political processes when these do not function well enough (e.g., Estache and Martimort (2000), Jordana and Levi‐Faur (2006), Maggetti 2007; Maggetti et al (2013), Majone (1997), Thatcher (2011)). When this happens, IRAs can be quite effective in improving performance. In the rest of this paper, we ignore these process related matters and focus on the simple payoff to the creation of a separate regulatory agency. We recognize that the degree of independence of the agency is an important dimension but it goes beyond the scope of this paper.

# **3. How many water IRAs are there in the world?**

To be able to assess the impact of IRAs on PPP, two sets of data at least are needed: data on the existence of IRAs and comparable data on PPPs. PPP data are available from the World Bank, but global information on IRAs is not available, at least publicly. This is why this paper started with a data collection effort on the existence of national water and sanitation IRAs. The main output of this effort is reported in Table 1. We managed to collect data for 177 countries in 2015.<sup>3</sup> The detailed country specific coding is reported in Annex 2.<sup>4</sup> The data are recorded as a dummy variable, i.e. if the country has an IRA, it is coded as 1 and otherwise as 0. The information has been collected from a systematic search of the official websites of the countries’ governments, United Nations agencies and multilateral development banks’ project documents. In the process, we also documented the extent to which the country had any access to some significant water or sanitation delivery contract with the private sector. The country is considered to have some form of public‐private partnership (PPP) in 2015 if during that year there is an ongoing divestiture, greenfield or brownfield PPP in the water sector of the country other than a management or lease contract (since these do not involve any private investment), or if these investment contracts had been closed and concluded within the previous 10 years. We also ran robustness checks changing this time limit to 5 and 2 years. This information is collected from the World Bank PPP database and is also coded as a dummy variable with a value of 1 when a PPP has been awarded. The detailed country specific coding used in this paper is also reported in Annex 1.

The way we have decided to account for these PPPs implies that the IRA may have been put in place after the adoption of a PPP in the sector, which imposes some limit on any causal interpretation of the results. In other words, we can only hope for a sense of correlation or of odds of a correlation as discussed in more detail later. We do not correct for the size of the deals with the private sector (i.e. large and small projects both count as a PPP in the same way). While the main focus of the paper is the experience of developing countries, we collected the basic institutional information also on the developed economies. This allows us to identify any significant core difference between the two country groups. As discussed next, however, the stylized facts suggest that the differences in the distribution of basic governance characteristics are actually not very significant across country groups.

> 3 123 developing countries and 54 developed countries.

> 4 Updates will be available on the Bernard Vanommeslaghe Chair website <u>http://ecares.ulb.ac.be/index.php?option=com_content&task=view&id=168&Itemid=367</u>

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