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Service Delivery

Subtopics:


Education and Decentralization

There is currently a global trend of decentralizing education systems. Most countries are experimenting with or contemplating some form of education decentralization. The process transfers decision-making powers from central Ministries of Education to intermediate governments, local governments, communities, and schools. The extent of the transfer varies, however, from administrative deconcentration to much broader transfer of financial control to the regional or local level.While there are solid theoretical justifications for decentralizing education systems, the process requires strong political commitment and leadership in order to succeed. The path, depth, and ultimately, the outcome of decentralization reforms depend on the motivations for reforms, the initial country and sector conditions, and the interaction of various important coalitions within the sector.

Why Decentralize Education

In a world where most governments have experienced the pitfalls of centralized education service provision, mainly: opaque decision-making, administrative and fiscal inefficiency, and poor quality and access to services, the theoretical advantages of decentralization have become extremely appealing. In general, the process of decentralization can substantially improve efficiency, transparency, accountability, and responsiveness of service provision compared with centralized systems. Decentralized education provision promises to be more efficient, better reflect local priorities, encourage participation, and, eventually, improve coverage and quality. In particular, governments with severe fiscal constraints are enticed by the potential of decentralization to increase efficiency. Beneficiary cost recovery schemes such as community financing have emerged as means for central governments to off-load some of the fiscal burden of education service provision.

Deciding Who Controls What

There is ongoing debate about the appropriate locus of decision making within the education sector. The debate remains unresolved because the process requires that policymakers rationalize and harmonize a complex set of complementary functions, mainly: curriculum design, teaching methods, student evaluation, textbook production and distribution, teacher recruitment and pay, school construction and rehabilitation, education financing, and parent-teacher linkages. The choices of who does what are further complicated because each of these functions has to be evaluated for primary, secondary, and tertiary education, and often for preschools and adult literacy as well. Some emerging areas of consensus are summarized in this chart. Decentralization ImpactsThe evidence about the impact of decentralization on education services is mixed and limited. In Brazil, it has increased overall access (enrollments) but has done little to reverse persistent regional inequities in access to schooling, per capita expenditures, and quality. Chile’s experience also suggests that decentralization does not by itself remove inequalities between localities of varying incomes, and quality in poorer communities continues to lag. These results are supported by experiences in Zimbabwe and New Zealand. However, the design of these decentralized systems have been criticized. One shortcoming is that central governments have off-loaded responsibilities to local governments and communities without providing adequate targeted support to poorer areas. The initial evidence suggests that decentralization to subnational governments may not be sufficient and that increased autonomy for communities and school actors may be necessary to improve schools and learning. By increasing the participation of parents, community-managed schools in El Salvador show significantly lower rates of student and teacher absenteeism. While this type of management does not appear to have improved student performance in tests according to a recent evaluation, it may be just a matter of time before better student attendance translates into higher student achievement. In Nicaragua, controlling for similar household background and school inputs, students in schools that make more decisions about school functions perform better in tests. These results are derived from ongoing impact evaluations. Since the impact of management reforms such as these may take time to unfold, further empirical analysis is needed.

Conclusion

Decentralization of education systems demands harmonization of a complex set of functions, each for primary, secondary, tertiary, and non-formal education. Issues of how far to devolve decision-making in each of these subsectors, and to whom, continue to be debated. There are a number of on-going experiments worldwide, ranging from devolution of limited functions to intermediate governments and local governments, to community-based management and financing of schools. The current consensus is that tertiary education, and specific functions such as curriculum design and standards setting are best retained by the center; secondary and primary education should be devolved as far as possible; local participation in school management improves accountability, and responsiveness, and fosters resource mobilization. Yet, the devil is in the details, and there are many details that need to be sorted out on a country by country basis.

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Decentralization and Health Care

The general argument for decentralizing health care is the potential for improved service quality and coverage; yet the issues of, one, exactly how these benefits can be realized, and two, the specific impact of different health system reforms are not well understood. Several features of health care (e.g., the controversial nature of some services such as family planning, the importance of formal training for personnel, and the integrated nature of services make decentralization in this area more complex and potentially more difficult than in other sectors. Since decentralization in the health sector is often politically driven, the theoretical benefits tend to get more attention than the more concrete facts of actual experiences in other countries, which is mixed. Without proper planning and acknowledgment of the lessons learned by other countries, decentralization of health care can be disappointing at best and detrimental at worst.

This note raises the issues to consider if decentralization is to bring about beneficial results.

What is Decentralization?

