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Since 2016 the World Bank has explored a wide range of country experiences in delivering better water supply and sanitation services. The analyses led to publication of three new global frameworks for designing water reforms: Policy, Institutional, and Regulatory Incentives, which looks at the broader sector enabling environment; Water Utility Turnaround Framework, which looks at utility-level reforms; and Maximizing Finance for Development, which looks at shifting the financing paradigm to reach the Sustainable Development Goals. The three frameworks—individually and as a compendium—set forth the key principles of a more holistic approach to reform that diverges from the traditional focus on infrastructure economics to a deeper understanding of the behavior of and between sector institutions and of the people within those institutions. Each country-specific reform path will gradually bring the sector to higher degrees of maturity with a strong focus on improving financial sustainability. This summary note integrates the three lines of work—utility reform, sector reform, and sector finance—for readers to understand the critical links between the three spheres. New contributions of this note are a Maturity Matrix for assessing where a country is in its reform process and where it wants to go and a Maturity Ladder that identifies typical actions to move from one stage of maturity to the next. Tools and references are also provided to help governments start on their reform path.

Since 2016, the World Bank’s Water and Governance Global Practices have been implementing the Policy, Institutional and Regulatory (PIR) Incentives Initiative to gain deeper insight into the dynamics between water supply and sanitation (WSS) sector incentive mechanisms. PIR is a global framework for understanding factors that can contribute to positive sector outcomes at the country level. This knowledge brief uses a PIR framework to provide a snapshot of the experiences of five countries in South America: Argentina, Brazil, Chile, Colombia, and Peru. The brief showcases the wide variety of incentives created by governments to successfully motivate people (as individuals or as part of an institution) to do their part in an integrated PIR system and how a lack of such integration may produce perverse incentives that prohibit the achievement of sector goals. Governments looking to strengthen the WSS sector should, therefore, take a holistic approach to sector reform and one that seeks to align PIR incentives through integrated interventions. This alignment includes harmonization between sector objectives, rules of the game, and mechanisms for implementation. Of critical importance is the financial and human resource capacity of sector institutions. Countries in South America need to move beyond the technical solutions that enabled them to achieve the MDGs and in the process carefully consider the drivers for reform and the best fit for the prevailing institutional context.

Providing sustainable water supply and sanitation (WSS) services in developing countries remains an immense, and increasingly urgent, challenge. Chapter two sets out how the sector is currently funded and why business as usual is insufficient for meeting WSS-related goals, covering the size of the investment gap, and the challenges presented by the status quo. Chapter three proposes a financing framework toward more effective use of existing funds to enable the mobilization of new sources of finance, and explains the benefits and costs of commercial finance. Chapters four to six detail the three components of the financing framework, providing practical advice and global experiences that demonstrate how countries can begin to make progress. Chapter seven summarizes how stakeholders can bring the three components together to mobilize commercial finance, and provides the main conclusions and recommendations of the report.

Given the broad array of issues and the complexity faced by the water sector as a whole (from irrigation to flood protection, to water conservation and hydropower), there is great demand for future exploring the potential of RBF and tackling the questions still unanswered about many of its operational dimensions. This document takes a closer look at some of the practical aspects of implementing various RBF water schemes. Chapter 2 provides an analytical framework to explore if and when RBF can be a viable option, shedding light on some key factors and preconditions that are necessary for RBF to work--with the understanding that it can be used either as an alternative or a complement to a more traditional input-based funding scheme. Chapter 3 then revisits the concepts discussed in the analytical framework through the analysis of various case studies of RBF approaches in different water-related areas. Some of the case studies are based on actual projects already implemented or ongoing, while others are an illustrative elaboration, given the lack of practical cases to use as sources. Chapter 4 presents some conclusions and lessons learned. The key challenges that are likely to be encountered in designing an RBF scheme deal with: the clarity and level of certainty of the relationships from input to output to outcomes (causal links); the ease and availability of measurable indicators; and, consequently, the optimal determination of the necessary incentive(s) to align the goals of the principal with the agents' deliverables. Appendix A presents a glossary of RBF concepts and acronyms. Appendix B presents specific results and indicators which may be relevant for different sectors.