Teaching/Communication/Extension/Profession,

de Lange, Willem J.

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Research Papers in Economics

Agrekon, Vol 45, No 3 (September 2006)  De Lange 
 
 
                                                
Book Review 
 
Water delivery: Public or private? 
 
WJ de Lange1
 
 
 
1. Preface 
 
This book is a compilation of six papers dealing with access to water resources 
in the Dutch and South African contexts. All papers were presented at a 
seminar entitled “Water delivery in South Africa and the Netherlands: Public 
or Private?” held in Utrecht, the Netherlands in March 2005. The seminar was 
jointly organised by the Community Law Centre of the University of the 
Western Cape and the Institute of Constitutional and Administrative Law at 
Utrecht University. 
 
Private sector involvement in the provision of traditional public goods and 
services is becoming a common sight in many parts of the world with basic 
service provision, such as water, electricity and transport, forming part of this 
trend. Such “privatisation” ranges from the outright sale of public assets to 
outsourcing service delivery functions. Efficiency gains are usually put 
forward as the main motivation for outsourcing or privatisation. However, 
some view this thrust towards the privatisation of public goods and services 
as evasion of state responsibility and a violation of the constitutionally 
protected right to safe water. It is also argued that the legitimacy of the state is 
put at risk if a balance between efficiency and equity with regard to service 
delivery is not found. A thrust towards privatisation also promotes the 
commodification of such basic services, and given that such services are 
guaranteed within the human rights network of both countries (and 
international law), the degree to which private service providers could engage 
in such service delivery, remains controversial. 
 
Each paper is summarised below.  
 
 
1 Western Cape Department of Agriculture, Elsenburg, South Africa. The views expressed in 
this review are those of the author and do not necessarily reflect the views of the Department 
of Agriculture: Western Cape. 
  361Agrekon, Vol 45, No 3 (September 2006)  De Lange 
 
 
2. “Safe  water” 
Bas de Gaay Fortman 
 
De Gaay explains from a political-science perspective some of the complexities 
regarding human rights, entitlements, access to and acquisition of water. De 
Gaay argues for the contextualisation of generic international safety standards 
to local areas in order to make them more practicable. He argues that access to 
water is driven by entitlement, while a right is not an entitlement to a handout 
and that rights have nothing to do with free handouts from government for 
this reason a rational private decision-maker would rather opt for entitlement 
without a right rather than a right without entitlement. He also argues that 
privatisation does not discharge government from its social responsibility to 
guarantee access to and delivery of water. 
 
De Gaay notes, however, that human rights should not be over-emphasised 
and that care must be taken not to detach humans from nature, since human 
dignity requires the conservation of nature, with a functional ecosystem being 
a basic human need. 
 
3.  “Comparing water delivery in South Africa and the Netherlands” 
Jaap de Visser 
 
De Visser follows on De Gaay by contextualising the Netherlands and South 
Africa in terms of devolving international law relating to water resource 
management. Both water management regimes are neatly summarised. He 
notes that that network services in general (water, electricity and 
communication) are prone to monopoly if not regulated through competition, 
it being assumed that competition is to the advantage of the user. De Visser 
also defines the concepts of liberalisation, privatisation and restructuring 
within the context of water resource management. 
 
Liberalisation is defined as the introduction of competition with the aim to 
gain in pressure generated by competition in price and quality. Privatisation is 
defined as the selling of public assets to the private sector. Restructuring in the 
Dutch context refers to providing a public service independent from the state 
but not selling it to the private sector. 
 
In short, the Dutch are in favour of liberalisation of most network services 
with government allowing competition in various ways. Ownership remains 
with the state while the state also regulates competition, leaving enough space 
however to reap the benefit of competition in terms of efficiency and quality 
gains. Water services are liberated through outsourcing services management 
  362Agrekon, Vol 45, No 3 (September 2006)  De Lange 
 
 
and operation (ownership remains with the state). Benchmarking in terms of 
financial and quality criteria is used as an element of competition while 
supervision is provided by private watchdogs with local expertise. De Visser 
argues that regulation and supervision is more important than ownership in 
the Dutch context. The Dutch have no infrastructure-related backlogs and no 
non-payment problems. Also, their regulating capacity is adequate. 
 
De Visser continues with a neat summary of the legal framework of the South 
African context. He makes it clear that South Africa faces huge infrastructure 
backlogs, non-payment problems (mainly as a result of wide-spread poverty), 
water scarcity (which negatively impacts on the ability to supply water) and 
shortcomings in regulatory capacity. 
 
It is made clear that the South African government will not be able to meet the 
above-mentioned challenges and is to a certain extent dependent on the 
private sector, suggesting scope for liberalisation. However, in the South 
African context, liberalisation would promote cost recovery with water being 
commodified and supplied on the basis of “ability to pay” rather than need. 
Water service authorities often lack capacity and to resort to liberalisation too 
quickly when the answer actually lies in political interventions. A 
reconsideration of the role of the courts in enforcing socio-economic rights is 
proposed. 
 
4.  “Privatisation and the right of access to sufficient water in South 
Africa: The case of Luhkanji and Amahlati” 
Christopher Mbazira 
 
Mbazira presents two South African cases were the local water service 
providers (municipalities) tried to deliver water as an entitlement through 
liberalisation of water services. As result of capacity problems, the 
municipalities outsourced some services. However, the private service 
providers experienced non-payment problems and took steps resulting in 
public concern. 
 
Mbazira concludes that liberalisation of water service delivery with the 
emphasis on cost-recovery has negative impacts on access to water. 
 
