EXECUTIVE SUMMARY
tion within an effective ‘multi-level governance’19 system. According to Marks and Hooghe, multi-level governance “emerges when experts from several tiers of govern ment share the task of making regulations and forming policy, usually in conjunction with relevant interest groups.”20
There is no universally accepted definition of multi-level governance. The OECD defines multi-level governance as the explicit or implicit sharing of policy-making authority, responsibility, development and implementation at different administrative and territorial levels. OECD, Water Governance in OECD Countries; A Multi-Level Approach, OECD Studies on Water, OECD Publishing, Paris, 2011. In the context of the European Union, “the Committee of the Regions sees the principle of Multilevel Governance as based on coordinated action by the EU, the Member States and regional and local authorities according to the principles of subsidiarity and proportionality and in partnership, taking the form of operational and institutionalized cooperation in the drawing-up and implementation of the European Union’s policies” (CdR 273-2011 fin) 19
Rod Hague and Martin Harrop, Comparative government and politics: an introduction, p. 282, Palgrave Macmillan, Basingstoke, 2007.
Even in systems in which local governments are the organizing authorities for basic services, other government actors and external stakeholders are usually involved in some aspect of their regulation, financing, management or delivery. For example, urban transport infrastructure may be financed and managed by metropolitan governments rather than individual municipalities. In the European Union, shared governance between the European Commission, Member States and local governments has become important in standard-setting, financing and procurement regulation. As well as vertical coordination, the concept of multi-level governance includes various forms of horizontal collaboration; local governments may decide, for example, to partner with neighbouring municipalities to provide services. This may be motivated by the identification of shared goals and interests, or used as a way to more efficiently manage limited resources by creating economies of scale, as is often the case for landfills or water treatment plants. The implication of multi-level governance, then, is that, even in a report focused on local government, a full exploration of basic local services requires a consideration of the effectiveness of the relationships between public, private and civil society stakeholders at local, national, and international level.
20
http://ppp.worldbank.org/ public-private-partnership/ agreements/full-divestiture-privatization 21
The role of the private sector in basic service delivery As shown throughout the report, private sector participation in basic service governance can take a range of forms, with asset ownership, capital investment, commercial
risk, administration and contract duration varying widely (see Table 1. on private sector participation in water and sanitation services). This section provides a brief outline of some of the most important models of private sector participation. At its most extreme, privatization or divestiture involves the transfer of ownership of the service or its infrastructure from the public to the private sector. However, most private sector involvement takes the form of a ‘public private partnership’ (PPP) in which roles and responsibilities are shared between the public and the private sector. Even in the case of divestiture, public bodies may maintain supervisory authority over prices and quality. A private company may buy equity in a government-owned enterprise and take over service management with some degree of control over investment, but the government generally retains some indirect control and regulation by means of granting licenses to deliver services.21 Other models of private sector participation do not involve asset transfer. At its simplest, a private operator may be given a contract by the organizing authority for specific public works – for instance, building a public toilet or set of standpipes. This may involve a competitive bidding process. Build-Operate-Transfer (BOT) is one of the most common forms of PPP. Under these agreements, generally the local government delegates the building, operation and maintenance of infrastructure (e.g. piped water or sewers) to a private enterprise for a specified period, during which it raises the funding and retains the revenues. The private partner manages the infrastructure, with the government purchasing the supply. At the end of the contract, the assets are generally transferred back to the government. BOT schemes are common for Greenfield projects such as a water treat-