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Should we Bet on Private or Public Water Utilities in Cambodia? Evidence on Incentives and Performace from Seven Provincial Towns

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  • Mike Garn
  • Jonathan Isham

    ()

  • Satu Kahkonen

Abstract

Is public or private sector provision of water more likely to succeed in urban areas of Cambodia? Using quantitative and qualitative data from a range of surveys and technical assessments, this paper compares consumer satisfaction and technical performance of four private and four public utilities in Cambodia. The results indicate that households served by private utilities are significantly more satisfied with the piped water than customers of public utilities: the daily availability and quality of piped water is better and service interruptions are less frequent. This has not happened by accident. Private utilities hire more educated staff whom they pay higher salaries; maintain their facilities on a more regular basis; and implement quality control programs more diligently. Private sector operators seem to face stronger incentives than public utilities to keep their customers satisfied. However, this improved service does not come for free and, consequently, does not yet reach all the available households. Households served by private utilities pay significantly more for piped water services, and some lower-income households that are not served by private utilities are partially limited by the high connection fees (as opposed to the regular monthly payments). Overall, while this recent effort to introduce private sector involvement in the water sector in Cambodia is encouraging, the full gains have not yet been realized. The commercial incentive for improved performace will likely be stronger if the privatization option used is a lease or concession arrangement; if there is more competition in the water market; and if the regulatory structure in Cambodia encourages commercial incentives to be more demand-responsive and cost conscious. Under these conditions, the private sector is a good bet.

Suggested Citation

  • Mike Garn & Jonathan Isham & Satu Kahkonen, 2002. "Should we Bet on Private or Public Water Utilities in Cambodia? Evidence on Incentives and Performace from Seven Provincial Towns," Middlebury College Working Paper Series 0219, Middlebury College, Department of Economics.
  • Handle: RePEc:mdl:mdlpap:0219
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    File URL: http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0219.pdf
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    References listed on IDEAS

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    1. Emanuel Idelovitch & Klas Ringskog, 1995. "Private Sector Participation in Water Supply and Sanitation in Latin America," Reports _017, World Bank Latin America and the Caribean Region Department.
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    Cited by:

    1. Basani, Marcello & Isham, Jonathan & Reilly, Barry, 2008. "The Determinants of Water Connection and Water Consumption: Empirical Evidence from a Cambodian Household Survey," World Development, Elsevier, vol. 36(5), pages 953-968, May.
    2. Theara Horn, 2011. "Welfare Effects of Access to Water Service in Cambodia," Economics Bulletin, AccessEcon, vol. 31(3), pages 2075-2089.

    More about this item

    Keywords

    supply; privatization; urban infrastructure; Cambodia;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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