The term ‘decentralization’ is used to describe a wide variety of power transfer arrangements and accountability systems. Policies range from the transfer of limited powers to lower management levels within current health management structures and financing mechanisms to extensive sectoral reform efforts which reconfigure the provision of even the most basic services. In the first case, decentralization may later become the driving force for health sector reform; in the latter, it is driven by the wider sectoral reform efforts. The parameters for decentralization -- the speed, the pressures, and the scope of issues to consider -- vary considerably.

The Promise of Decentralization

Health sector decentralization has become appealing to many because of it has several theoretical advantages. (Mills et al. 1990) These include the potential for:

  • a more rational and unified health service that caters to local preferences
    improved implementation of health programs
  • decrease in duplication of services as the target populations are more specifically defined
  • reduction of inequalities between rural and urban areas
  • cost containment from moving to streamlined targeted programs
  • greater community financing and involvement of local communities
  • greater integration of activities of different public and private agencies
  • improved intersectoral coordination, particularly in local government and rural
  • development activities.

The Caveats

We Don’t Have Much Information

Little concrete evidence exists to date, however, to confirm that these potential benefits can be realized. Few developing countries have long-term experience with health sector decentralization, and its impact on the management of the sector and on the services it delivers has rarely been evaluated. Thus, the debate whether decentralization does indeed improve equity, efficiency, accountability and quality in the health sector continues without data to inform it. Although anecdotal and country-study evidence confirms that poorly designed and hastily implemented decentralization has serious consequences for health service delivery (Gilson et al. 1994, Kolehmainen-Aitken et al. 1997), we do not have a clear analytical framework to isolate or generalize the factors behind successful and unsuccessful decentralization. (Bossert 1997)

A First Attempt at a Framework

Past experience shows that achieving the benefits of decentralization depends heavily on policy design. In general, careful attention must be given to health service needs and priorities in deciding which functions and programs to transfer and which to retain under central control. If a function is critical to the attainment of central-level goals and its sustainability at the local level cannot be guaranteed, it should not be decentralized. With this in mind, the following table summarizes a general framework for assigning responsibilities to central and local levels, while the rest of the note outlines a series of issue to consider.

Function

Assignment/Rationale

 

Central

Local/Subnational

Program Design Information dissemination and parameters for priority national programs with externalities that reach beyond individual communities –e.g.,. Family planning or vaccination programs. Details of service delivery mechanisms.
Financing Transferring resources to ensure local government’s ability to carry out responsibilities, setting minimum requirements for expenditure on maintenance and training in order to assure consistent quality and sustainability. Setting user charges/cost-recovery mechanisms, planning expenditure allocations within parameters set by national standards.
Standard-Setting Central government should carry out functions such as licensing health professionals, registration and quality -control of drugs. The capacity for licensure rarely exists at the local level and in countries (such as India) where this function has been decentralized, pharmaceuticals of questionable quality and safety freely cross from states with a poorly managed drug registration system to other better managed states. -
The complex linkages between different services require more planning of appropriate organizational roles, relationships and organizational structures. Serious distortions and hindrances to health service delivery are created, if functional roles and organizational structures are devised without full participation of health managers. In the Philippines, the integrated district health office concept that had taken years to develop was destroyed, when provinces were handed the responsibility for managing hospitals, and municipalities became responsible for primary health care. No linkages were created between these two levels of health service, even though the patient load and quality of service in one are highly dependent on the other. In Bolivia and Zambia, the small size of many local governments has similarly separated primary care from its secondary referral facilities. In Papua New Guinea, the failure to specify clearly the new roles and responsibilities for subsidy payments to church-run health services resulted in a severe funding crisis, which forced the churches to close many of their health facilities for a time. Since churches provide about one half of all rural health care in that country and are well integrated with the public sector, large numbers of rural residents were deprived of any access to health services.
Legal Responsibility The legal and/or regulatory implications of decentralization for the work of health personnel must be considered to avoid placing health staff at risk. In the Philippines, the legal protection of local government health staff under a national malpractice legislation has been questioned. In Papua New Guinea, provincial health inspectors after decentralization could no longer legally enforce national legislation concerning the cleanliness of markets, restaurants and work places.

1. Local government’s freedom to adapt to local conditions must be balanced by a common vision about the goals of the health sector and the purpose of decentralization in furthering these goals. Decentralization policy should include some coordinating mechanism.

The prominence of local political interests increases as decentralization transfers more responsibility to this level. While responsiveness to local demands is a benefit of decentralization, it brings two main disadvantages. First, local officials frequently change and may, therefore, be uninformed about key national health policies. Second, local groups may also oppose national policies. One provincial governor in the Philippines banned a donor-funded project in support of family planning services. (It is certainly acceptable and indeed desirable if decentralization enables local governments to design programs according to local preferences; however, services of national priority (e.g., family planning) should be mandated and funded by the central government.

