WaterReg - Water services regulation and governance in Europe (AG102)

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WaterReg - Water services regulation and governance in Europe (AG102)

The WaterReg AG is building its activities around three main pillars:

  • Capacity building
  • Networking
  • Research
     

Our 15 partners represent different categories to make sure that the issues addressed are relevant and the variety of points of view is taken into account

The WaterReg project addresses innovation barriers by focusing on:

  • The incentive to invest

Long term reflexion on technical, social, environmental and economic sustainability of infrastructure Because of technical and economic characteristics of network industries, infrastructure represent up to 80-90 % of the services costs. These costs are fixed and weigh on service charges regardless of volumes sold. Substantial investments are required not only to create water and sanitation services (WSS), but also to maintain the service quality and renew the equipment. The ability to invest in services is thus a major issue for good economic regulation of services. Regulators want to develop and implement incentive mechanisms favouring investment and long-term planning in order to maintain and improve the technical and environmental performance of services. 
Given the different situations and characteristics of water and sanitation services in Europe, the issues identified may however differ somewhat from one European country to another. Indeed, in Eastern European countries, the issue of investment focuses more on the financial capacity of services to upgrade their infrastructure and to ensure a satisfactory service quality to users. Methods of price-cap and cost-plus have shown their limits, particularly due to significant information asymmetries or limited ability to reduce inefficiency. Hybrid models must be developed in order to reduce information asymmetries with operators and/or to promote, for example, opex savings which could be redeployed to fund capex needs. 
In Western Europe, the investment issue is more about equipment renewal and sustainable asset management policy implementation. Thus, the challenge is to implement efficient and reliable asset management policy and tools to help services adopt long-term planning of investments. All these reflections on investments are ultimately linked to the issue of permanent and sustainable financing of services. If in Western Europe maintaining an affordable but sustainable water price is a central objective, the need to increase water tariffs in Eastern European countries is a crucial issue. Thus, thinking about investments inevitably leads to the issue of cost recovery which is an important economic element of the Water Framework Directive. 
 

  • What is the optimal scale for water & sanitation services operation? What is the efficient scope to operate water & sanitation services?

Because of their techno-economic characteristics already mentioned above, water and sanitation services, as natural monopolies, are more efficient when managed at a level enabling a maximum of scale economies. Thus the optimal size for the organization and management of water and sanitation services is at the heart of the concerns of economic regulation. How to determine this optimal size? What are the main sources of economies of scale? Is regionalization of services economically and technically efficient? This reflection on optimal scale also concerns regulation itself: is it more effective and efficient to promote multi-utility regulation? Does multi-utility regulation helps achieving economies of scale and gains in terms of cross-sectoral learning? What is the maximum number of services that a regulator can regulate effectively and efficiently? 
 

  • Soft vs. hard regulation

Building upon the OECD study which examines the role of WSS regulators and describes their position in the overall regulatory scheme as well as their mode of internal and external governance arrangements, discussions have arisen regarding the functions and powers which must be assigned to regulators so that they fulfil their mission. How to effectively define the coordination mechanisms between the different levels and bodies of regulation? How to ensure the strict complementarity of regulatory institutions if regulation is fragmented? To what extent do the national characteristics of the water sector (in terms of concentration/fragmentation, management and contractual arrangements, institutional organization) affect the nature of the regulation and its effectiveness? In a situation of "sunshine" or "yardstick" regulation, which minimum mandatory functions and powers should be assigned to the regulatory authority? Is it possible to benchmark regulation authorities and regulatory functions and powers? In this case, what tools should be implemented to assess whether the regulatory objectives set ex-ante are achieved ex-post? How to identify and flag key regulatory functions which bear the major risks of regulation failure?

Mr. Fleischmann is part of the EIP Water...

Professor of Economics at the Sorbonne Business...

Currently… Maria Salvetti has joined the “...

Chiara Caccinelli is the coordinator of the water...

Javier Suárez-Pandiello is Full Professor of...

December 2011 -December 2013: expert within...

I have been studying about energy sector since...

Maria A. García-Valiñas is associate professor at...

Born in 1964. Married, one child Degree in...

Public Documents: 

17th June 2015

 

The call for papers for the 1st International Conference on Water Governance is now open!

The conference will be held in Lisbon on 8-9 October 2015. Don't miss these important deadlines:

11th November 2014

On 31 October the WaterReg AG organised a workshop on benchmarking issues in the water industry

Benchmarking methods are now widely used in the energy sector. This is not yet the case in the water sector, where regulation procedures...

30th October 2014

On 31 October WaterReg is gathering academics, regulators and operators in the water sector to discuss "Performances in the Water Sector: Benchmarking, Regulation Drivers & Information Sharing". 

Find...

8th July 2014

The journal Utilities Policy has opened a call for papers for the upcoming special issue dedicated to Redesigning water tariffs: Experiences and reforms...

18th June 2014

Maria Salvetti (Coordinator of the WaterReg project within the Water Area at the Florence School of Regulation) has been invited to moderate a session on "Progressive models for...

