Abstract

Abstract 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). Scholars have –to date-not succeeded in providing conclusive evidence regarding the added value of neo-liberal institutional changes to the WSS sector. The research design for the thesis at hand attempts to take an alternative approach compared to the existing body of literature, by taking ‘strategy’ as an intermediate variable between institutional changes and shifts in performance. The main research question of the thesis is formulated as: to what extent do neo-liberal institutional changes affect the strategies and performance of WSS providers. To operationalise the multidimensional nature of strategies, an analytical framework is developed distinguishing what a WSS provider can do (context), what it wants to do (plans), and what it actually does (actions). To provide an assessment of the magnitude and rationale for neo-liberal institutional changes a case study is conducted of the Western European WSS sector investigating the drivers for change, the current institutional arrangements and plausible future developments. It is found that the current institutional context of European WSS providers is a shattered landscape of multiple, locally dependent institutional arrangements. A country-by-country analysis shows a clear shift towards more delegation and more private sector involvement. Hence, the analysis confirms that neo-liberalism has had a profound impact on the institutions of the WSS sector, and its influence will continue for the near future. Analysing whether neo-liberal institutional changes have had an effect on what WSS providers can do (strategic context), results in the conclusion that institutional changes indeed make a difference. In a case study comparing the regulatory regimes of England & Wales and the Netherlands, it shows that not only the regulatory regimes are different but also that the managerial discretion differs. Managers of privately owned WSS providers enjoy more freedom with respect to their market and products/services strategies, while these companies are more constrained with respect to their seeking revenues strategies. For the internal and external organisation not much difference was found between the two comparative cases.