Political economy and political risks of institutional reform in the 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. T,he 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 approachto 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.