2. Adequate financing and clear delineation of new financial flow mechanisms is essential

In the preoccupation with defining an essential package of basic health services or a new decentralized health service model, the crucial issue of financing the decentralized health system may be overlooked. A significant financial gap between what is available and what is being planned can compromise the health sector’s ability to provide equitable, efficient and good quality services under decentralization. Zambia and South Africa are both facing this issue in their current decentralization efforts.

Several guidelines emerge from past experience:

Revenue allocation must take previously existing local expenditure responsibilities and own resources into account. In Bolivia and the Philippines, for example, the fixed funding formulas used to allocate national revenue between local governments failed to take into account the level of existing health facilities that these governments inherited and the services they were expected to provide. Local governments that inherited expensive new responsibilities, such as hospitals, often were not able to maintain the level of service previously provided.

Local freedom to allocate funding should be tempered with nationally-set minimum requirements. The degree of freedom that the local level has in deciding the amount of resources devoted for funding health services, together with local budgetary realities and financial procedures greatly influence the operation of the health system. In Papua New Guinea, several provincial governments failed to pay for nurse aide training which had been decentralized to them. Within four years, the training capacity for this important staff category fell from 13 government schools with 135 annual graduates to 3 schools with 13 graduates.

Any central policies must consider local conditions and capacities. In the Philippines, the discrepancy between the cost of health staff benefits promised under centrally-negotiated labor agreements and the local government capacity to pay have seriously eroded staff morale, while cumbersome local financial procedures have jeopardized timely availability of essential medical supplies. Some local governments require up to 40 separate signatures before a purchase order can be sent to a supplier!

3. Capacity constraints cannot be ignored in either central and decentralized management levels.

Ignoring capacity constraints at either central or local levels, or giving inadequate or delayed attention to training staff for their new roles are very serious omissions with predictable effects on health services. Decentralization places a considerable new management burden especially on the lower levels. Qualified health managers are in very short supply in many countries. Furthermore, management training capacity may be insufficient to meet the rapidly expanding training needs. Madagascar, for example, has begun to transfer planning, management and budgetary authority to 111 health districts without having a sufficient number of qualified health managers to serve all these districts.

Decentralization changes the roles of the central ministry staff from line management to policy formulation, technical advice and program monitoring. The central-level managers also require systematic retraining and reorientation, which, however, many countries have overlooked. In other cases, staff cuts at the central ministry of health have been so severe that the center’s capacity to function effectively is in question. It has been suggested that this is the case in Ethiopia at the moment. In Nepal, initial staff cuts at the central level paralyzed the Expanded Program on Immunization.

Conclusion

In summary, decentralization creates major challenges for health service provision. Active involvement of health managers in the decentralization design, clear national resource allocation standards and health service norms, and an ongoing system for monitoring are essential for guarding equity and quality and for improving efficiency.

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Decentralization and Infrastructure

Technological developments that diminish economies of scale and political pressures for decentralization and have led to increased subnational government participation in providing and financing roads, water and sewerage systems, transit, power, and telecommunications networks, as well as other public infrastructure. The advantages of this decentralization are becoming more apparent: subnational governments are better positioned to identify local preferences for infrastructure technology or service quality, accountability is enhanced with local decisionmaking, and voters have more information on the price and quality of services, thereby increasing competition in the sector. Theoretically, decentralization can also improve equity in the distribution of infrastructure as smaller governments away from the political center gain more latitude and funding to serve their constituents. Still, decentralized provision and financing of infrastructure does not guarantee improvements in the quality or distribution of infrastructure. Local performance depends on the incentives facing decisionmakers, which in turn depend on the financial, institutional, and political environments in which decentralization occurs.

This note outlines some general guidelines for assigning responsibility for public infrastructure to central, subnational, and local governments and to community groups and the private sector. It describes the institutional settings that can create the right incentives for decisionmakers. It also examines some of the evidence about decentralization’s effects on infrastructure provision.

Assigning Responsibility in Infrastructure Policy

Services may be provided and or financed by many different public sector institutional structures; they can be provided by the private sector under various contracting arrangements; or they can both be provided and financed by the private sector alone. (see Box 1)

Each type of infrastructure investment has particular characteristics—economies of scale, exclusivity, and spatial concentration of beneficiaries, for example—that affect the desirable degree of decentralization. Provision of infrastructure can be broken up into a number of decisions and separable responsibilities: planning networks, choosing locations, setting standards, constructing and operating facilities, regulating, and maintaining systems. The basic logic behind assigning these tasks is that the central government should have primary responsibility for ensuring the quality and consistency of infrastructure networks that affect the well-being of citizens in multiple jurisdictions, while local or subnational governments should provide services that can vary between jurisdictions to suit local needs without disrupting national development policies. The private sector can play an important role in building, operating and /or maintaining different types of infrastructure. The assignment of responsibilities should ensure that the benefits and costs of decisions are borne by those who make the decisions.

