Water Institutions and Management in Switzerland

The main characteristics of water management in Switzerland are its big diversity, strong decentralisation, and different modes of management between drinking water supply and sanitation. Both, the distribution of water and sanitation, fall within the competences of the cantons, which normally delegate this mandate down to the municipalities. The water sector in Switzerland is organised as a local monopoly, with the most common organisational structure being the municipal water service for drinking water supply, and the (non-autonomous) municipal management for sanitation services. Although significant changes are not expected in the sector in the near future, there are important features and dynamics that may help understanding how the sector will most likely evolve. Firstly, and especially in what concerns water supply operators, there has been a trend towards the autonomisation and professionalisation of the public entities. Secondly, there is a growing trend towards regionalisation of operators both for economic, technical, and security reasons. Thirdly, there is a general consensus that the degree of water liberalisation is unlikely to increase in the near future. And, finally, public opinion is considered by the specialists as the most important driving force of the Swiss water sector

Reform and risk management in the urban water sector:the role of regulation

Traditionally, urban water services were characterised by local monopolies, where the incumbent was publicly-owned. This was explained by safety, health, economic, and technological reasons related to the sector's specificities. However, in spite of this, the sector has undergone important reforms in recent years, triggered by efficiency, underinvestment, and environmental problems. The most important features of reform are competitive pressures, private sector participation, and more autonomous operators. These reforms have created a new environment for urban water management and regulation. The objective of this thesis is to analyse the role of regulation in the management of the risks created by the sector's reform. The theoretical analysis is developed along two lines. Firstly, we present an extensive literature review of the theories of economic and social regulation, with the aim of clarifying the interactions between regulation and reform better. We conclude that regulation matters, even after reform. Secondly, we use contract theories as a framework for presenting the vulnerability analysis of the main elements at risk because of reform, namely capital investments and the provision of the service of general interest. At the same time, risk-sharing regimes are identified for the most common institutional arrangement in the sector. The empirical analysis focuses on risk-sharing patterns and the vulnerability of the elements at risk. It is based on a questionnaire targeting management entities, five case-studies illustrating different institutional arrangements, and a study on operator's strategies in a context of reform. In the new context, asset specificity and informational hazards are the most important factors increasing the vulnerability of capital investments. The lack of funding sources is also highlighted, specifically in developing countries. It also became clear that non-provision of the service may result from non-capacity of the system or to non-affordability of the service. Along these lines, we propose regulatory governance mechanisms that tackle the problems highlighted in each institutional arrangement, involving different actors, for every step of the reform risk management process

Economic Regulation in the Network Industries: where does it stand?

The purpose of this paper is to present the different forms of economic regulation in the network industries, following the debate about restructuring these industries. The main theories on (economic) regulation of the network industries are presented and the most important regulatory instruments available to regulators are identified. Several regulatory theories were developed over the past decades proposing different types of public intervention in the market, and up to a certain extent influencing the nature of the reform process. Depending on the region, this process is characterised by the privatisation and/or the liberalisation of network industries. Even in situations where it is difficult to introduce competition, some theories explore alternative mechanisms to overcome this limitation, which consequently influences regulation. In practice, deregulation in the network industries pertains essentially to command-and-control types of regulation, and not all the types of intervention in the market. In reality, instead of complete deregulation, there has been a move towards different types of intervention (a process also known as re-regulation), with a special emphasis on incentive regulation

The evolution of the water sector in Europe: an institutional analysis of possible scenarios

In this paper we present six scenarios about the possible evolution of the water supply and sanitation sector in Europe, considering both liberalised and non-liberalised environments. The scenarios were developed around three macro-storylines, namely (1) pressure for more competition and private sector participation; (2) opposition to liberalisation and pressure to return to direct public or community management; and (3) maintenance of the status quo. We then define the institutional framework of each scenario taking into account the specificities of the sector. The institutional framework aims at illustrating the relative positioning and changing power attributes of the main actor groups. We conclude this institutional analysis of the scenarios by assessing their viability based on three criteria, in particular stability, efficiency and accountability