Remediable institutional alignment and water service reform

Beyond rational choice

Abstract

A growing body of empirical evidence fails to support rational choice expectations of superior
private sector efficiency in the urban water sector. Drawing on Oliver Williamson’s
work on comparative institutional analysis, I suggest that institutional adaptability explains
the efficiency and effectiveness of the public sector relative to the private sector. Under private
sector participation, lowly remediable institutional adaptability favours the deployment
of asymmetric power and the production of outcomes unaligned to reform objectives. Conversely,
institutions supporting public operations are designed to facilitate the achievement of
collective goals. This makes the alignment of individual attitudes, resources and institutions
under in-house service provision less resilient to sustainability-oriented change. Remediable
institutional alignment undergirds the comparative advantage of public water operations, as
more ample opportunities are provided for compliance, allocative efficiency and adaptive
performance. I thus call for a critical realist account of the outcomes of water service reform,
free of rational choice dogma.