Restructuring municipal water supply using ‘alternative service delivery’ models is a growing trend. The author examines potential contradictions between ‘alternative service delivery’ business models, on the one hand, and goals of good governance and sustainability on the other. A case study of water conservation and efficiency programs implemented by municipal water utilities in Canada is used to show that specific alternative service delivery (ASD) models which seek greater distance between management and government can create incentives which deter utilities from pursuing important social and environmental goals. The neoliberal governance reform that commonly accompanies and encourages ASD tends to exacerbate its deficiencies vis-à-vis conservation in the water sector. Still, the prevalent government-led service delivery model can impose trade-offs of its own. Strategic (rather than ideological) improvements in governance can enable municipalities to reap the benefits of a variety of business models (including ASD) without compromising sustainability objectives.
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