Water Sector Regulation in Small Island Developing States: An Application to Cape Verde

Water Policy, Forthcoming

27 Pages Posted: 25 Jul 2012 Last revised: 10 Aug 2012

See all articles by Rui Cunha Marques

Rui Cunha Marques

Technical University of Lisbon (UTL) - Centre for Management Studies (CEG-IST)

Pedro Simoes

affiliation not provided to SSRN

Sanford V. Berg

University of Florida - Department of Economics

Date Written: September 8, 2011

Abstract

Small Island Developing states (SIDs) present challenges for analysts and policy-makers attempting to strengthen island-nation infrastructure. This study applies lessons to one SID to illustrate how benchmarking can improve the performance of water utilities. The archipelago-nation of Cape Verde is characterized by severe water scarcity and relatively low per capita income (the GDP is the 93th of the world and the 11th of Africa). These national characteristics have been considered the main constraints for the water supply development. Analysts find a close relationship between the socioeconomic conditions of a country and the precarious level of water and wastewater services, including their coverage. Nevertheless, after the creation, in 2003, of a multi-sector regulator, the Economic Regulation Agency (ARE), citizens had high the expectations for improved sector performance. To achieve significant network expansion and cost containment will require the regulator and operators to draw lessons from countries who have successfully addressed water issues despite comparable socioeconomic/hydrologic features. This study provides the rationale for a regulatory model for ARE that is based on benchmarking analysis (for quantifying performance) and yardstick competition (for incentivizing utility managers). The study recommends a design for a performance evaluation system and discusses the major issues associated implementing such a system.

Keywords: Benchmarking, Cape Verde, Regulation, Water Sector, Yardstick Competition

Suggested Citation

Marques, Rui Cunha and Simoes, Pedro and Berg, Sanford V., Water Sector Regulation in Small Island Developing States: An Application to Cape Verde (September 8, 2011). Water Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2117361 or http://dx.doi.org/10.2139/ssrn.2117361

Rui Cunha Marques

Technical University of Lisbon (UTL) - Centre for Management Studies (CEG-IST) ( email )

Technical University of Lisbon
Avenida Rovisco Pais
Lisbon, 1049-001
Portugal
+351218418305 (Phone)

Pedro Simoes

affiliation not provided to SSRN ( email )

Sanford V. Berg (Contact Author)

University of Florida - Department of Economics ( email )

Gainesville, FL 32611-7140
United States
352-392-0132 (Phone)
352-392-7796 (Fax)

HOME PAGE: http://www.cba.ufl.edu/purc/facultyinfo.asp?WEBID=1260

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