Water and Sanitation Sector Integrity Risk Index

Fazekas, M., Allakulov , U., Hernandez Sanchez, A., Aje, J. (2020). Water and Sanitation Sector Integrity Risk Index. GTI-WP/2020:04, Budapest: Government Transparency Institute.

We employ a data-driven approach to develop a composite Water Integrity Risk Index (WIRI) made up of a host of objective proxy indicators as well as survey-based measures of corruption experience to identify and assess integrity risks in the urban water and sanitation sector in selected settlements around the world. Unlike broader-scope corruption indices, the WIRI outlined in this paper uses administrative datasets and survey data capturing information on corruptible transactions; thus, our analysis is micro-level, narrowly focuses on the water and sanitation sector, and is both transparent and replicable. The result is an actionable index which measures integrity risks over seven countries between 2012 and 2019.

Violations of integrity, fraud, and corruption result in reduced quality, affordability and availability of water and sanitation services. There is an urgent need to a) proactively and systematically identify, b) precisely and comprehensively measure, and c) effectively mitigate integrity risks in urban water and sanitation (W&S) service provision.

This paper fills this gap by developing a novel measurement of integrity in the water and sanitation (W&S) sector in urban areas. It utilizes a data-driven approach to develop a composite Water Integrity Risk Index (WIRI) made up of a host of objective proxy indicators as well as survey-based measures of corruption experience to identify and assess integrity risks in the urban W&S sector in selected settlements around the world. The novelty of our approach comes from applying Big Data methods to administrative data and survey datasets in order to develop a comprehensive and actionable integrity risk indicator.

To our knowledge, there is no integrity risk index for the W&S sector to date. Existing indexes focus on two aspects. The first is country-level reports of perception of corruption provided by sources such as the Political Risk Service, International Country Risk Guide, and Transparency International’s Global Corruption Index (Drury et al., 2009; Guasch & Straub, 2009). The second focuses on state-owned enterprises’ transparency which is related to integrity but only partially overlaps with it. For example, Transparency International (TI) has developed indicators that measure the level of transparency of Public and State-Owned Enterprises based on the availability of free access to information. TI also evaluates and ranks companies based on indicators of the level of data transparency per enterprise and the legal framework to make information available (Marek Chromý, Milan Eibl, Nemanja Nenadic, Zlatko Minic, 2019). Neither of these approaches focuses on direct and measurable corruption indicators specific to the W&S sector.

By contrast, the WIRI outlined in this paper uses administrative datasets and survey data capturing information on corruptible transactions. Our analysis is micro-level and narrowly focuses on the W&S sector. In addition, this analysis rests on open data sources, making our measurements both transparent and replicable. The proposed WIRI will assist policymakers in identifying water and sanitation integrity risks which supports better policy decisions by:

  • facilitating decisions about monitoring, audit, and investigations;
  • informing sector-wide policy decisions for example on regulation and oversight; and
  • supporting civil society and other stakeholders to hold governments accountable and advocate for better services.

The report is structured as follows; first, we outline a focused review of the literature on integrity and corruption in order to identify relevant actors, transactions, data sources, and forms of potential wrongdoings. Next, we provide a detailed description of the methodology and we describe the criteria for selecting case studies and the resulting sample and datasets. Finally, we calculate a host of elementary risk indicators and use a set of advanced data analytic methods for parametrising and validating each of them in order to define the building blocks for the composite score. We present the Water Integrity Risk Index (WIRI) and review its statistical properties, comparing urban W&S sectors across the pilot countries and settlements.

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