Pages

Profile

WaterReg - Water services regulation and governance in Europe (AG102)

The WaterReg AG is building its activities around three main pillars:

  • Capacity building
  • Networking
  • Research
     

Our 15 partners represent different categories to make sure that the issues addressed are relevant and the variety of points of view is taken into account

The WaterReg project addresses innovation barriers by focusing on:

  • The incentive to invest

Long term reflexion on technical, social, environmental and economic sustainability of infrastructure Because of technical and economic characteristics of network industries, infrastructure represent up to 80-90 % of the services costs. These costs are fixed and weigh on service charges regardless of volumes sold. Substantial investments are required not only to create water and sanitation services (WSS), but also to maintain the service quality and renew the equipment. The ability to invest in services is thus a major issue for good economic regulation of services. Regulators want to develop and implement incentive mechanisms favouring investment and long-term planning in order to maintain and improve the technical and environmental performance of services. 
Given the different situations and characteristics of water and sanitation services in Europe, the issues identified may however differ somewhat from one European country to another. Indeed, in Eastern European countries, the issue of investment focuses more on the financial capacity of services to upgrade their infrastructure and to ensure a satisfactory service quality to users. Methods of price-cap and cost-plus have shown their limits, particularly due to significant information asymmetries or limited ability to reduce inefficiency. Hybrid models must be developed in order to reduce information asymmetries with operators and/or to promote, for example, opex savings which could be redeployed to fund capex needs. 
In Western Europe, the investment issue is more about equipment renewal and sustainable asset management policy implementation. Thus, the challenge is to implement efficient and reliable asset management policy and tools to help services adopt long-term planning of investments. All these reflections on investments are ultimately linked to the issue of permanent and sustainable financing of services. If in Western Europe maintaining an affordable but sustainable water price is a central objective, the need to increase water tariffs in Eastern European countries is a crucial issue. Thus, thinking about investments inevitably leads to the issue of cost recovery which is an important economic element of the Water Framework Directive. 
 

  • What is the optimal scale for water & sanitation services operation? What is the efficient scope to operate water & sanitation services?

Because of their techno-economic characteristics already mentioned above, water and sanitation services, as natural monopolies, are more efficient when managed at a level enabling a maximum of scale economies. Thus the optimal size for the organization and management of water and sanitation services is at the heart of the concerns of economic regulation. How to determine this optimal size? What are the main sources of economies of scale? Is regionalization of services economically and technically efficient? This reflection on optimal scale also concerns regulation itself: is it more effective and efficient to promote multi-utility regulation? Does multi-utility regulation helps achieving economies of scale and gains in terms of cross-sectoral learning? What is the maximum number of services that a regulator can regulate effectively and efficiently? 
 

  • Soft vs. hard regulation

Building upon the OECD study which examines the role of WSS regulators and describes their position in the overall regulatory scheme as well as their mode of internal and external governance arrangements, discussions have arisen regarding the functions and powers which must be assigned to regulators so that they fulfil their mission. How to effectively define the coordination mechanisms between the different levels and bodies of regulation? How to ensure the strict complementarity of regulatory institutions if regulation is fragmented? To what extent do the national characteristics of the water sector (in terms of concentration/fragmentation, management and contractual arrangements, institutional organization) affect the nature of the regulation and its effectiveness? In a situation of "sunshine" or "yardstick" regulation, which minimum mandatory functions and powers should be assigned to the regulatory authority? Is it possible to benchmark regulation authorities and regulatory functions and powers? In this case, what tools should be implemented to assess whether the regulatory objectives set ex-ante are achieved ex-post? How to identify and flag key regulatory functions which bear the major risks of regulation failure?

Members

Mr. Fleischmann is part of the EIP Water...

Professor of Economics at the Sorbonne Business...

Currently… Maria Salvetti has joined the “...

Chiara Caccinelli is the coordinator of the water...

Javier Suárez-Pandiello is Full Professor of...

December 2011 -December 2013: expert within...

I have been studying about energy sector since...

Maria A. García-Valiñas is associate professor at...

Born in 1964. Married, one child Degree in...

Documents

Public Documents: 

News

17th June 2015

 

The call for papers for the 1st International Conference on Water Governance is now open!

The conference will be held in Lisbon on 8-9 October 2015. Don't miss these important deadlines:

11th November 2014

On 31 October the WaterReg AG organised a workshop on benchmarking issues in the water industry

Benchmarking methods are now widely used in the energy sector. This is not yet the case in the water sector, where regulation procedures...

30th October 2014

On 31 October WaterReg is gathering academics, regulators and operators in the water sector to discuss "Performances in the Water Sector: Benchmarking, Regulation Drivers & Information Sharing". 

Find...

8th July 2014

The journal Utilities Policy has opened a call for papers for the upcoming special issue dedicated to Redesigning water tariffs: Experiences and reforms...

18th June 2014

Maria Salvetti (Coordinator of the WaterReg project within the Water Area at the Florence School of Regulation) has been invited to moderate a session on "Progressive models for...

Pages