BOOK REVIEW by www.watermagazine.com
Competition & Economic Regulation in Water
The Future of the European Water Industry
"...There is a large degree of consensus among policy makers in the telecommunications and energy industries.... Why have different countries developed different models of water industry structure, regulation and private sector participation?...." The book starts by examining the fundamentals of the water industry, and assesses the feasibility of introducing competition into the water industry. It looks at how water regulation has been introduced in England & Wales, France and Germany. It finishes by drawing conclusions for water sector reform in other countries based upon this experience. The book was written by Tony Ballance and Andrew Taylor. The book was published by IWA Publishing.
The book has grown from a number of research projects the authors have engaged in. They write in the introduction: "Our book does not seek to draw definitive conclusions regarding the superiority of any one particular model of industry organisation over another, or the most appropriate direction for the European water industry, but rather to provide a contribution to public debate...."
Chapter headings of this pithy, 150 page book include:
- Water industry fundamentals: the rationale for regulation and the scope for competition. It concludes: "...it is unlikely the benefits of competition would be large..." and "... the costs of introducing competition could be large...." and "... claims that water is like gas and electricity and should be reformed are (therefore) significantly overstated...".;
- A framework for evaluating different models of water industry regulation. ;
- England & Wales: private ownership and independent regulation. ;
- France: competition for the market and contract-based regulation. ;
- Germany: public-private partnerships and multi-sector utilities. ;
- Developing Water sector regulatory frameworks in less developed countries.;
I found the juiciest parts of this book were in the sections dedicated to careful explanations of what actually happens in the case studies, at the crucial point between the funder and the provider, over what service is provided for how much. The book is at pains to explore the delicate balance of culturally specific institutional arrangements that underpin the more obvious contract or licence arrangements. This analysis and understanding is critical when faced with the assertion from reformers: "let's have the German model here", without an indepth knowledge of actually what is happening in Germany, with the German model. The book effectively says, "don't think you can just import the France, German or English model, and assume it will work the same in any other country...."
Other things. The book contains an appendix: The legislative framework for the water industry in England and Wales. There is an extensive bibliography and useful index. The book contains 150 pages.
The book is an intelligently written book which concentrates on water industry regulation, and in particular the nature of the contract that exists between the funder of water services and the provider of those services. It is wonderfully free of dogma and religiously-held economic truths. In my experience it is precisely at this contractual boundary where the rubber hits the road in the regulatory relationship, and where issues such as price, performance definition and service quality monitoring, plus penalty regimes etc, all come together. How this "contract" or licence or statement of intent or whatever the instrument is called is framed and performs, is to a lesser or greater extent ofen determined by broader institutional arrangements - "how we do things here" - that are outside the narrow scope of the instrument itself. The book does the debate a service by explaining this, by reference to the three case studies it explores.
Competition & Economic Regulation in Water was published in 2005 by IWA Publishing.
The isbn is 1843390493 (hard cover).
Email: publications@iwap.co.uk
Website: www.iwapublishing.com
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