Channels Through Which PB May Affect the Provision of Water and Sanitation Services

PB is a process oriented to democratize and make more transparent public budgeting by creating formal channels of citizens’ participation and promoting the inclusion of politically and economically weak sectors of society in the budget allocation process. Looking at cross-sectional data for Peru, the World Bank (2011) provided some evidence that PB has effects on the composition of investments by sub-national governments.3 Specifically, evidence pointed out that the new budget allocations respond to the results of PB prioritizing, and that priorities set on basic infrastructure projects tend to correlate with an index of needs. Thus, they conclude that evidence from Peru suggests that PB effectively promotes a pro-poor logic in the allocation of capital expenditures by sub-national governments.

While some evidence has been provided pointing to a link between PB and the composition of investment, as priorities set by PB processes are put into execution by local governments, the link between PB and the effective provision and quality of public services seems more long winded, at best.

We identify three possible channels through which PB may affect quality of public service provision:

PB provides greater voice for the population to express its opinions on municipal matters generating pressure on local governments (i.e. make them more accountable) to provide better services and show more transparency.

PB results on more local government investment in basic services and this higher investment result in greater coverage and/or better service quality.

As people prioritize investments in a public service, they are better motivated to monitor the provision of such service and represent a signal to the authorities of the community’s interest in those services.

On the other hand, several conditions may limit or even obstruct the effectiveness of PB in inducing better public services. First, poor people, who are in greater need of basic services but at the same time face the largest costs of participation, may not participate. Second, people may not have the capacity or the means to adequately identify the required investments and monitor service quality. Third, because of the composition of their political clientele or because of the lack of accountability mechanisms, mayors may not be responsive to people’s needs expressed in the PB results. Fourth, municipalities may not have either the technical capacity or the resources to carry out the prioritized investments. This is particularly key when investment is as complex as that in water and sanitation. In sum, conceptually it is not clear that PB may live up to its promise of improving basic public services.

To test whether PB has an effect on coverage and quality of water and sanitation services, we propose the following hypothesis:

H1: “Greater involvement in PB causes greater coverage and/or better service quality.”

Channels 2 and 3 above require that a public service being a priority for PB is associated with greater coverage and/or better services. The hypothesis in this case is:

H2: “Prioritizing a public service investment in PB causes greater coverage and/or better service quality.”

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