Design: Each level of government has a comparative advantage in designing infrastructure: the central government has the nationwide perspective and jurisdiction to ensure compatibility across the entire network, while the lower-level governments face lower transactions costs in gathering and aggregating place-specific information. Local initiative can also lead to innovative, more efficient designs. Private contractors can often serve as a source of technical expertise in design.

Construction: Construction is one of the most commonly decentralized functions, for it is relatively simple and place-specific. The private sector is often involved in this area as well. In the Republic of Korea, local governments have acted as developers -- consolidating large parcels of land, building infrastructure, then returning part of the land to the original owners and selling the rest to recoup development costs.

Financing: Central governments usually provide the bulk of finance for infrastructure investment, while lower-level governments and the private sector participate more often in financing small improvements, modifications, and local additions to the national networks. Many central governments also provide transfers to local governments for local infrastructure investment or maintenance in order to ensure a minimum level of infrastructure for both reasons of efficiency (externalities) and equity.. These transfers can be quite a large percentage of infrastructure funding.

Local governments can support capital investment and maintenance through several channels including: 1) general transfers from the center, 2) specific purpose transfers from the center, 3) local taxes, 4) earmarked user fees for specific types of infrastructure (e.g. water charges) and 5) subnational borrowing. Their use of these different channels will depend on the system of intergovernmental finance and the legal and regulatory system which sets the rules for local finance. (see legal note). User fees are a particularly important source for local infrastructure finance since local governments can identify users and collect user fees in their jurisdiction quite easily. (Note that over-reliance on earmarked user fees can starve local governments of an important source of finance with which to finance other public goods, such as the social services and address equity concerns.) Valorization, a system of local taxation in which the cost of public works is allocated proportionally to affected properties, has become more common.

In developing countries, in particular, maintenance tends to be neglected at all levels, since the results of money spent are not as immediately apparent and the pressures to extend the infrastructure network to underserved areas tend to be very strong. Central government transfers are often earmarked for specific capital expenditures for infrastructure, but maintenance is provided under a general block grant which can then be used for many competing needs.

Informal financing of infrastructure, whereby private citizens contribute time, money, and technical expertise to build and maintain community infrastructure where governments have failed, is attracting increasing attention. Residents of the Orangi district of Karachi, Pakistan, have invested money and labor to install a sewerage system and build schools, health-care posts, and other facilities. In Lima, Peru, local community associations have financed such public works through informal taxation. Throughout Vietnam, commune residents have assumed the responsibility for maintaining local infrastructure through household contributions and in kind payments (most notably, labor).

Regulation: The central government usually plays a coordinating role in setting standards and monitoring compliance. This ensures compatibility and consistent quality across the national network and enables a wide variety of potential service providers. The outcome of decentralizing regulation depends on the political circumstances. On the one hand, turning regulatory authority over to local governments will generally facilitate the adaptation of regulation to local conditions and preferences. On the other hand, devolution can lead to interest group capture if local governments do not have adequate regulatory capacity and broad-based accountability mechanisms are not in place.

An Enabling Environment for Effective Local Provision

Decentralization's potential impact on infrastructure performance is quite similar to its impact on other sectors: it depends largely on the degree of subnational political and financial autonomy, whether accountability is well established, and whether the correct incentives are offered for a long-term view of infrastructure investment, maintenance, and use. Because decentralization increases the number of actors involved in infrastructure provision, the institutional settings and range of incentives on subnational governments increase and more attention must be paid to the signals implicit in financing arrangements, regulatory structures, and other interactions between levels of government and citizens. Some core elements of successful institutions for decentralization include accountability and technical support.

Accountability

The links between the central government, local government, the private sector, and citizens must be designed to ensure that providers of infrastructure are accountable to those who pay for the services as well as those who benefit from the services. Participatory mechanisms should be structured so that the entire community can participate in infrastructure decisions, particularly regarding location and financing issues which have substantial distributive implications. Enhancing the availability of public information regarding budgetary and procurement decision making is important for community participation and accountability. The World Bank’s Economic Development Institute is currently conducting workshops with local governments worldwide to enhance participatory budgeting and open procurement processes.

Technical Support

Inexperienced subnational and local governments often require some form of technical support as they take on new responsibilities. Local governments’ technical capacity varies widely across jurisdictions, and national assistance may be required to maintain consistent infrastructure quality.

A variety of public-private partnerships can be useful in building up local capacity. Colombia, for example, met these technical needs in several ways when it devolved primary responsibility for the provision of drinking water and sanitation services to local governments in 1987: it contracted training out to nongovernmental organizations, private consultants, and universities in addition to drawing on public sector specialists from the Ministry of Public Works and Army Corps of Engineers.

