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Analysis of the European Unions Explicit and Implicit Policies and Approaches in the Larger Water Sector

Publication

Analysis of the European Unions Explicit and Implicit Policies and Approaches in the Larger Water Sector

Deliverable 1

2003: Deliverable 1 - EUROMARKET Water Liberalisaion Scenarios - Analysis of the European Unions Explicit and Implicit Policies and Approaches in the Larger Water Sector. ENGREF/IHE/EPFL/Paris VIII/Delft UT/University Bocconi/University of Birmingham/Ecologic/UCL/University of Zaragoza.


Citation

2003: Deliverable 1 - EUROMARKET Water Liberalisaion Scenarios - Analysis of the European Unions Explicit and Implicit Policies and Approaches in the Larger Water Sector. ENGREF/IHE/EPFL/Paris VIII/Delft UT/University Bocconi/University of Birmingham/Ecologic/UCL/University of Zaragoza.

Language
English
Funding
Year
2003
Dimension
171 pp.
Project ID
1977
Table of Contents

LIST OF ACRONYMS
CONCEPTS AND DEFINITIONS
I Water services, Water uses, Water Supply and Sanitation services
II Services of General Interest, Services of General Economic Interest, public service, universal service,
subsidiarity
III Privatisation, liberalisation, competition, private sector participation, regulation
IV Full cost recovery, precautionary, polluter pays principles
CHAPTER 1 INTRODUCTION
I Objectives of the Work package 1
II Historical perspectives on the water sector in the EU
II.1 From an extensive model towards an intensive model for WSS services
II.2 A history of EU water policy
II.3 Consequences of these combined evolutions on the water sector
III Overview of the content of the document
CHAPTER 2 DRINKING WATER AND SANITATION STANDARDS
I. Introduction
II The evolution of drinking water standards
II.1 The first directives impose stringent standards
II.2 Directive EC/98/83 and controversies over lead and pesticide thresholds
III More preventive directives based on emission limit values
III.1 Principles
III.2 The history of the Urban Waste Water Directive
III.3 An overview of applied principles in the Urban Waste Water Directive
III.4 Other preventive directives
3.4.1 Directives related to discharges of certain dangerous substances and the groundwater directive
3.4.2 Directive 91/676/EEC on nitrates from agricultural sources
III.5 The Water Framework Directive
IV Implications and implementation at national level
IV.1 Italy and France: water sector largely influenced by European Directives
4.1.1 Hypothesis 1: EU directives enhance technological change
4.1.2 Hypothesis 2: Financial pressure on municipalities
4.1.3 Hypothesis 3: Pressure on the scale of water resource management
4.1.4 Hypothesis 4: the emergence of new stakeholders
IV.2 Germany and the Netherlands: weak influence of European Directives on the water sector
4.2.1 Hypothesis 1 and 2: EU directives enhance technological change and increase financial pressure on municipalities
4.2.2 Hypothesis 3: Pressure on the scale of water management
4.2.3 Hypothesis 4. The emergence of new stakeholders
V Conclusion
CHAPTER 3 MANAGEMENT OF THE NATURAL RESOURCE
I Introduction
II Principles and Content of the Water Framework Directive
III. From WFD principles to the issues raised by the liberalisation process
III.1 Ecological sustainability
3.1.1 Sustainability of the water resource
3.1.2 Good status: a new concept for new goals
3.1.3 Basin management under an eco-systemic approach
3.1.4 Environmental principles
III.2 Economics
3.2.1 Polluter pays principle and cost recovery
3.2.2 Selection of Cost-Effective Measures
3.2.3 Applying Economic Considerations to the Derogations of Environmental Targets
III.3 Institutional design
3.3.1 Evidence-based policy
3.3.2 Pro-active public participation
3.3.3 Management basin authority
IV Conclusion: next steps of EU water policy
IV.1 Common implementation strategy
IV.2 Future policies
4.2.1 Further development of EU-policy regarding Groundwater protection: the new Groundwater Daughter Directive
4.2.2 Water pricing in the EU
4.2.3 Hazardous Substances
CHAPTER 4 LIBERALISATION AND SERVICES OF GENERAL INTEREST
I Introduction
II Specificities of network utilities considered as services of general interest
II.1 Nature of the good : goods traditionally provided by public utilities
II.2 Characteristics of the production
2.2.1 High sunk costs
2.2.2 Natural monopoly and artificial (historic) monopoly
2.2.3 Existence of externalities
II.3 Social objectives
2.3.1 Equity considerations
2.3.2 Different understandings of general interest
II.4 Characteristics of demand
III Empirical evidence and doctrinal evolution in the liberalisation process of network industries
III.1 Driving forces and extent of liberalisation across sectors and countries
III.2 A cross-sectoral analysis of the liberalisation process in network industries
3.2.1 The routes to liberalisation: introducing different forms of competition
3.2.2 Means of implementing competition and liberalisation
3.2.3 Accompanying mechanisms of liberalisation
III.3 The Construction of a European doctrine: from deregulation to re-regulation
3.3.1 Separation between operators and regulators and creation of independent regulatory authorities
3.3.2 Introduction of concepts that limit the negative effects of competition
3.3.3 Guiding principles in the construction of the European Doctrine
III.4 New issues arising from the combined evolution of doctrine and practice
3.4.1 The need to guarantee independent regulatory agencies and better coordination with competition authorities
3.4.2 Restructuring and the development of multi-utilities
IV Evolution of the EU doctrine and practice: the case of the water sector
IV.1 Specificities of the water sector compared to other network industries
4.1.1 Nature of the good: a merit good and a quasi-public good
4.1.2 Characteristics of the production: a natural and local monopoly and strong externalities
4.1.3 Social objectives
4.1.4 Characteristics of the demand
IV.2 Processes visible in the water sector: their extent and their limits
4.2.1 The routes to liberalisation and competition
4.2.2 Means of implementing competition and liberalisation
4.2.3 Other accompanying mechanisms
IV.3 Water sector and the European doctrine on network industries
4.3.1 Regulatory authorities for water
4.3.2 European doctrine in the water sector
IV.4 Common trends in water and sanitation management and regulation in Europe
4.4.1 Regionalisation of WSS services management and a shift towards market logic
4.4.2 Regulation authorities
V Conclusion
CHAPTER 5 SYNTHESIS
I Analysis of the framework created by existing European policies: driving forces and constraints for a
possible liberalisation of WSS services
I.1 European directives on standards: various influences among countries
I.2 WFD implications: structuring principles that apply in particular to WSS services
I.3 Liberalisation policies in other network industries and specificities of the water sector
II Main results and channels leading to a possible liberalisation of WSS services
II.1 New stakeholders: large water companies (public and private) and users representatives
II.2 Open discussions on the nature of WSS services
II.3 The evolution of the regulation on Public-Private Partnerships and Competition
III Various issues and needed safeguards
BIBLIOGRAPHY
ANNEX I: EUROPEAN DIRECTIVES ON DRINKING WATER AND URBAN WASTEWATER TREATMENT
Council Directive 75/440/EEC of 16 June 1975 concerning the quality required of surface water intended for the abstraction of drinking water in Member States
Council Directive 80/778/EEC of 15 July 1980 relating to the quality of water intended for human consumption
Council directive 98/83/EC of 3 November 1998 on the quality of water intended for human consumption
Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment