http://worldcat.org/entity/work/id/23505908

Political Economy and Political Risks of Institutional Reform in the Water Sector

September 1998 An approach combining structured analysis of political economy and expert opinion is developed and used to estimate the political risk associated with implementing a series of institutional reforms in Pakistan's water sector. It is difficult and time-consuming to get adequate information about influence groups in a society. Dinar, Balakrishnan, and Wambia develop an approach to estimating the political risk associated with implementing a set of institutional reforms in the water sector. Their approach endogenizes the actions taken by politicians, users, service providers, and other stakeholders. Their analysis provides insights into the relationships between institutional arrangements, the power structure, and policy outcomes. The authors develop a two-tier tool to assess the risks associated with implementing reform. The first tier is a structured analysis of the distribution of power among groups interested in the outcome of reform. The second tier is a Delphi process, based on experts' opinions. Their approach is a compromise between the two options: the first (structured analysis) is costly and time-consuming and often entails creating and using pseudo-precise indices; the second (Delphi) process is an unstructured expert opinion way of assessing risk. Their compromise approach provides a manageable framework that, after some testing, could be added to the feasibility analysis of projects undertaken in politically complicated environments. They apply the approach to the National Drainage Program Project, currently in the early stages of implementation in Pakistan. They describe risk mitigation strategies that should be followed in dealing with political risks associated with the project. This paper-a joint product of the Rural Development Sector Management Unit, South Asia Region, and the Rural Development Department-is part of a larger effort in the Bank to appraise the National Drainage Program Project in Pakistan and apply the approach to other water-related projects with institutional reform components. The authors may be contacted at [email protected], [email protected], or [email protected].

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