5.  “Outsourcing of basic services: Contract analysis” 
Victoria Johnson 
 
Johnson investigates the legitimacy of public private partnerships (PPPs) in 
the South African context by means of a legal analysis. Key drivers (capital 
  363Agrekon, Vol 45, No 3 (September 2006)  De Lange 
 
 
investment; efficiency; skills transfer; risk transfer and value for money) and 
dangers (legitimacy; public buy-in; user protection; inappropriate risk 
allocation; continuity and asset protection) to viable PPP are identified and the 
analysis uses these as comparative criteria for fifteen outsourcing contracts. 
 
Johnson starts with general comments applicable to all fifteen contracts. She 
states that the relative difficulty and inaccessibility of the contracts pose an 
obstacle to transparency and practical implementation. The rest of the paper 
compares the contracts in terms of the key drivers and dangers in outsourcing 
contracts, as mentioned in the introduction. 
 
Johnson concludes that a simplification process is crucial to improving 
transparency and public participation. The issue of risk transfer in outsourcing 
contracts must be handled in a more scientific way. Monitoring should be 
improved because this improves accountability and ultimately legitimacy. She 
warns against a situation where the public sector becomes incapable of 
delivering services and becomes totally dependant on the private sector and 
asserts that skills transfer is important in this regard. 
 
6.  “Some for all forever? A policy analysis of the establishment of 
Johannesburg’s new water utility” 
Tobias Schmitz 
 
Schmitz discusses the process of restructuring water services management in 
Johannesburg, South Africa. Specific reference is made to choices and trade-
offs between privatisation and expected efficiency gains vs. retaining state 
control and a higher level of accountability. Schmitz agrees with de Visser by 
noting that with regard to privatisation control over regulation and 
supervision is more important than ownership. Ownership is regarded to be 
important only insofar it affects control. He differs from de Visser in defining 
privatisation as a range of methods by which public goods are produced by 
the private sector. 
 
Schmitz notes that the 1998 National Water Act effectively nationalised South 
African bulk fresh water, which had historically been largely privately 
controlled. However, the Municipal Systems Act of 2000 enables 
municipalities to enter into PPPs with water service providers, indicating a 
thrust towards privatisation – this could be seen as somewhat contradictive. 
 
Schmitz provides a neat summary of the history of South African water law 
and the Johannesburg water management context by placing it against the 
background of a global shift towards increased private sector involvement in 
  364Agrekon, Vol 45, No 3 (September 2006)  De Lange 
 
 
the production of public goods. Johannesburg certainly needed such a shift 
since the level of service provision had fallen into despair mainly because of 
non-payment problems. The city proposed the “iGoli 2000” plan to better the 
situation; however, it was a case of too little too late. A new water 
management authority, “Johannesburg Water” (JHBW), which incorporates 
the five municipalities that previously serviced the Johannesburg metro, was 
created in 2001. JHBW contracted Johannesburg Water Management Company 
(JWMC) for water services and management. Two PPP contracts were signed 
between JHBW and JWMC with JHBW holding legal but not financial 
autonomy. New administrative structures, such as the “Contract Management 
Unit” (CMO) and the “Shared Services Council” (SSC), were created to 
support the above-mentioned PPP. The main goal of the CMO is the 
translation of government policy objectives into performance indicators and 
service targets for the private sector. The SSC acts as a watchdog to regulate 
water-related income flows to municipalities.    
 
Schmitz concludes that in the case of JHBW, government held back on 
complete privatisation of water service delivery.  
 
7.  “Beyond the new South African water acts: Integrating water and 
society in the Lower Blyde” 
Bert Raven; Jeroen Warner and Cees  Leeuwis 
 
Raven et al. provide an overview of the South African water management 
context in the pre- and post-1998 eras. They depart from a water scarcity 
situation with conflicting policy goals of efficient but equitable water use as 
the main challenge for water service authorities and service providers.  
 
Multi-stakeholder participation (MSP) and integrated water resource 
management (IWRM) are proposed to path a balance between a political 
authority and a complete free-market-based allocation and management 
system. To this end, Raven et al. review IWRM and MSP in a general sense but 
also contextualise it to the Lower-Blyde River in South Africa.  
 
They  go to length in describing the case study in the Lower-Blyde area, 
explaining the challenges in accommodating previously disadvantaged 
individuals in the context of efficient but equitable management of a scarce 
resource. (It must be noted that the case study mentioned in this paper is by no 
means unique in South Africa.) 
 
Raven et al. conclude that IWRM and MSP did not meet all expectations. For 
example, the progressive legal framework of MSP will not succeed unless 
  365Agrekon, Vol 45, No 3 (September 2006)  De Lange 
 
 
legislative principles are translated into tangible and practical entitlements to 
which restructuring efforts are aimed at benefiting. The danger of regarding 
legislation and implementation as synonyms is emphasised, since service 
providers may use regulations without practical translations as opportunities 
not to implement and enforce the transformative process. 
 
8. Postscript 
 
To summarise, the book is a compilation of paper contributions regarding 
access to water from a human right perspective using examples of benefits and 
costs associated with public and private water service delivery. The book may 
prove insightful to public policy makers, especially in long-term water 
resources management. 
 
However, upon reading the book the expectation is created that the final 
chapter will provide some “lessons learned from the Netherlands experience”. 
It is, however, a pity that such “lessons” are not provided and the last chapter 
actually focuses on specific cases within South Africa. It is also unfortunate 
that the technical editing of some of the chapters is not up to standard. More 
effort could have gone into the elegance and flow of the chapters. 
 
 
  366

Book Review: Water delivery: Public or private?

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