Toolkit: Approaches to Private Participation in Water Services Module 3 Involving Stakeholders in the design of the Arrangement

Toolkit: Approaches to Private Participation in Water Services

Module 3

Involving Stakeholders in the design of the Arrangement.

Introduction:

Navigating through this E-Learning Module This is one of 9 Toolkit e-learning Modules. Each Module is created in PowerPoint, and you advance through the Module by pressing the right arrow or ‘Enter’ button. Core Module: The Module takes you sequentially through four or five major issues, depending on the Module. The progress through the Module is shown by the colored area on a logo on the top right hand corner of each slide. Here is an example: Supplementary Content: The Core module covers all key issues. However, you can choose to access additional information. These supplementary slides can be accessed by passing the cursor over colored buttons. The button colors relate to issues of various levels of detail:

Navigation through the supplementary material is also by pressing the right arrow or ‘Enter’ button. At the end of each section you will return automatically to the core Module. However, there is an extra button (to pass over) on the top right hand of each supplementary page that gives you the option of a shortcut back to the core Module:

Basic Concept Detail

Expert insight

Supplementary Information / Case studies

Back to Module

E-learning design: [email protected]

Elements of the Toolkit

TOOLKITTOOLKIT

1ConsideringPrivate Participation

2Planning the Process

5Standards, Tariffs, Subsidy, Financials

4Setting Upstream Policy

3Involving Stakeholders

6Responsibilities & Risks

7Developing Institutions

8Designing Legal Instruments

9Selecting an Operator

Additional MaterialCD-ROM

Appendix BPolicy Simulation

Model

Appendix AExamples of PP Arrangements

General Outline of Toolkit

TOOLKITTOOLKIT

1ConsideringPrivate Participation

2Planning the Process

4Setting Upstream Policy

3Involving Stakeholders

6Responsibilities & Risks

7Developing Institutions

8Designing Legal Instruments

9Selecting an Operator

Additional MaterialCD-ROM

Appendix BPolicy Simulation

Model

Appendix AExamples of PP Arrangements

Module 3

5Setting Service

Standards, Tariffs, Subsidies &

Financial Arrangements

Module 3

Involving Stakeholders in the Design of the

Arrangement

Module 3 - What will we learn?

How will we identify important Stakeholders?

How should we deal with different Stakeholder groups?

What is the best strategy for involving Stakeholders?

Who will ‘win’ or ‘lose’ under the Arrangement?

Module 3Involving Stakeholders in Design

THE ARRANGEMENT

IDENTIFY Stakeholders

DEVELOP Communication

Strategy

INTERACTwith

Stakeholders

Satisfactory outcome

In this Module we look at the issues that Governments need to address in order to involve Stakeholders in Private Particpation Arrangement design.

Government needs to consider the interests of the different stakeholders

Government will benefit from engaging with the Stakeholders:

through better Arrangement design,

through the fact that Stakeholders have participated in the design, and their views have been sought and understood.


“In designing the Arrangements the Government needs to consider the interests of different Stakeholders”

Need: To consider the interests of the different stakeholders

Benefits: Engaging with the different groups will ensure that views are understood, and that stakeholder participation in the design is recognized.

Trade-offs: Some interests will conflict:

There is a need for the Government to trade-off competing interests

The better the Arrangement, the easier the trade-offs.

Arrangement Design: Designing the new Arrangement generally increases the size of the ‘pie’, making it easier to find acceptable ways to share. Government has to survey and consult to see:

What people want? What people will pay for services?


“In designing the Arrangements the Government needs to consider the interests of different Stakeholders”

Need: To consider the interests of the different stakeholders

Benefits: Engaging with the different groups will ensure that views are understood, and that stakeholder participation in the design is recognized.

Trade-offs: Some interests will conflict:

There is a need for the Government to trade-off competing interests

The better the Arrangement, the easier the trade-offs.

Arrangement Design: Designing the new Arrangement generally increases the size of the ‘pie’, making it easier to find acceptable ways to share. Government has to survey and consult to see:

What people want? What people will pay for services?

Some Examples:

What level of service do people want?

How much are people willing to pay for new connections?

Given different costs, what type of connections do they want?


