Decentralization of water supply and sanitation systems in Central America and the Dominican Republic

Analysis of the status of decentralization showed that, while most countries have been talking about reform, progress to date has been limited. State corporations with a national mandate for urban provision still dominate the formal urban sector, complemented by municipal arrangements in smaller cities. Only Nicaragua has enacted a comprehensive reform. In rural and peri-urban areas, NGOs have tried to fill the vacuum left by the national government but have not come close to meeting the large need. The balance between national companies and municipal providers varies considerably by country. In Guatemala, virtually all urban systems are municipally owned and operated. In Honduras, municipal providers account for 62% of urban water connections, but in El Salvador and Nicaragua only 20% and 10%, respectively, of connections are provided by municipalities. The Dominican Republic has no municipal operators. Theoretically, rural WS&S is the responsibility of the state water companies. In El Salvador, USAID assistance created a participatory process that involved multiple interests. Discussion of decentralization was broadened to include a wider range of concerns, including environment and municipal development. USAID is now positioned as a key player in the national dialogue. The new government recently declared the decentralization of WS&S services to municipalities as one of its main priorities. In the Dominican Republic, USAID is established as a credible and effective player in the policy reform process, and attention is being paid to the rural sector. In addition, the National Institute for Potable Water and Sewerage (INAPA) has made the policy decision to implement the EHP decentralization strategy. EHP has established an electronic decentralization network with 142 members from 17 countries. A USAID-sponsored regional workshop was very successful in promoting the exchange of information and experiences. The country delegations became closer -- many had not worked together before and were operating under very different paradigms for decentralization. The paradigm for reform was also broadened and resulted in a heightened appreciation of democracy, health, and environment. During the workshop several key themes emerged: (1) Reforming the sector requires the involvement of a broad constituency and multiple perspectives, including the WS&S sector itself, local government, health, and environment. (2) Meaningful participation by key national and municipal actors is essential to reform. Without it, the reform is much less likely to take into account the interests of all parties and gain support. (3) In any reform process, explicit attention must be paid to the rural and urban poor to ensure they are not overlooked. (4) Each country must develop its own approach to reform. No one model is applicable in all situations. (5) Political will is a key ingredient in successful reform efforts. Achieving consensus at the political level is virtually a prerequisite for reform. (6) Separating the planning and regulatory functions from the operating function is a necessary condition for reform. (7) Decentralized approaches are basic to improving water and wastewater services. The following lessons were learned: (1) There is significant and growing interest within the region in the reform of the WS&S sector and decentralization. (2) Although the solutions may vary by country, the issues relating to decentralization of WS&S services are common. (3) USAID can improve the process by bringing an integrated perspective. (4) Pilot demonstration activities can have great value in demonstrating what is possible. (5) It is important to work both "bottom up" and "top down" on decentralization. Both the pilot activities and the "bottom-up" activities showed that much can and ought to be accomplished within the existing regulatory/policy framework to move the reform process along. Suggestions for follow-up activities are noted in conclusion. (Author abstract, modified)