Options, Chances and General Framework of Opening the Market for a Sustainable Water Supply
Following on the heels of the liberalisation of the telephone, electricity and gas industries, there is intensive talk of the liberalisation of the water supply, too. According to economic theory, greater competitive pressure is supposed to induce innovations and to lower expenses, bring fresh capital into the industry and help consumers by providing a better, cheaper supply. But unfortunately this is generally not the case in a "real" liberalisation, which involves such other factors as competition to win end customers or competition "on the market", in which case the discussion concentrates more on the competition "for the market" between suppliers of operator services.
The German drinking water supply sector is characteristically structured in small local units. The majority of the approx. 7,000 drinking water suppliers are owned by the municipalities. The water suppliers are protected from direct competition from other potential suppliers by the §§103, 103a Antitrust Law (GWB, Kartellgesetz). The German Federal Ministry of Economics and Technology (BMWi) is presently considering repealing the exceptionally competitive position of the drinking water suppliers. For the most part, environmental and health interests stand in conflict with the measures proposed. Moreover, the municipalities are concerned about both a loss of control and influence and a loss of earnings through the concession charge (Konzessionsabgaben) they currently earn.
It is the purpose of the research project to examine the possible options for more competition. In this case, existing gaps and deficiencies in the regulative framework are to be exposed (highlighted) and recommendations were developed for shaping and expanding upon the framework in such a way that undesired side-effects can be avoided.
More precisely, the models chosen by England and Wales, France and the Netherlands were analysed and their influence upon market structures shown. Furthermore, the possible consequences of an enforced opening of the market for the actors involved (businesses, employees, consumers, districts), the quality of drinking water and water pollution control are examined.
The main contributions of Ecologic to this co-operative project are the comparative presentation of experiences with alternative regulatory models (England and Wales, France, the Netherlands), and the assessment of environmental consequences arising from a liberalisation of the drinking water supply sector in Germany.
The project results were presented and discussed at the workshop in the Federal Ministry of Economics in Berlin on March 27th 2001 involving experts from the fields of politics, science and economics.
The final report [pdf, 256 KB, German](also named "Ewers-Gutachten") was published in October 2001 and can be downloaded as pdf-file at the Homepage of the BMWi.