies.

Through these considerations, we can perceive that in many countries of the region – especially in basins with intensive intervention and concentrated economic development, water management is slowly entering a mature phase of its development. This phase is characterized by an inelastic supply of new resources and an increasing interdependence among water uses and users. As the water sector matures and the availability of water becomes more scarce - in quality, quantity and occurrence in time - the attention of governments is gradually shifting from concern with the expansion and subsidy of the development of the water sector to revenue generation and reallocation.

Investment to increase the water supply needed for consumption is necessary and growing every day. Nevertheless, while investment is necessary, it is not enough to solve the problem of resource management. That is the reason why a change in the approach is gradually developing, from one based exclusively on the management of the supply to another that includes both supply and demand; from one fragmented approach by different sectors of users to a more integrated approach that leads to the multiple uses of water. All this requires is to modify laws and institutions that were created decades ago to solve problems completely different than the ones the region faces today. The motivations generating the current wave of changes in legislation and organization dealing with water resources management are not the same in every country. Motivations are not even shared by entities and people from the same country. This situation has created extensive discussion. The most conflictive and complex debates are centered around issues such as the ways and conditions governing the assignment of water rights; the formulation and application of regulatory frames; the organizing institutions required for managing the multiple uses of water; the feasibility of creating water markets; and the application of economic instruments, among others.

As a consequence of all these different motivations, the process of negotiating change has become very complex, either because of the magnitude of the problems that have to be solved or the discrepancies in interests and ideologies. The main problem that makes the reform process so difficult is the current tendency to modify the water management and supply system to encourage the participation of the private sector and the use of economic and market instruments, leaving out of the discussion the equitable and multiple uses of water. There is a gap between the progressing privatization process and the introduction of economic and market instruments, on the one hand, and the formulation and implementation of regulatory frames that prevent monopoly and excessive fees for the delivery of the service, guarantee quality assurance and organize the required institutions for the integrated management of water, on the other. There has not been enough progress in organizing and operating multiple-use water management. There is a tendency to reduce the relative importance of water resources in the context of a general concern for the environment.

A common mistake that is observed is the tendency to copy other countries’ water legislation without paying much attention to the institutional and geographical conditions of the countries where this legislation has been implemented, and without assessing the outcome of this legislation. Other options are frequently ignored, and evaluations of the conditions of the “recipient” country are often not made. For instance, some countries of the region tried to copy the 1981 Chilean Code of Waters without the proper analysis. This has caused more delays than advantages when discussing many projects on water legislation. In some instances, there have been futile theoretical and ideological debates on issues that are foreign to the real problems of water management existing in countries that are changing their water legislation. It is important to point out that water management models cannot be exported or transferred from one country to another in a rigid way, particularly when big differences exist between the availability of water, and management traditions and capabilities. What could be done is to adopt the principles behind a specific water management model and adjust them according to the conditions, traditions, capabilities and needs of each country, region and basin. When formulating the new water laws, successes of previous legislation, as well as new scientific and technological experiences from other countries known for their integrated management approach, should be considered with the necessary modifications depending on the reality of each country. Unfortunately, a common characteristic in many of these proposals for legislative reform is that positive aspects of the current law are completely ignored as are as the differences in traditions, capability, availability of water, etc., among different areas or basins of a country.

Advances in the administrative structure for an integrated management

The regional situation

Traditional State organization in the region countries is essentially by sector. Sectors specialize in activities related to the use of water resources for specific goals, and do not do so for their multiple uses. This severely limits the possibility of optimizing their uses, of minimizing water-related conflicts, and of approaching tasks that affect the whole of water users or basin users. Hydroelectric energy production, provision of drinking water and sanitation, irrigation and other forms of utilization were and are the only raison d’être for each organization. They acted or act independently with non-existing or weak coordination systems. Depending on the country, hydroelectric energy, irrigation, or drinking water provisions and sanitation sectors dominated or dominate the hydraulic development, and in many cases, the water management. In many countries, these marked sectors’ interests have become still more pronounced with privatization.

Currently, it can be said that there is consensus in the region that the fragmented approach to water resource management is resulting in increased conflict, inefficient use and deterioration of the resource. A paradigm change to the approaches is happening gradually, from a fragmented, user sector approach to a more integrated approach. This process is manifested in a profound reorganization of the state apparatuses oriented to water management and use.

