In an era of privatisation, an UNCTAD expert today asked developing countries like India to be "cautious" while opening up environmental services in infrastructure like sewage system as privatisation has not worked in many countries including Britain.
"Environmental services in infrastructure involve a huge social cost and hence, the Government will have to move cautiously while privatising it," visiting UNCTAD official Rene Vossenaar.
More importantly, a strong regulator has to be put in place as otherwise privatisation would be a failure, said Vossenaar, who is here to participate in the three-day UNCTAD conference on trade, investment and development.
He said the experiences of Britain, Argentina and Bolivia have not been good in this area. Even in a liberalised economy like the United States, there are not many private players in environmental services like sewage system and drinking water facility.
A pre-condition for private participation in this area is a strong regulator expecially for tariffs as no player would come unless the business could be run profitabily, Vossenaar, who is chief of UNCTAD's Trade, Environment and Development section, said.
He, however, said there was tremendous scope for private participation in commercial environmental services like environment audit.
The global business on environmental services was put at $550 billion, of which India accounted for $4 billion.