Basic infrastructure services are those that households and businesses tend to use every day. The primary components are roads and transportation services, water supply and distribution, and sanitation—wastewater collection and removal, and solid waste collection and removal. These services are often bundled together under the heading of “urban services.” However, parallel infrastructure systems are found in rural areas, where roads, irrigation networks, and latrines are critical to life. Irrigation systems, in particular, are sometimes underestimated as infrastructure networks. In the Philippines, irrigation systems account for 80 percent of national water consumption. Efforts to decentralize infrastructure services raise distinctive issues regarding policy design and implementation. Because of their capital intensiveness, these systems require decision making at several different stages:
- Preparing capital investment plans and setting priorities for individual capital projects.
- Operating a network system to provide services and maintaining facilities to sustain the physical capital.
- Financing the system by both mobilizing capital to pay for the initial investment and generating revenues to cover operations and maintenance—that is, ensuring financial sustainability.
Each of these decision-making points presents an opportunity for decentralization, and different countries have responded by decentralizing different stages of the decision-making process. The issue is further complicated because infrastructure projects are subject to spillover effects and economies of scale. When this is the case, there are often substantial benefits to be achieved by coordinating projects across sub-national governments. Accounting for economies of scale and externalities is especially important when decentralizing decision making and responsibility to low levels, and when infrastructure projects cover multiple jurisdictions, such as in managing water resources across large watersheds or trunk roads that connect regions. Promoting equity, harmonizing standards, and ensuring efficient revenue collection may also argue for limiting decentralization. Infrastructure services are distinctive in another important respect. Because they are used so widely and often, citizens are familiar with their benefits and typically have strong opinions as to which types of projects and service improvements should have highest priority in their area. Choices among priorities for infrastructure investment often provide local citizens with their first opportunity to participate in public decision making. Participatory choice at the local level comes more naturally with small investment projects—which often quickly yield local benefits—than with school curricula and health services, which often require professional expertise and longer waiting times to produce benefits. Thus, decentralization strategies often include participatory choice in (small-scale) infrastructure investments, not simply to better respond to local service needs but as a deliberate seedbed for democratic participation in governance, with the intention of strengthening civic commitment to the entire decentralization program. The payoff is judged only partly by whether infrastructure services improve; equally important is whether mechanisms for public participation in decision making strengthen citizen involvement in governance. This chapter views decentralization in the infrastructure sector as a work in progress. The transfer of service and investment responsibilities to the local level evokes an immediate response based on the capacities and institutional practices of local governments relative to those of the central government. More important, however, this first round of adjustment will reveal shortcomings in the new arrangements and stimulate responses by national agencies, local officials, local citizens, and international organizations supporting the decentralization process. The fact that East Asian countries have experience with both different strategies and implementation periods for decentralizing infrastructure enhances the opportunity to learn from comparative results.  Read the full chapter (Ch. 10): Decentralizing Basic Infrastructure Services (247kb pdf)
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