The cornerstone of this restructuring is the assignment of formulating water policies, of coordinating the multiple uses of water, of regulating their assignment and the supervision of users to a regulating or coordinating non-user entity, independent and separate from the scope of traditional users, such as agriculture, hydroelectric energy and the provision of drinking water and sanitation. This entity would consider the water resource integrally and in its totality. With respect to the structuring of entities in charge of water management, there is an incipient trend to secure for them independence, and professional and financial capabilities.

The driving force behind this change is recognition of the basic fact that sector entities cannot impartially exercise the function of managing and properly assigning the resources as well as solving conflicts between competitive uses. Furthermore, a user-sector’s dependence diminishes its authority. Restructuring the processes of institutional structures in charge of water management is accompanied by reforms at the sector level and invariably involves the separation of the public service provision function from its regulation, control and planning.

This trend is positive since, in general, the water manager must be a non-sector entity separated from administrative estates with sector vocations, such as irrigation, hydroelectric energy, and the provision of drinking water and sanitation services. When management functions are conferred to institutions with functional responsibilities for specific water uses or for discreet economic activities, there is the danger that their decisions might no longer be objective. In these cases, each interested party may tend to support water projects or assignations according to their own sector interests, without considering water’s multiple uses and without considering the basin in its wholeness, or the security of the investments, or the economic solidity of particular projects and decisions.

It is important to say that, in general, the administrative organs of the collegial type, such as boards or commissions, have not had good results. Normally, institutions of this type do not fulfill their goals and end up being replaced by more consolidate entities, with more lineal and less deliberative structures. Previous experience suggests that countries’ policies should be oriented to create non-collegial management entities even though they may incorporate organizations or sector interests for consultation and participation.

In many cases, such goals are pursued through the creation and strengthening of environmental or natural resources ministries or autonomous organizations. This road is, in general, a valid option given the multi-sector character of water, but its implementation has not always resulted in favorable effects with respect to water resources management. In many cases, this is due to the fact that there still exists a certain degree of conceptual confusion between the environmental dimension of water resources management and the environment management problematic. For example, in various countries the water management problematic has been diluted within the larger objectives of environmental or natural resources management.

Currently, global management of the environment is being attempted in many countries, without them having exhibited the capability to properly manage even one of the natural resources at the necessary scale. What is often forgotten is that the management of water resources occupies an important place in environmental management. In many cases, the results of the creation or strengthening of environmental or natural resource entities is a reduced government capability with respect to water management. This is why it is thought that when water management is part of the general system of environmental or natural resources ministries, it is essential that it have certain functional autonomy in order to facilitate the proper carrying out of tasks.

Reforms of this type have not yet consolidated in the region countries, and many of the advances are limited to the normative or declared scope of intentions. In most countries, management systems have not yet improved sufficiently to achieve their purpose and, what it is worst, in some of them such systems have deteriorated with respect to earlier capabilities. The reform process has been and continues to be slow and, in general, governments confront considerable difficulties on this road.

In many countries the assignment and control of water are still governed by sector organizations, usually from the agriculture or energy sectors. The result is that decisions are made by a user sector that is both a judge of and a participant in the assignment of water resources as well as conflict resolution between users. It also results in bias in the design of hydraulic works that are not designed for multiple uses. In other countries, the institutional systems of water management still integrate many institutions that are characterized by a lack of coordination of activities. The result is that, in many cases, the resource continues to be utilized almost exclusively for sector goals. Most investment projects on hydraulic works are carried out by sector entities without establishing adequate coordination mechanisms between them.

In many cases, the assignment and management of resource responsibilities are still separated in a way that does not reflect its physical characteristics or optimal use. This makes it difficult to have an integrated vision of the resource, and causes a duplication of activities, overlapping of responsibilities, and resource dispersion. An example of this is the existence in many countries of different laws and institutions to regulate the assignment of superficial and ground water. Though almost every water use may cause pollution, it is still common for there to be one organization responsible for the quality of the resource and pollution control, and another charged with its assignment and management, with weak or non-existent coordination mechanisms.

In some cases, there still exist limitations resulting from the politicization of essentially technical activities, as well as from the instability of the high level direction of water-related organizations.