Technical support is particularly important in maintaining regulatory quality during decentralization. Among possible arrangements are training programs run by national agencies, mutual assistance through regulatory associations (such as the U.S. National Association of Regulatory Utility Commissioners), and twinning relationships that pair inexperienced regulators with more experienced domestic or international regulators.

Decentralization and Infrastructure Performance

Available data and cross-country studies indicate that decentralization can have varied effects on the infrastructure sector. (Table 2) Choices about the optimal level of decentralization are sector- and country- specific.

Estache and Sinha (1995) show that both aggregate and subnational infrastructure expenditure increase as decentralization proceeds, particularly in developing countries. This could be an indicator that local governments prefer more infrastructure than would have been provided by the central government, but it could also be a sign that infrastructure expenditure is not as efficient.

Humplick and Estache (1995) find that performance indicators generally improve slightly or stay the same when infrastructure sectors are decentralized, although they do observe a few negative effects (the strongest being lower labor efficiency in the electricity sector). They also show that decentralization can result in more variable performance across jurisdictions, but it is not clear whether this is a symptom of varying local capacity or of varying local preferences.


Table 2. Main Effects of Decentralization on Roads, Electricity, and Water Supply

Sector Desirable effects Undesirable effects Neutral effects
Roads Condition of unpaved roads improves.

Overall performance of roads improves.

  Condition of paved roads is unchanged.

Share of paved roads in total network is unchanged.

Electricity Generation capacity improves.

Tariffs are lower.

Number of employees per gigawatt/hour is high if there is no vertical unbundling. Customers served per employee unchanged.

System losses unaffected (but spatial decentralization preferred to functional decentralization).

Water Supply Percentage of water loss decreases.

Production costs unchanged.

Operation costs unchanged.

Percent access to service unchanged

Incidence of water borne diseases unchanged.

Source: Estache and Humplick 1995.

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Decentralization and Safety Nets

Safety nets protect a person or household in three types of situations
(1) when there is chronic incapacity to work and earn (e.g., the severely disabled, elderly, young orphans etc.), (2) when there is an unpredictable "idiosyncratic" shock (e.g., sudden death or serious illness of bread-winner), or (3) when there is an unpredictable community "covariate" shock (e.g., economic recession, bad harvest, flood). Hence, safety net programs serve two important roles: redistribution for situations such as (1) (e.g., income transfers, food supplement programs) and insurance for situations (2) and (3) (e.g., public works programs, drought relief). A key challenge in the design of safety nets is to maximize the benefits to the needy and vulnerable for a given cost. Costs include administrative costs, disincentive effects and political economy costs. For example, an important obstacle to improving the targeting of services and transfers to the poor is the high costs that can be involved in obtaining accurate information on their incomes and needs (Subbarao et al. 1997, Beasley and Kanbur, 1993, Van de Walle, 1995).

It has been suggested that decentralizing from national to local level poverty monitoring and the management of anti-poverty programs can reduce costs and improve targeting of intended beneficiaries. Local governments and administrators may be better informed about members of their community and thus better able to identify their poor.

There is some empirical evidence about this and the experience seems to differ depending on which level of local government is involved. For example, in Albania, where social assistance allocations are determined at the commune level (population of about 2500) local authorities appear to have more information than available through formal monitoring systems and this enables them to target the poor more effectively. District officials in Karnataka State, India have attributed a ten-fold increase in information flow from communities to decentralization. This has helped to increase the warning time before natural disasters, and has improved the government’s ability to respond and fend-off potential diseasters. In Vietnam, centrally funded transfers go more towards the poorer provinces but not necessarily the poorer areas and people within the provinces. This is because each province uses different criteria for distributing funds within their jurisdiction. In Argentina, wealthier provinces appear to be more effective at targeting federal safety net subsidies to their poorer areas than poorer provinces.

Many of the benefits of decentralization seem most apparent at the village level, and least apparent if decision making rests at the provincial level. Decentralization at the village level can lead to greater participation and more effective local development strategies and thus, enhance the delivery of pro-poor services. But the evidence is mixed. In some cases, there is also evidence of corruption at the local level (e.g., India).

In some countries (particularly the transition countries of the Former Soviet Union) national governments have decentralized safety nets with the goal of lowering the national deficit. But often expenditure responsibilities have been decentralized without adequate provisions made for revenue sources. Such unfunded mandates lead to a deterioration in the quality and quantity of services.

