The Results of Modernizing Network Industries: The Case of Urban Water Services in Europe

Since the 1980s, the European Union favours regulatory reforms in network industries and the water sector appears to be the latest to be included in this. We deal with this issue while questioning the concept of “modernization of the Urban Water Systems in Europe†(UWSE). This process began in the second half of 1990 and the Water framework directive (2000) constitutes its main element. Three core principles provide the basis for the modernization of UWSEs: 1/ a rationalisation of the public command; 2/ an increasing use of market mechanisms; 3/ the identification of sustainable development goals. After implementation it appears that many UWSEs fall short of expectations. Our analysis is concentrated on the impacts and the operating mechanisms, impacts of such reform. It is argued that modernization entails a change in the modalities of coordinating UWSEs, while intensifying and polarizing the problems of sustainability around economic issues. At an organizational level, modernization tends to depoliticize UWSEs and increase socio-institutional resilience. These two phenomena are mainly the result of hybridization of institutional arrangements in favour of the market. With respect to sustainability potential, the lack of coherence in the development of UWSEs re-regulation explains the relatively gloomy outlook.