“Engaging with Stakeholders offers two additional advantages………”

Analysis based on the consultation may show Government better ways to design, with a more equitable distribution of costs and benefits

Perhaps too many costs imposed on poorer groups the Government wants to protectPerhaps too many costs imposed on groups that could block the reforms

Not all groups will benefit as well as they hope for. Their support is more likely if they feel that the design and implementation of the Arrangement is ‘Legitimate’. One way is if they see through the consultation process that all is transparent and fair, and peole understand the objectives of the reform

Note: Legitimacy is an issue covered in Modules 7 (Tariff resets) and 9 (Contractor selection)


THE ARRANGEMENT


Strategy

INTERACTwith

Stakeholders


THE ARRANGEMENT


Strategy

INTERACTwith

Stakeholders



Identifying Stakeholders“The first step is to identify important Stakeholders”

Any group that asserts an interest can be a Stakeholder, but only some groups will do so. Other groups that might be overlooked will need to be sought out, including:

Unconnected poor, women, alternative providers ( such as standpipe operators)Women’s groups and community organizations may open the path to other consumers with special needsInternational specialist water operators are obvious contacts, but local financiers, firms and agencies should be considered

A communications needs assessment may be required to further identify the stakeholders

It may help to extend Government consideration beyond the obvious contactsIt can help to identify prevailing concerns about privatization and water services, and possibly offer ideas on potential ways forward

Examples of some potential Stakeholders:

Consumers

NGO’s

Workers

Private Firms and Financiers

Alternative Providers

Opinion Leaders and other Politicians

Media



Strategy


THE ARRANGEMENT


Strategy

INTERACTwith

Stakeholders



Identifying Stakeholders“The first step is to identify important Stakeholders”

Any group that asserts an interest can be a Stakeholder, but only some groups will do so. Other groups that might be overlooked will need to be sought out, including:

Unconnected poor, women, alternative providers ( such as standpipe operators)Women’s groups and community organizations may open the path to other consumers with special needsInternational specialist water operators are obvious contacts, but local financiers, firms and agencies should be considered

A communications needs assessment may be required to further identify the stakeholders

It may help to extend Government consideration beyond the obvious contactsIt can help to identify prevailing concerns about privatization and water services, and possibly offer ideas on potential ways forward

Examples of some potential Stakeholders:

Consumers

NGO’s

Workers




Media

Examples – more detailLa Paz & Cochabamba

“Can more Consultation help?”

Stakeholder Identification & Composition


INTERACTwith

Stakeholders


THE ARRANGEMENT



Strategy


Strategy

Developing Strategy for Involving Stakeholders

“Consultation may show better ways to design, and get support”

Acquiring expertise for the engagement


Types of Interaction with Stakeholders


Many ways to involve stakeholders, depends on objectives, type of Arrangement and other factors5 main types of interaction: Collecting and providing info, consulting, deciding and acting togetherSeveral different ways of communicating with shareholders, according to situation


“Governments need to think about the types of interaction, and expertize needed”





Many ways to involve stakeholders, depends on objectives, type of Arrangement and other factors5 main types of interaction: Collecting and providing info, consulting, deciding and acting togetherSeveral different ways of communicating with shareholders, according to situation


“Governments need to think about the types of interaction, and expertize needed”

4 Ways of Communicating

5 Main Types of Interaction





Specific skill sets needed, that may not exist within Government

Different kinds of interaction needs depend on type and scale of the project

Designating a communications manager as focal point is of advantage


“Governments need to think about the ……………….. expertize needed”

DIFFERENT SKILLS:

Community Development Specialists can help engage poor communities

Survey Experts gather facts in a quantifiable way

Communications Experts help to publicize and explain proposals

Depending on project size, several specialists may be employed

COMMUNICATIONS MANAGER:

Acts as focal point

Needs to be well briefed by the Team

Ensures effective communication about objectives and Government policy

Alerts Team to potential problems or benefits of the proposed Arrangement

Ensures sequence and method of communications

INTERACTwith

Stakeholders

INTERACTwith

Stakeholders

Interacting with Stakeholders


Strategy


THE ARRANGEMENT



Strategy

The appropriate approach with each group of Stakeholders depends on a number of variables, including:

The Group’s capacityUnderstanding of Private ParticipationThe ways that social, political and economic climate affect Group

Interacting with Stakeholders“The appropriate approach with each group of Stakeholders must be varied”

Some potential Stakeholder Interactions:

Customers

NGO’s

Workers




Media

Interacting with Stakeholders“The appropriate approach with each group of Stakeholders must be varied”

Some potential Stakeholder Interactions:

Customers

NGO’s

Workers




Media

THE ARRANGEMENT

Involving Stakeholders in Design




Strategy

INTERACTwith

Stakeholders

THE ARRANGEMENT


Government can use the information from Stakeholders to make estimates of the effects of Arrangements on the different groups.

Whilst net benefits may be expected, it is necessary to review the effect on each of the different groups, and balance the interests of the ‘winners’ and ‘losers’ in the final design

It is possible to establish a quantitative ‘policy model’ approach to help in this task.

Winners & Losers under different options

“Winners & losers can be identified and gains & losses estimated. If necessary the Arrangement can be redesigned to take account of this.”