This is aggravated by the fact that currently many elements of the public good related to water are neglected in the region: information, records, and administrative justice among others. An important obstacle to achieving integrated management of water resources is the problem of the lack of hydro-meteorological information. This does not allow the adequate and reasonable adoption of rational decisions for water assignment, the planning of its uses or the ordering of territory use; nor does it allow the implementation of vigilance, control and regulation functions. The result is that decisions are taken and plans made without data, and rights are given without records. Since there are not simple and expeditious mechanisms of common access to solve conflicts, those sectors with fewer resources and political access are left defenseless. This last point is serious, because without a neutral system of conflict resolution, those sector with more economic clout and political power do not have incentives to negotiate conflicts; while at the same time, other sectors do not have the information or the economic resources to sue them in tribunals. Tribunals do not have the technical capability to adequately solve the complex questions they are dealing with. Furthermore, since sacrificing budgets dedicated to the administration and research of water resources has been and still is a common practice in many countries, sector organizations have not had the priority they require to obtain adequate budgets.

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Advances in the creation and operation of water management entities at the basin level

The regional situation

The issue has become a force in the nineties at the moment in which the countries in the region strive to achieve sustainable development goals reconciling economic growth, equity and environmental sustainability. In spite of the existing obstacles there is a generalized interest in creating and operating organizations at the basin level to administer the multiple uses of water, and to solve the conflicts resulting from its utilization. The interest to manage water with multiple use goals at the basin level is reflected in recently approved laws, as well as in many proposals to modify existing laws. Among other factors, this new interest is due to: (i) the intensification of conflicts over water use, resulting from growing demand for water as well as increasing pollution problems, and the effects of extreme natural phenomena and the perception that the seriousness of the deterioration of the basins of capture and of ground water recharge zones is increasing; (ii) decentralization and privatization processes, which reflect the appearance in water resource management systems of many new actors (i.e., water users, local governments, the private sector, native populations, and non-government organizations) and new challenges; and (iii) geographic concentration and the differentiation of problems and conflicts related to water management and use, which do not occur uniformly in one country, but are greatly heterogeneous in their nature as well as in their seriousness in different basins.

Thus, the dialogue on the need to create water management at the basin level has intensified in countries of the region as a way of solving conflicts, improving administration and focusing on the impact of water use on the environment and on society. Already, in many countries different activities related to water management and use are carried out through some entity that functions at the basin level, or some planning already exists at that level. Though all these experiences are greatly heterogeneous in their goals and outcomes, the most common approaches can be classified in the following groups: :

• Entities that are charged with managing inter-jurisdictional or transboundary basins. Generally, entities of this type only have the power to make decisions on strictly technical matters and to comply with programs agreed upon between the parties. This is due to the fact that, in general, those who have jurisdiction over water are normally reluctant to delegate attribution to an inter-jurisdictional or international organ that is not fully subordinated to them. It is convenient to distinguish two different cases:
  
