Corruption Risks in Water Licensing

A Risk Assessment with Case Studies from Chile and Kazakhstan

This report examines and compares corruption risks in water licensing in Chile and Kazakhstan, focusing in particular on:

  • The licence application process,
  • The definition or scope of a licences,
  • Bidding and trading procedures,
  • Licence monitoring and enforcement.

The analysis is based on field surveys in Kazakhstan and Chile (Eighty semi-structured and open interviews were held with licensors issuing water licenses, water licensees, NGOs, private sector managers, press, water managers, and power companies…)

In both market (Chile) and state-focused (Kazakhstan) water licensing systems, the potential for corruption exists with licensing being administered by under-funded, under-equipped, and under-coordinated regulating agencies.

Both cases illustrate very different examples of water licensing systems. In Kazakhstan, the State dominated water sector is in the midst of institutional and financial reform and the water licensing system is being adapted for users that are no longer collectively organized. In Chile, market-based initiatives are key elements of the water licensing system. This seems to have contributed to the fact large companies have a dominant role in securing water rights.

 

Lessons learned from this type of assessment

  • Researchers can facilitate information-sharing within countries.
  • Donors and consultants can encourage or discourage corruption.
  • Changing the water laws does not necessarily mean changing practices; often there is a gap between water law and practice. The gaps in the system can facilitate corrupt practices.
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