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Drowned in an inch of water

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  • Massarutto, Antonio
  • Ermano, Paolo

Abstract

Italy reformed its water and sanitation services in 1994. The strategy aimed at transforming public entities, financed by the central budget, into self-sufficient professional companies regulated at arms' length. Nearly 20 years after, the reform has failed to deliver (despite some partial success). Italians have been divided in two parties: those blaming public sector inefficiencies and calling for competitive tendering; and those refusing to privatize water and willing to go back to the fiscal budget. In this article, we suggest that both parties are wrong. Underperformance is not related to the ownership structure of water companies, but rather to poor regulatory design and lack of understanding of the regulatory requirements that are implicit in the management model chosen, namely the concession contract.

Suggested Citation

  • Massarutto, Antonio & Ermano, Paolo, 2013. "Drowned in an inch of water," Utilities Policy, Elsevier, vol. 24(C), pages 20-31.
    • Handle: RePEc:eee:juipol:v:24:y:2013:i:c:p:20-31
    DOI: 10.1016/j.jup.2012.09.004
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    3. Guerrini, A. & Romano, G., 2017. "Contract renegotiation by an Italian wastewater utility: Action research to promote effective tariff revision," Utilities Policy, Elsevier, vol. 48(C), pages 176-183.
    4. Romano, Giulia & Molinos-Senante, María & Guerrini, Andrea, 2017. "Water utility efficiency assessment in Italy by accounting for service quality: An empirical investigation," Utilities Policy, Elsevier, vol. 45(C), pages 97-108.
    5. Jensen, Olivia & Wu, Xun, 2017. "The hybrid model for economic regulation of water utilities: Mission impossible?," Utilities Policy, Elsevier, vol. 48(C), pages 122-131.
    6. Christine Mawia Julius & Timothy C. Okech, 2021. "Moderation Effect of Government Regulation on the Joint Influence of Water Pricing, Infrastructure Financing, Utility Efficiency and Subsidies on Financial Sustainability of Water Service Providers in," International Journal of Economics and Financial Issues, Econjournals, vol. 11(3), pages 72-80.
    7. Olivier CRESPI REGHIZZI, 2013. "Milan’s water and sanitation service:from full direct provision to corporatization," CIRIEC Working Papers 1308, CIRIEC - Université de Liège.
    8. FuloP ARPAD ZOLTAN & BAKO KINGA ERZSEBET, 2017. "The Analysis Structures Of The Costs And Of The Relationship Between Costs And Revenues In The Sector Of Sewerage And Wastewater Treatment In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 188-196, December.
    9. Aidan R. VINING & Anthony E. BOARDMAN & Mark A. MOORE, 2014. "The Theory And Evidence Pertaining To Local Government Mixed Enterprises," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 53-86, March.
    10. Guerrini, Andrea & Molinos-Senante, María & Romano, Giulia, 2018. "Italian regulatory reform and water utility performance: An impact analysis," Utilities Policy, Elsevier, vol. 52(C), pages 95-102.
    11. Massarutto, Antonio, 2020. "Servant of too many masters: Residential water pricing and the challenge of sustainability," Utilities Policy, Elsevier, vol. 63(C).
    12. Marques, Rui Cunha, 2017. "Why not regulate PPPs?," Utilities Policy, Elsevier, vol. 48(C), pages 141-146.
    13. Eduardo Araral & Alberto Asquer & Yahua Wang, 2017. "Regulatory Constructivism: Application of Q Methodology in Italy and China," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2497-2521, June.
    14. Danelon, André Felipe & Augusto, Fernanda Gaudio & Spolador, Humberto Francisco Silva, 2021. "Water resource quality effects on water treatment costs: An analysis for the Brazilian case," Ecological Economics, Elsevier, vol. 188(C).
    15. Di Giulio, Marco & Galanti, Maria Tullia & Moro, Francesco Niccolò, 2016. "Political coalitions, local leaders and the internationalization of local public services in Italy," Utilities Policy, Elsevier, vol. 40(C), pages 144-151.
    16. Fulop Arpad-Zoltan & Bako Kinga-Erzsebet & Avram Boitos Camelia, 2017. "The Analysis Of The Costs And The Correlation Between Tariff And Cost In The Sector Of Clean Water And Sewerage In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 179-185, August.
    17. Romano, Giulia & Guerrini, Andrea & Campedelli, Bettina, 2015. "The new Italian water tariff method: A launching point for novel infrastructures or a backwards step?," Utilities Policy, Elsevier, vol. 34(C), pages 45-53.
    18. Romano, Giulia & Guerrini, Andrea, 2014. "The effects of ownership, board size and board composition on the performance of Italian water utilities," Utilities Policy, Elsevier, vol. 31(C), pages 18-28.
    19. Massarutto, Antonio & Roder, G. & Troiano, S., 2022. "Better safe than sorry? Stated preferences and the precautionary principle for securing drinking water quality in an Italian district," Utilities Policy, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    Water service regulation; Regulatory impact assessment; Concession contract; Italy;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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