Public or private water management: Experience from different European Countries
IOP Conference Series: Earth and Environment
Faced with liberalisation proposals and an increasing internationalisation of water resource management, the question arises as to how a change of the regulatory framework would affect the market structure and the supply conditions in this area. While the term "privatisation" relates to the ownership structure of the providers, the term "liberalisation" implies extensive free market ideas. Privatisation involves the outsourcing of public services from the public authorities to a privately
... o a privately organised organisation. Through this, however, nothing needs to change in terms of the market or the intensity of competition for the commodity in question. Within the framework of privatisation it can also occur that the public monopoly is only transferred to a private monopoly. The term "liberalisation" in addition refers to the basic regulatory constraints: liberalisation signifies the cessation of limitations to competition and supply monopolies, and open competition between several suppliers for the consumers. In the EU-15, the only country where the provision of operational services in the water supply has been totally passed to the private sector is the United Kingdom, but this is only true for England and Wales. Another singular case is France, where there is a mix of mainly private operating companies and municipalities which have divided the regional supply areas among themselves. In six other EU-15 countries where some privatisation took place, either the municipalities or (majority) publicly owned companies are controlling water supply. In the remaining seven countries, the water supply is organised by municipality companies only. In an international comparison, there are three basic models for the regulation of natural monopolies in the public water supply: the Anglo-Saxon, the French and the German model. The delimitation between supervisory bodies and operations in the water supply is strongest in the first model and weakest in the last. This has led to three basic types of privatisation: "full privatisation", "privatisation through delegation" and "privatisation with regulation by the supervisory bodies". These have led to three clearly distinguishable forms of competition: substitute competition simulated by the regulation authorities between private supply-enterprises, competition between private operators for the right to the temporary provision of water supplies, and competition in the product and service markets in the provision of water. In this paper, these different forms of privatisation and liberalisation are described and their impact on competition And market structures is analysed.