  • Inter-jurisdictional entities in federal countries. In federal countries, water jurisdiction is not always dependent on central governments. In this case, because the territorial borders of local, provincial, state or regional governments do not normally coincide with the physical border of the basins, it is easier and simpler to approach water resource management at the basin level. Among the countries of the region, the main example is Argentina where water belongs to the provincial states. For this reason and because most of the country’s basins are inter-provincial, different types of inter-jurisdictional organizations have been created.
  • Entities charged with the administration of transboundary basins. Almost 71% of the total surface volume of Latin America and the Caribbean corresponds to shared basins, comprising 55% of the total surface of the region. In South America, international basins represent 75% of the total volume; in Central America and Mexico that number is 24%. In the Caribbean islands, there is only one international basin, Artibonite, shared by Haiti and the Dominican Republic. In the nineties, the long tradition of cooperation in the field of management and the use of the shared basins of the countries in the region has been maintained and strengthened. However, there are still few entities that are actively in charge of the joint management of shared water resources.
• Entities that are charged with the bulk of water management substantive functions in its jurisdiction’s area >. In the countries of the region it is still uncommon that the substantive functions and the authority to make relevant decisions in water management matters – such as water assignment, control of water pollution, etc. – are decentralized at the basin level. This is the case for the Regional Autonomous Corporations in Colombia. They are charged with administrating the environment and the renewable natural resources in compliance with the policies of central government authorities. However, these corporations were not created at the basin level but are part of the territorial entities that constitute geographically the same ecosystem or configure a geopolitical, bio-geographic or hydro-geographic unit. As it is possible to observe, the criteria of the hydrographic basin is only one among several criteria used to determine the physical jurisdiction of these organizations. This is also the case with the Regional Management Agencies of the CNA in Mexico. The CNA promotes the de-concentration of functions of the Regional Management Agencies, including functions that were carried out at the central level. The Regional Management Agencies have delimited hydrologic and administrative criteria in such a way that the borders between them almost coincide with the water partitions of basins or groups of basins. Other similar cases are the Water Agencies in Ecuador, which are part of CNRH and have among their functions water assignment and conflict resolution; another example, though in a lesser way, are the Regional Directions of the DGA in Chile.
• Entities whose main objective is to improve coordination and to facilitate user and local government participation in the water management>. In most countries in the region, the responsibility of water resource management is dispersed and fragmented. Also, the traditional administration structures tend to be centralized, with scarce participation by users, local governments and other actors. The effects of this fragmentation and the lack of administrative coordination and participation are manifested on a larger scale at the basin level. Discussions to overcome these problems through better coordination at the basin level are underway in many countries in the region. Meanwhile, the substantive functions of water management are retained by central governments. These entities’ functions are normally limited to: (i) consulting and seeking consensus among the different actors that participate in the basin and coordinating their actions; (ii) elaborately planning water resources at the local level; (iii) coordinating with the central government certain aspects of water assignment, especially in extreme situations; (iv) arbitrating, in the first administrative instance, conflicts related to water resources; and (v) compiling information, taking censuses and conducting inspections. The Basin Committees in Brazil and the Basin Boards in Mexico operate in this manner. The Autonomous Basin Authorities in Peru and the Regional Irrigation Consulting Juntas in Uruguay are also representatives of this type, although in a limited form. The creation of entities with similar objectives and outcomes has been proposed in Bolivia, Chile, Ecuador, El Salvador, Guatemala and Honduras.
• Entities created for specific functions in basins of priority attention>. In the countries of the region, water use is spatially irregular and is highly concentrated in a relatively reduced number of zones or basins. Also, it is common that in some sectors there is no responsible organization, while certain types of water-related problems such as water pollution and urban draining fall under the mandates of a large number of institutions, without any of them effectively taking charge. These two factors help explain the creation in many countries of special entities for high-priority basins. Their functions are normally related to the conservation and protection of basins. Entities of this type have been created in Costa Rica, Guatemala, Honduras, Panama and Venezuela. Municipal associations, such as the inter-municipal basin consortium in Brazil, can also be considered examples. They have been created to deal with specific problems that concern several municipalities in the same basin. Furthermore, in almost every country of the region, though the basin entities are created based in a general legislation as in Mexico, it is very common that many such entities are “virtual” and do not have the necessary support or the resources to carry out their functions. The few “real” entities are those dedicated to high-priority basins.
• Entities whose functions are related mainly to the construction and operation of hydraulic works and water distribution to users>. These are entities with diverse compositions, functions and outcomes. At one end, there are the typical organizations of water users such as the vigilance juntas in Chile. They are created at the basin level, and use natural currents or their sections to distribute water to which their members have rights and to exploit the works of common use. At the other end, there are entities with mixed composition and broader outcomes, such as the Basin Committees in the Santa Fe province in Argentina, whose functions are related to the maintenance and conservation of hydraulic works. This is the case of the Regional Development Corporations in Ecuador. They are in charge of the planning and execution of irrigation projects and in some cases also carry out hydro electricity and drinking water projects.

Advances in the administrative structure for the provision of drinking water and sanitation services

The regional situation

• The percentage of the population with adequate access to supplies of drinking water and sanitation services and the coverage deficit . OMS/UNICEF (2000) estimated that at the regional level 93% of the urban population had access to drinking water supply services in 2000 (proportionate to 92% in 1990), and 87% to sanitation services (85% in 1990). Of the rural population, only 62% (56% in 1990) had available drinking water supply services and 49% (39% in 1990) sanitation services. These coverage levels mean that in countries in the region there are still 78 million people without access to drinking water supply services (29 million in the urban areas and 49 in the rural ones) and 117 million lack sanitation services (51 million in the urban areas and 66 in the rural ones). The challenge of the present situation is still larger if it is considered that for 2010, due to the fast growth of the population, the coverage deficit will increase by some 77 million people, almost all of them in the urban areas.
• The lack of options of access to drinking water supply services and sanitation for low income groups . In general, most people without access to services are poor and many must buy water from private vendors at prices that highly exceed official prices. These companies - due in part to insufficient income - cannot extend their services to the marginal zones where the poor live. Recent studies suggest that the coverage of water services is 4 to 16 times larger in families of higher income that in those of lower income. In urban areas, the expense proportion for drinking water among poor families is 2 to 4 times higher than in wealthier families. Populations that do not have adequate access to drinking water supply and sanitation services adopt alternative solutions. In the case of drinking water supply, these solutions include public fountains, individual wells, cistern trucks, illegal connections to the public system network, or water capture from rivers, lakes or other water bodies without treatment. Many of these solutions do not monitor the quality of the water obtained and have a high cost for the user. The generalized use of septic tanks and water-closets have polluted groundwater in some cities.