Introduction of Private Participation reform is on the basis that there will be net benefits to the community. This means that benefits for the ‘winners’ outweigh costs borne by the ‘losers’.

In principle, it may be possible to distribute benefits so that no group loses.

In practice, Governments may wish to support one or more groups such as the disadvantaged poor or politically influential groups (water workers, major water users etc.)

Example: Unconnected poor expected to gain from service expansion. Existing customers might be expected to pay increased tariff and, unless services improve, they will ‘lose’. Government needs to quantify the situation, and use the information to adjust the design as necessary. In this case, the redesign could include a subsidy to the poor.

“A quantitative approach may be used to evaluate the social and economic impact of the Arrangement, and help to simulate the potential effects ”

Winners & Losers - Policy Simulation

“Social impact modeling can establish the different stakeholders. The Toolkit Policy Simulation Model quantifies the effects with different scenarios”

Household Survey Current Service Willingness to pay Income

Household Survey Current Service Willingness to pay Income

Predicted change in welfarePredicted change in welfare

Service ScenariosService Scenarios Tariff ScenariosTariff Scenarios

Typical households/stakeholders

Step 1 - Identify current parameters for various Household/Stakeholder types.

Might include: Middle class household / registered pipe connection Low income household / registered pipe connection Low income household / illegal connection Unconnected household / water standpipe Workers Taxpayers funding any subsidies Other important groups

Step 1 - Identify current parameters for various Household/Stakeholder types.

Might include: Middle class household / registered pipe connection Low income household / registered pipe connection Low income household / illegal connection Unconnected household / water standpipe Workers Taxpayers funding any subsidies Other important groups

Step 2 – Model Service and Tariff Scenarios.

For each Scenario the model predicts net impact on the welfare of each typical Household or Stakeholder types

Estimates additional value placed on each service

Subtracts any increase in bills from the Scenario’s tariff increases

Step 2 – Model Service and Tariff Scenarios.

For each Scenario the model predicts net impact on the welfare of each typical Household or Stakeholder types

Estimates additional value placed on each service

Subtracts any increase in bills from the Scenario’s tariff increases

Step 3 – Evaluate change in welfare across the different Groups

The Toolkit Policy Simulation Model uses a simplified and stylized form of this analysis.

It considers: The currently connected The currently unconnected

Assumes: How much the unconnected have to pay for their water Willingness to pay for better services

The model predicts the effects of reform on both Groups

Step 3 – Evaluate change in welfare across the different Groups

The Toolkit Policy Simulation Model uses a simplified and stylized form of this analysis.

It considers: The currently connected The currently unconnected

Assumes: How much the unconnected have to pay for their water Willingness to pay for better services

The model predicts the effects of reform on both Groups

Reviewing Module 3

The Arrangement

Identify Stakeholders

Develop Communication

Strategy

Interactwith

Stakeholders


‘The Module has looked at the whole range of Stakeholder communication issues in Arrangement design………….’

More Information: Module 3

More information Involving Stakeholders: Advantages of involving stakeholders: Cabanero-Verzosa and Mitchell 2002, Plummer 2002, Trémolet and Browning 2002, and Water and Sanitation Program 2002b. Consultation techniques and stakeholder interaction: Asian Development Bank 2002 (pages 25 to 29), Mukherjee and van Wijk 2003, Plummer 2002, Plummer and Nhemachena 2001, PPIAF and Water and Sanitation Program 2002d (Chapter 6), Sohail 2003, Wilcox 1994, and World Bank 1996. Sustainable partnerships with NGOs and community organizations: Trémolet and Browning 2002 and Trémolet and others 2004. Engaging the media: Osborne 2003 Household surveys: Hanley and others 2001 and Whittington 1998. Engaging the media: Osborne 2003. Interacting with workers: Chong and Rama 2000, Idelogovitch and Ringskog, 1995, Kikeri 1998, PPIAF and World Bank 2004, and Rama 2000. Advisor support for consultation and effective communication campaigns: World Bank Development Communications webpage “Publications and Articles” available at http://www.worldbank.org/developmentcommunications/Publications/publications.htm Quantitative analysis of impacts on stakeholders: Catalyst Solutions in association with Castalia 2003 and van den Berg 2000.

Supporting Material

• The Toolkit Financial Model• Toolkit Case Study material• Toolkit Website:

http://rru.worldbank.org/Toolkits/WaterSanitation/• For comments or further details contact Cledan Mandri Perrott at

[email protected]

http://rru.worldbank.org/Toolkits/WaterSanitation/

mailto:[email protected]

Toolkit: Module 3

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Toolkit: Approaches to Private Participation in Water Services Module 3 Involving Stakeholders in the design of the Arrangement