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Several policy options in the water sector target the governance and capacity of the water utilities, which after all sit in the centre of the water and wastewater operations in a city. Some of these policy instruments may target water efficiency, partly through better treatment and reuse of wastewater, while other policies may help utilities become more proactive in flood prevention. In addition to the role of the water utilities, the behaviour of industries and residents need to be aligned with a clean and sustainable water sector, and several measures can be applied to incentivise and guide the various water users within a city.

Water utilities sit at the centre of this, but industries, businesses and residents also play important roles, as do water users and producers of wastewater. Starting with the water utility, the relevant policies are to ensure that the utility firm has enough resources and the capacity to make necessary investments as well as to provide good services in a sustainable manner. It is also important to ensure a predictable institutional framework with clear rules and incentives for the water utilities to make the right decisions. Therefore, policy reforms should aim to ensure that the utility firm is well regulated and controlled on the back of robust institutional capacity and adequate information.

Regarding water users, such as industries, businesses and households, an effective control of water use and wastewater pollution is critical. Policies should also provide price signals, incentives and support for water-efficient behaviour and awareness among the different user groups. Sustainable supply and use of water and wastewater services must be built on the back of a sector plan that carefully assesses future water sources and water needs as well as investment needs. Such a plan should also carefully consider the sequence of reforms and investment programmes. In particular, tariff reforms should be introduced at an early stage to detect any reduced demand and to better scale the necessary investments in water and wastewater treatment capacity.