Managing political risk through increased local participation : innovations in water sector PSP from Tirupur, India

Abstract

Using primary data from an innovative water project in Tirupur, India with findings from two well-documented water projects in Latin America, this thesis asks: How might greater equity participation and decision-making authority among a broad base of users insulate against key political risks that have beset water sector private sector participation (PSP) in the past? I utilize concepts from the political risk literature, which have mainly been applied to the extractive and manufacturing industries, and extend this consideration to the water sector. I present preliminary findings, based on field research in India, that suggest increased local participation in water sector PSPs can mitigate against key political risks that have created problems elsewhere. These early findings challenge the conventional wisdom about water privatization and suggest a means to improve the design of future PSPs to reduce some of the risks and controversy that have characterized the sector.