Title page 1

Contents 7

Abstract 4

Résumé 5

Acknowledgements 6

Acronyms and abbreviations 9

Executive summary 10

1. Introduction 11

Why should water and sanitation services be regulated? 11

State of economic regulation of water supply and sanitation services 12

2. Institutional models of regulation: lessons learned 14

What is economic regulation of WSS services? What are the main functions and powers of regulation? 14

What impacts for which regulatory models? 18

3. How can regulation help address social and territorial inequalities? 31

What is pro-poor regulation? 32

The role of regulation in addressing social inequalities 34

Territorial inequalities: the role of regulation in bridging the service gap between urban and rural areas 35

4. How can economic regulation help address environmental challenges? 39

Strengthening the role of the economic regulator for climate change mitigation and adaptation 39

Contract incentives for efficiency 41

Price incentives to reduce consumption 41

Incentive mechanisms for ecosystem services 42

Conclusions 45

References 48

Figure 2.1. Year of operational establishment of water regulators 17

Boxes 8

Box 1.1. Sustainable Development Goal 6 (SDG 6), Indicators 6.1 and 6.2 12

Box 2.1. Regulating water supply and sanitation services through the contract in Senegal 16

Box 2.2. Eau de Paris: an example of self-regulation? 19

Box 2.3. The Portuguese regulator ERSAR: an effective agency-based regulatory model 21

Box 2.4. Ofwat: a regulatory model previously seen as "exemplary" faces challenges 22

Box 2.5. Manila - Mixed improvement in WSS service performance through hybrid contract regulation and regulatory office 25

Box 2.6. Performance contract and investment: the keys to ONEA's success in Burkina Faso 27

Box 2.7. Djibouti, performance-based support contract 28

Box 2.8. The contract based on reducing unbilled water losses in Jamaica 29

Box 3.1. The Social Fund for Water in Wallonia, Belgium 34

Box 3.2. Institutional reforms of rural WASH services in Benin 36

Box 3.3. Consolidation, Expansion and Improvement of the Rural Water and Sanitation Information System (SIASAR) in Latin America 38

Box 4.1. The UK regulator Ofwat and its net-zero strategy 40

Box 4.2. The Italian regulator Autorità di Regolazione per Energia Reti e Ambiente (ARERA) is promoting the reuse of treated wastewater... 42

Box 4.3. Payments for ecosystem services by Eau de Paris via support to farmers 43