There are many different ways a safety net program can be decentralized. It is difficult to discuss the potential advantages or disadvantages of safety net decentralization, per se, since these will differ depending on what aspect of the program is decentralized. Different levels of government can be given responsibility for different aspects of program design and implementation. These include:

  • Eligibility
  • Project Implementation: Identifying Individuals according to predetermined eligibility criteria
  • Financing
  • Design of Intergovernmental Transfers
  • Monitoring

The design of intergovernmental grants is also key to determining how each level of government will participate in the program.

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Decentralized Water Services: Irrigation, and Water Supply & Sanitation 

Water is increasingly being managed as an economic, rather than a social good, and decentralization – in various – forms has been a useful tool to support this new approach. Governments and other reformers are now trying to link service levels and costs, provide incentives that increase the efficiency of water resource allocation, reduce costs, and increase sustainability of water service systems. This note briefly summarizes some of the lessons that are emerging from these varied attempts at decentralizing water services. In particular, it will focus on some of the lessons from decentralized water supply and sanitation, and small-scale irrigation.

The Rationale for Decentralization: Water as an Economic Good

In theory, decentralized water services should improve governments’ ability to treat water as an economic good and assess user charges that will create incentives for efficient water use as well as finance improved service delivery. Lower level governments, closer to the beneficiary population, have an informational advantage in identifying citizens’ preferences as well as the flexibility to respond to local conditions. As local governments act on this information to improve quality, reliability, and variety of services, consumers will be willing to pay more for services. These increased user charges can, in turn, be used to finance expansion, improvement, and maintenance of the existing network.

Evidence from new decentralized approaches confirms that users are willing to pay for water services that are tailored to their needs. A 1993 World Bank study found this to be true across income levels. It showed that even poor rural farmers and households are willing to pay for levels of service above the minimum usually supplied under centralized systems. However, the key to design systems which have the capability as well as the incentive to identify and respond to consumers’ demands.

The Evolution of Decentralized Water Services

Centralized, Supply-driven Water Services

Water was treated primarily as a social good under the centralized, supply-drive approach. Its positive health and environment externalities seemed to justify the view of both government and communities that free water was a fundamental right of the people. However, inadequate resources constrained governments’ ability to fulfill this goal and coverage and quality of services suffered.

Traditionally, water services have been delivered via a deconcentrated system. Field offices were established within intermediate and local jurisdictions, staffed with civil servants (usually engineers) from the central ministry responsible for water services, and these staff were responsible for delivering water. Engineers devised schemes based mainly on technical considerations such as viability of the water source and area/population to be served rather than seeking advice from intended users. Staff managed systems with little effort to identify or address users’ preferences. Not surprisingly, this approach created few incentives for users to assist government in maintaining or financing water services.

Worldwide, the failures of centralized service delivery, exacerbated by a decreasing supply of water in some regions created considerable pressure for decentralization. Three new principles, "The Dublin Principles," were issued by the International Conference on Water and the Environment, held in Dublin in 1992:

  • The "Ecological Principle" requiring holistic water management,
  • The "Institutional Principle" requiring participatory water management including devolution of responsibility "to the lowest appropriate level" and greater involvement of NGOs, the private sector, and women, and
  • The "Instrument Principle" requiring that water be managed as an economic resource.

Decentralizing Water Supply and Sanitation, and Irrigation

Three main trends in decentralization of water services have emerged: private sector participation (PSP), delegation, and devolution.

1.  Private Sector Participation. PSP is a spectrum ranging from full privatization to contracting out for services such as irrigation, water supply, and sanitation. In the latter, PSP is increasingly common in the urban sector and has led to better quality services and higher operational efficiency in countries such as Argentina and Chile. PSP does not work as well for rural water supply, however, because private, profit-seeking companies tend to neglect harder to reach segments of the population.

2.  Delegation. Under the delegation model, governments transfer water management to public or semi-private water companies. These companies are responsible for providing services within a specified region. This approach has often worked well – provision of XX in Tunisia is one example. (XX for footnote – look up the bank report on tunisia, maybe by going into imagebank and searching for "tunisia"and "water". It’s on the KMS too.XX) However, as in the "pure" private sector, there are strong incentives to under-serve rural areas. Delegation may not necessarily be an improvement on public provision, for public and semi-private companies, however, are frequently plagued by the same inefficiencies and incentive problems (such as lack of profit motive) of other government agencies.

3.  Devolution to subnational governments and users.  Small-scale irrigation, and rural and urban water supply/sanitation are often devolved to local governments. Ideally, responsibilities vary with capacity: the strongest local governments can undertake activities ranging from interaction with communities to technical planning to supervising construction. Other local governments might focus more on interacting with the communities while relying on staff from central or intermediate governments for technical support. Sometimes stronger urban municipalities provide services to neighboring rural areas.