• Infrastructure deterioration and collapse and the low quality of drinking water supply and sanitation services. In many countries of the region, the drinking water supply services are intermittent, even in important parts of main cities. In countries where information about the continuity of their urban systems of drinking water supply is available, almost 50% report a certain degree of intermittence. In 15% of countries, more than 95% of their systems have intermittence problems. In almost every country in the region, due to inadequate maintenance, the systems have many water filtration problems that put the integrity of the distribution networks at risk, along with drinking water quality and the financial sustainability of the sector. In the large cities of the region, levels of water not accounted as delivered to users are estimated at more than 40% of the initial delivery to the system. The experiences of most companies in the sector in the region indicate that the high levels of non-accounted water originate from deficiencies in commercial management, mainly invoicing problems, payment recollection and inadequate policies in matters of expired bills -- and not only from loss by filtration in the distribution systems. The population covered by adequate systems of drinking water vigilance and quality control is limited to urban areas and insignificant in rural areas: only 24% of the urban population in the region have effective drinking water vigilance systems. It is estimated that in the large cities of the region, 94% of drinking water is disinfected in an effective way, but almost 18% of samples violate national norms with respect to their microbiological, chemical, physical and esthetics properties. The deficit of coverage and the low quality of services are further compromised by growing water pollution that has reached alarming levels in many water bodies, due mainly to the generalized lack of sewage water treatment. According to estimates, only 14% of sewage water currently receives some degree of treatment.

The main reasons that explain the poor performance of the sector are related mainly to: (i) the inefficiency of responsible public bodies and their inability to implement and follow appropriate policies of company management, or to establish tariffs that make it possible to recover costs and protect contributions to the sector through the general income of governments with austere budgets; and (ii) the inappropriate institutional structure of the sector that has resulted in the overlapping, confusion and excessive politicization of service provision, of policy definition and the control of provision entities. Furthermore, these problems have been aggravated by macroeconomic instability and a structural deficit in public finances.

The consequences of these blundered public policies became apparent during the eighties’ recession, though their repercussions are still being felt in many countries today. When a strong economic recession exists, there often follows a considerable reduction of government involvement. This occurs at the same time that a gap appears between the real value and the tariffs charged by the service provider. This tariff gaps diminishes the operation and maintenance capabilities of the service provision entities. In conditions of relative stability, periods of financial deficit have been somehow overcome by the sector through the assignment of funds from governments’ general income. However, in periods of increasing instability, governments react to limit and reduce expenses as much as possible. This implies that the financial requirements of public companies are neglected: they become indebted, work gets postponed, and operational and maintenance activities are suspended. In turn, this produces a process of increasing dissatisfaction leading to decreased demand, further reducing the quality of services delivered and a general deterioration of the infrastructure. Simultaneously, state sector salaries decline resulting in a drain of competent personnel, especially at the management level. Thus the quality of human resources in the sector’s administration also deteriorates.

This generalized decay syndrome in the amount and quality of services leads to a deep crisis in the sector. The public credibility crisis that affect companies in the sector reaches such levels that a political and social consensus is created in relation to the need for radical and deep changes. Recently, as a result of this consensus in many countries, changes and reforms to the administrative structure for the provision of services have occurred, with a special emphasis in decentralization, and deconcentration, and the participation of the private sector, auto financing and the management of the systems with a more commercial criteria. In spite of the fact that the reforms carried out in the countries of the region show a heterogeneous profile, it is possible to appreciate some common trends:

First, in many countries, the sector has been restructured, meanwhile others are just starting. The reforms invariably imply the separation of policy-making and planning from the functions of regulation and accountability, and from the control of the companies and the provision of services and the administration of the system: criteria that constitute the cornerstone of the re-structuring process in the sector. This differentiation represents an important institutional advance. The regional experience suggests that such division between functions is essential in those cases where there is a decision to privatize the service provision. But it is also highly recommended when there is a decision to keep the provision of services public.

The formulation of sector policies and strategic planning are normally separated from regulatory functions and are left in charge of the sector ministries. The functions of control and regulation are institutionalized through regulatory commissions and organizations, for which financial and technical capabilities and independence are secured. In most of the countries of the region there is the intention of regulating each user-sector separately; meanwhile other, normally smaller countries, propose to have only one regulatory organ for all public services.

