The European Parliament says that water is not a commercial product, but a public good. This statement fits well with the message of the United Nations that affirms that water is also a rights issue. Water resources are at the core of sustainable development, and are essential for socio-economic development everywhere on the planet. However, rampant population growth and the resulting rising demand, together with the increasing impact of climate change, mean water resources are subject to strong pressures.
We therefore need a legal framework to safeguard global water resources, through a strategy that ensures enough quality water is available in the long term for the range of applications it is used for. And this is where, in Europe, the Water Framework Directive (WFD) comes in, establishing the protection of European waters both in terms of quality and quantity, ensuring their long-term availability for Member States. Moreover, it allows establishing homogeneous environmental objectives for water bodies, in order to move forward in unison to achieve them, while sharing experiences. Nevertheless, the management and organisation of water services, including the supply of drinking water and waste water collection and treatment, results from historical-cultural factors that reflect the diversity of the countries that make up the European Union.
The WFD urges Member States to recover the costs of water services
Different management models for one single resource
Given that water is a key resource for a country's development, its government is responsible for finding the formula that better suits its socio-economic model. On this basis, and either due to political, administrative or financial reasons, the behaviour and the organisational structure of European countries have led to the evolution of water services management over the past 20 years from a model that was mostly public in nature, to the emergence and development of a private sector, thus opening the door to new management models.
Hence, water management in Europe can follow one of three models: the public one, where the responsible public entity can be directly in charge of providing the service and managing it, or delegate those tasks in a publicly owned management entity; the mixed model, where a public entity (usually a local government) and a private company manage the resource jointly; or the private model, where either the responsible public entity designates a private company to manage the tasks under a lease or concession agreement, but maintaining public ownership of infrastructure, or else all management tasks, responsibilities and ownership of water services, including infrastructure, are in the hands of private operators.
According to the 2018 EurEau report 'The governance of water services in Europe', except for England and Wales, where all water services follow a private management model, the public management model is more common in the rest of Europe. Whereas direct public management is used in Cyprus, Croatia, Hungary, Luxembourg and Norway, in Greece, Ireland and Malta it is more common to delegate management in a publicly owned services company. Serbia, Sweden and The Netherlands combine both public models.
The organisation of water services results from historical-cultural factors that reflect the diversity of the countries
In Belgium, water services (including waste water treatment) are a public responsibility; however, in Flanders, Wallonia and Brussels there is a small private share in waste water treatment.
In some countries where public management is also the predominant model, private companies participate in water services through a mixed model or delegation in private management. That is the case of Germany, Bulgaria, Slovakia, Estonia, Finland, Poland and Switzerland. It is also de case of Austria, where limited companies and limited liability corporations are the most common form of organisational arrangement, where the public authority holds the majority (in most cases 100%) of shares.
In the case of France, municipalities are legally responsible for water and waste water services. However, under national supervision, they are free to choose any management model, so that public management coexists with private management, together with public-private partnerships.
Still, the weight of private companies in water services management is not a minor one. In Denmark, for example, up to 2010 the main management model was a public one, but after 2016 there has been a trend towards a private model. That is also the case in Italy, where about half of the population receives services through a delegated public management model, and the other half through a mixed model; and in Portugal, where about one fourth receive services through public-private collaboration. In this regard, we should note that private water services management is not contemplated in Portuguese legislation. Elsewhere, in Romania, regional operators and two private companies cover 85% of the water supply and sewerage services market.
Another aspect worth noting is the weight of private companies in those countries where the three management models coexist in a balanced manner. That would be the case of the Czech Republic, where private companies outweigh public ones, and Spain, where both sectors are almost completely balanced.
The chimera of a perfect formula
Given the different water management models that exist in European countries, which one would be most appropriate? Unfortunately, there is not a consensus answer to the million-dollar question.
We could think that the opinion of civil society could maybe shed some light on the permanent question: which is the best model to use? According to an international survey for the Global Infrastructure Index done by Ipsos MORI in partnership with the Global Infrastructure Investor Association (GIIA) in 28 countries across the world, the water supply and sanitation sector was the second best valued with 73% of people satisfied. If we focus on Europe, the countries where the sector received a better rating were Germany (76%), Great Britain (73%), France (68%), Belgium (64%), Poland and Sweden (60%), Hungary (59%), Spain (55%) and Italy (36%). Interestingly, in each of the three countries with the highest per cent of people satisfied, the weight of public versus private management is different.
The Water Framework Directive establishes the protection of European waters both in terms of quality and quantity
Among the factors that the end user tends to evaluate in terms of water services are the water price (according to the per capita income), the quality of the service or the condition of infrastructure. But many people are not aware of the management model used to bring water to their tap; the important thing is that water does arrive to their tap.
And for that, Member States have to identify objectives and priorities in their water policies, mobilise enough resources to achieve the objectives (whether human, financial, or institutional resources), develop a solid regulatory framework, and mechanisms to solve the conflicts that will arise among the different stakeholders involved in water management.
Going back to the Water Framework Directive, which is complemented with more specific European legislation such as the Drinking Water Directive or the Urban Waste Water Directive, it does not specify the model that Member States should follow to comply with it. Rather, it urges them to ensure not only that all people have a right to water and sanitation, but also to recover the costs of water services. Where is Europe heading?