The new push towards participatory management processes has enabled decentralization to user groups. The comprise the intended beneficiaries, who, weigh all technically feasible options, consider capital and recurrent cost implications, make choices, and then manage systems. The approach pays dividends for both governments and communities: communities get what they need, and governments are relieved of the long-term operation and maintenance (O&M) burden. User groups, referred to as Water Users’ Associations (WUAs) or Water and Sanitation Committees (WSCs), are common to irrigation and rural water supply and sanitation.

Dividing Responsibilities

Management

A number of management options ranging from full agency control to full WUA or WSC control, are used in water systems. Forms of joint agency-user management are the most popular.

Activity Full Agency Control Agency O&M

(user input)

Shared Management WUA/WSC O&M WUA/WSC own (agency reg) Full WUA/WSC control
Regulation Agency Agency Agency Agency Agency WUA/WSC
Ownership of structures, water Agency Agency Agency Agency WUA/WSC WUA/WSC
O&M responsibility Agency Agency Both WUA/WSC WUA/WSC WUA/WSC
User Represent’n Agency WUA/WSC WUA/WSC WUA/WSC WUA/WSC WUA/WSC

Intermediate and Central Government Functions

In most cases, regulatory functions remain the domain of central agencies, while operating functions are more likely to be devolved in some way. Central agencies often have a primary role in establishing the legal and regulatory frameworks for water rights, pricing policies, and environment standards. These regulatory functions are the most susceptible to capture by local interest groups and the concerns that they address – potential for environmental degradation and disputes over the distribution of water- often affect multiple subnational jurisdictions. Central governments’ broader perspective gives them a comparative advantage as arbiter in disputes between communities as well as various broad user groups (such as agricultural, residential, etc.)

Central and intermediate governments also have a financial and technical comparative advantage in managing and financing capital-intensive trunk systems. End-users are better able to manage feeder systems which require local knowledge and ingenuity, local resource mobilization, and enforcement of contracts among secondary and tertiary users (e.g. irrigation channels, water and sewage networks).

Role of Water User Groups

Water user groups are usually formed around a group of potential users, farmers or rural/urban households, for the purpose of accessing water resources. Two types of groups are common, Water Users Associations (WUAs) in irrigation, and Water Supply and Sanitation Committees (WSCs) in rural water supply and sanitation. These groups usually have some sort of legal character (e.g. are legally registered, have elected leadership and a constitution, etc.) and are held together by common interests of members, the public good characteristics of the service, and the expected gains from collective action. User groups work well and fully internalize costs and benefits of schemes when they are certain that they will not be rescued by public agencies if they fail to mobilize the required funds for operation and maintenance.

Financing

Although high level capital intensive systems are usually financed by central or intermediate agencies, user charges are increasingly common for operations and maintenance of feeder systems. Experience suggests that in order for feeder systems to be sustainable, users must commit to paying the full cost of operation and maintenance, in cash, kind or a combination. This approach links choice with costs, and given all technically feasible options, users will chose levels and types of service which they can afford to maintain and address their needs.

While O&M should be financed by users, there is considerable good experience with capital subsidies for water supply and sanitation, and irrigation. Subsidies offset some of the substantial start-up costs associated with water services provision. Governments often agree to subsidize a fraction of capital costs, leaving users to then provide any additional funds required. The subsidy is borne by the level of government with functional responsibility.

The structure of tariffs used to support operations and maintenance are important for determining equity and efficiency. For example, in developing countries, an "increasing block tariff" (IBT) is often applied to improve access and discourage wasteful water use. This is a price structure in which a commodity is priced at a low initial rate up to a specified volume of use, then at a higher rate for additional consumption. In many developing countries, however, households do not have individual water meters (i.e. several households share one meter) and thus the impact of the IBT is actually to worsen equity. Informational constraints make it advisable to leave tariff setting and collection the municipality, as it can better monitor water use.

Some Results

Successes of the decentralized approach have been recorded in both water supply and sanitation, and irrigation. In Mexico, after government transferred the management of irrigation systems to users’ associations, recovery of O&M costs increased from 30% to about 80%. In Egypt, cropping intensity nearly doubled in farmer managed systems were introduced, and user associations also were able to reduce some environmental impacts, such as salinity level of water applications.

There have also been many successes in water supply and sanitation, particularly in extending services to relatively inaccessible rural areas. The Ghana Community Water and Sanitation Project reports that 78% of the target population is now benefiting from improved water sources. Successful water supply and sanitation programs are also under implementation in Benin, Ecuador, Bolivia, India, and South Africa, to name a few cases.

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Natural Resource Management and Environment

 The term "natural resource management" (NRM) encompasses a broad spectrum of activities and projects. This information bulletin is focused on those NRM activities that specifically require the participation of local communities for their sustainable management. Examples of these kinds of projects include: micro-watershed management, irrigation water management, soil and water conservation, community forestry, community-based coastal zone fisheries management, and conservation of biodiversity.

