Going more private and sustainable: ex-post assessment of armenian water utilities

Abstract

Recent worldwide changes in water policies emphasize the role of the private sector in the provision of water services with the expectation of market forces to redress public provision failures and introduce innovative approaches for promoting sustainability. Armenia has experienced unprecedented rapid and mass privatization in the water sector: in a decade from zero reaching 63% of the population, which records the third highest level in Europe. The paper examines the impacts of privatization on sustainability performance of all water utilities. Ex-post benchmarking is employed for assessing relative and absolute sustainability measures and developing scores for utility sustainability ranking. The paper focuses on utility performance in time and scale dimensions and on the international level. The paper shows that transition to the public–private partnerships positively influenced the sustainability performance of all utilities. All utilities have improved their relative to pre-privatization performance. Considerable progress was seen in social followed by environmental performance. Armenian utilities also succeed in performing well internationally. The paper concludes that though water privatization may lead to sustainability of utility performance, the scale of impact may depend on the initial state of the enterprise and the local context. Moreover, after the low-hanging fruits are reached at the first stage, more efforts will be required for enhancing long-term sustainability and effectiveness, consistent with social and environmental needs.