al government to continue to play a strategic role, especially with respect to social, environmental and fiscal policy direction. The potential challenges for regulation are likely to increase as new technology is adopted and organisational forms respond to its deployment. It could well be that responsibilities in the area of service delivery will become blurred, requiring a greater level of governance to protect the public. The interrelationship of different spheres of regulation, safety, economics, quality, environment, consumer protection and perhaps others will become increasingly challenging and complex. The private sector's participation in water services will inevitably grow - and not necessarily as a result of privatisation, as there is only weak evidence that privatisation does actually result in greater investment in water services. Decentralisation and more effective private sector involvement are seen to be the way forward through various forms of outsourcing, as service providers seek to improve efficiencies and adopt technological innovations (Mohajeri et al., 2003). Such factors will have a greater influence on the governance and economics of service provision than any impact of trade liberalisation. In developing countries such as India and China, there will likely be an increasing trend toward forms of partnerships between local and international enterprises. This would make technological advances more readily available and create bigger, more globalised markets and at the same time localise their application. Important factors in enabling such partnerships to flourish would be the strengthening of property rights, a sound judiciary, legally enforceable contracts, the removal of barriers to the formation of joint enterprises and the formation of local capital markets to provide access to the necessary funds. A key issue in the funding of water services will be full-cost recovery and revenue collection. Only if there is certainty over the income stream can there be adequate planning for and provis