Experiences have shown that centralized "top-down" conservation is only effective with large expenditures on enforcement or under undemocratic circumstances. As an alternative, participation of different types of stakeholders is now considered to be essential for effective and sustainable management and conservation of natural resource systems. It is generally accepted that participation by local communities can be fostered by a significant degree of decentralization.

While focusing on decentralization to communities, the note recognizes that there are theoretical and practical arguments for higher level governments and the international community to play an active role in NRM. Management and utilization of the natural resources has implications for sub-national, national, and supranational territorial units, because of diverse costs and benefits associated with how and where they are managed. Furthermore, numerous dangers exist in delegating responsibility for management to local entities and communities that may themselves be undemocratic, unaccountable, and controlled by a small and powerful local elite.

The following table outlines some of the general principles for assigning functions, while the rest of the note elaborates on guidelines for decentralizing natural resource management to communities.

Function

Assignment/Rationale

Central Government Local/Community
Coordinating compensation for resources.

The market does not always compensate for resource use: management and exploitation of resources by one community can lead to negative externalities for another community. One frequently effective means of resolving the conflicts which arise from these externalities is to compensate affected communities.

Higher levels of government, possibly even international bodies. An example of this pattern is the well known example of rich countries compensating poorer countries to maintain forest reserves, in order to slow ozone depletion.  
Specific Resource Management Resources (e.g., rangeland management) where the

the minimum unit for sustainable management is too large, or the resource users cannot be clearly identified.

Most other resources.
Implementing environmental strategy Should create conditions for large-scale adoption of successful local efforts, also facilitate coordination between local units. Perform day-to-day resource management: levy user charges, enforce compliance with exclusion orders, manage financial resource, etc.

Three inter-related issues need to be considered when seeking to understand the relationship between decentralization and natural resource management:

1) Enabling policy and institutional environment

Decentralization policies have potential to encourage the evolution of community-based institutions to manage natural resources locally. The propensity of individuals to organize themselves into institutions for collective action will be partly determined by the expected pay-offs. The benefits of cooperative management will, in turn, be affected by the:

  • nature of property rights for resources (i.e., whether private or common, and how well-defined)
  • legal status of community-based institutions and whether they have authority to manage financial resources, levy user charges, enforce compliance with exclusion orders, etc.
  • macro-economic conditions affecting the financial viability of small producers
  • extent of rural infrastructure which affects the ease of access to markets for local producers

2) Participatory processes for establishing community-based groups

Evidence suggests that community-based groups are an effective means of managing the free-rider problems associated with most resource management regimes. Decentralization policies on their own, however, are not necessarily sufficient to result in the formation of these community-based groups. Catalytic external agencies using participatory processes are also required to facilitate and build local organizational capacity, effective community participation, and local control and authority over decisions and resources. Important issues to consider in strengthening local organizational capacity are:

  • entry point subprojects that result in positive financial and/or economic returns to local communities while attaining sustainable resource management goals - the incentive for collective action
  • benefits from management of natural resources must accrue quickly, locally, transparently, and as equitably as possible given the resource constraints - providing incentives to as many resource users as possible
  • externalities and asymmetric costs and benefits associated with most natural resource management activities means that appropriate financial incentives are required for co-financing entry point subprojects with local communities -- improving the incentives

3) Effective operational linkages between institutional actors to facilitate large-scale adoption of sustainable NRM practices.

There are many successful examples of using participatory processes for the formation of local management systems. However, most of these successes only operate on a small scale. The challenge lies in creating the conditions for large-scale adoption of successful community-based management systems. This requires effective operational linkages between the public sector, private sector, and community-based groups. Issues to be considered include:

  • review and restructuring of public sector agencies to become more responsive to clients
  • decentralization of responsibility and authority for resource management decisions to the most appropriate level (subsidiarity)
  • design of appropriate decentralized financial instrument (e.g., social fund, demand driven rural investment fund, or local development fund) for financing community-based resource management initiatives
  • decentralized financial instruments must enable community-based local procurement of goods and services.

It must be recognized that knowledge and examples of good practices in this sphere are limited. Therefore, all decentralized systems of resource management must pay particular attention to monitoring and evaluation. Apart form regular financial and physical tracking of program performance, the monitoring systems need to assess the participatory processes, transparency, accountability, equity, effectiveness of institutional and operational linkages, and technical aspects of local management regimes. Furthermore, the impacts of the institutional arrangements need to be regularly assessed in order to ascertain whether the welfare of the poor is being adversely affected by resource management regimes.

 
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