Mending leaks in Europe’s water industry

Across the EU, the way in which the water industry works varies enormously, with different organisations taking charge, from local government departments to joint-stock companies.

In the UK, water companies were public utilities until they were privatised in the late 1980s. In France, private entities have, to varying degrees, run waterworks since the Napoleonic era, but the industry has occasionally been rocked by scandals involving dirty dealings between companies, which are a major source of political funding, and politicians.

"Water is an excellent example of why a framework directive [on services of general interest] is needed," says Jan Willem Goudriaan, deputy secretary-general of the European Federation of Public Service Unions (EFPSU), who is leading a campaign on utilities. "The strategy of the European Commission is to reduce the scope of public services. It’s all about liberalisation. We don’t agree with that. If water supply is privatised, three things will happen. Prices will go up, there will be little investment and there’s a big risk for the democratic control of these services."

The EU has already issued a number of directives governing the sector such as the drinking water directive (1997) setting minimum quality standards for tap water, the urban waste water directive (1991), which requires all houses to be connected to a sewer system and all urban waste water to be treated, and the water framework directive (2000) on river basin management. The public procurement directive (2004) ensures all contracts are tendered in a transparent way aimed at fostering an effective internal market. Unlike other network industries such as electricity and gas, however, which have been pushed towards liberalisation by sector- specific legislation, control of water has remained close to the national and local authorities.

"Water is by nature local, a perishable product with high transportation costs, highly dependent on the locally available sources and the local capability of the environment to receive the effluent of wastewater treatment," says Frédéric de Hemptinne, secretary-general of the European Union of National Associations of Water Suppliers and Waste Water Services. "Water infrastructures are investments for the very long run and, after completion, cannot be transferred to other places or be used in other ways, therefore subsidiarity should be the guiding principle."

Given the idiosyncrasies of the sector and the diverse way in which it is organised, Hemptinne advocates that the EU restrict itself to a light touch modernisation programme for the sector that might include increased research and development through the 7th framework programme for research and EU help with costly asset maintenance and replacement costs. Legal certainty for local and regional authorities on how they can set up their water services would also be welcomed by the sector as current rules on issues such as state aid and public-private partnerships are often unclear. "All these uncertainties hamper decision-making on the most suited governance for the water services and are obstacles for modernisation," he says.

Across the EU, the way in which the water industry works varies enormously, with different organisations taking charge, from local government departments to joint-stock companies.