Challenges for water sector reform in transition economies

This paper discusses the practical problems of implementing water policy and pricing reforms in transition economies by looking at the case of Odessa, Ukraine. Chief among the policy advice for the water and sanitation (W&S) sector in less developed countries is greater cost-sharing by customers through increased service prices, with the goals of encouraging more efficient water use by users, promoting a greater perceived stake among customers in the health of their W&S systems and enabling service providers to maintain and expand their networks as needed. While appropriate for much of the developing world, this policy advice has had limited applicability for many communities in transition economies. The complex existing water supply infrastructure in much of Central and Eastern Europe, along with residents' low effective demand for high-quality service, create an environment in which typical price reform strategies will initially be a minor component in sector reform efforts. We use the case of Odessa, Ukraine, to discuss the reasons why traditional advice on water pricing has been of limited use in the region.