Though many countries in the region have already created regulatory entities, they do not yet have sufficient independence and resources to, on the one hand, effectively protect the interests of users and society in general and to secure efficient provision of services; and, on the other hand,, to guarantee independence and objectivity in front of the provider companies and to attract investment to the sector. In general this aspect continues to be one of the weakest in the regional experiences.

Secondly, the regional tendency is towards the decentralization of services . Though the forms this process take are multiple, the most salient are: (i) the transference of the responsibility of service provision to the local level or to an autonomous entity with a post administration based in technical and commercial criteria; and (ii) the strengthening and consolidation of autonomous operators.

It is important to say that the regional experiences point, especially in the larger countries, to the fact that the big and centralized national organizations are not an optimal solution. On the other hand, the decentralization processes, especially at the lower than province territorial levels, regions or states, have not always fulfilled their goals in the expected way. Several reasons explain this, some of them having to do with the fact that local institutions lack sufficient capability to operate, administrate or regulate the transferred services. Other reasons are related to the excessive fragmentation of the industry and its inability to take advantage of the economies of scale, and the politicization of decision-making at the local level, or to the rush and lack of adequate preparation with which the decentralization processes were carried out in some countries. It is because of this that technical needs, opportunities to take advantage of economies of scale, capabilities at the local level and other factors must be taken in consideration in decentralization processes.

With regards to the strengthening and consolidation of operating organizations, in spite of the achieved advances – maybe the best examples are the regional public companies in Chile that are rentable and efficient – most of them in almost every country continue to show serious inefficiencies in their operation, for example: high water loss; low levels of de-collection; excessive personnel and low operative margins; and precarious financial situations. So the sector continues to depend on the state budget to finance capital investments and, to a lesser degree but still appreciable, operation and maintenance costs. Finally, serious institutional and political problems persist. These problems are reflected in the lack of the administrative independence of many operating organizations and the predominance of political criteria in their administration as well as in tariff determination.

Finally, in almost all countries in the region, policies to increase the participation of the private sector in the provision of drinking water supply and sanitation have been adopted. Though in the first half of the nineties there was enthusiasm for privatizing the sector, and companies and many governments adopted ambitious plans. So far only a few countries (mainly Argentina and Chile) have implemented or are implementing policies aimed at transferring to the private sector the administration of most of the companies that provide services in the main population centers. At present, it is estimated that the private sector provides services to only 10% of the urban population in the region. In most cases, the participation of the private sector is only incipient, limiting itself to contracting services or specific activities, especially the treatment of sewage water, desalinization of sea water and the provision of services of high quality to tourist zones, mainly under the contract of construction, operation and transfer (BOT) framework.

It is important to bear in mind that the privatization process in the countries in the region has been founded in large measure in political philosophies, and in governmental financial crises; but mainly in public distrust of the sector companies as well as other factors that do not duly reflect the balance between the public and the private. As a result, the present process of privatizing reforms is strongly unbalanced and favours and stimulates the participation of the private sector, reducing the roles that the State and civil society should continue to play.

In consequence, it is not surprising that the results of private participation obtained so far have been, in general, contradictory. On one hand, in some cases, private participation has reversed the acute degree of deterioration in drinking water supply systems, and in sewage and sewage water treatment, and improved the coverage levels and the quality of services. However, it is important to say that the positive results obtained are due to multiple factors, so it is very difficult to isolate the specific contribution of the change of property from the other reform effects.

On the other hand, the characteristics of the process – the speed with which it has been carried out, the lack of preparation and careful analysis, the poor quality of available information, the low level of tariffs and deficient tariff structures, the macroeconomic instability, the inherent complexity of the regulation of public services and the lack of experience in the field, and the inadequate institutional design of the regulatory entities, which in some cases take away some independence from the political powers – have resulted in some controversies, failures and modifications to the original contracts. These difficulties explain why now, in the maturation of the privatizing process, some doubts have arisen about issues such as regulatory frames that are too permissive and weak, dissatisfaction with user protection and participation mechanisms, and the limitations of theoretical economicist approaches that do not seem to have had a practical base.

One of the important lessons that the privatizing reforms of the nineties have left is that the definition of the normative and regulatory frame as well as the design and institutional implementation of the charged entities must necessarily precede the privatization process itself. If this is not done, the reforms may be unstable, making possible unjustifiable patrimony and income transfers, sometimes of high value, and not secure efficiency in the service provision nor attract new investment to the sector.

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