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Ancev, Tihomir; Azad, Samad; Hernandez-Sancho, Francesc --- "The role of multinationals in providing water services – are they more efficient?" [2017] ELECD 335; in Chaisse, Julien (ed), "Charting the Water Regulatory Future" (Edward Elgar Publishing, 2017) 321

Book Title: Charting the Water Regulatory Future

Editor(s): Chaisse, Julien

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781785366710

Section: Chapter 15

Section Title: The role of multinationals in providing water services – are they more efficient?

Author(s): Ancev, Tihomir; Azad, Samad; Hernandez-Sancho, Francesc

Number of pages: 22

Abstract/Description:

The growing human population on the planet, combined with the processes of economic development and urbanisation lead to a growing need for municipal water supply and wastewater treatment. One of the UN Millennium Development Goals signifies the importance of access to safe drinking water and basic sanitation for all people. Despite noted progress over the last two decades, some 750 million people in the world remain without access to an improved source of drinking water, and 2.5 billion still lack access to improved sanitation facilities. At the same time, the threat of climate change points to a likely increase in water scarcity in many parts of the world due to the expected changes in hydrological patterns. IPCC estimates that between 0.4 and 3.2 billion people are going to be affected by the adverse effects of climate change on water availability, with mid-range scenario of 1–2 billion people being affected. In addition to the concerns posed by a growing population and possible climate change, the capacity of many countries to keep up the rates of expansion of their water infrastructure at par with the growing demand is diminishing in the light of sluggish economic growth worldwide and austerity measures taken by many governments around the world. Whereas the water sector needs to grow and provide services to an ever-growing number of users, the current economic environment does not offer favourable conditions for such growth. In the post GFC (Global Financial Crisis) world, there are tight budgetary conditions for all key economic players: governments, businesses, and individual consumers. Economic agents at all levels are becoming very conscious about spending. The situation is also very difficult on the investment front: water industries are forced to compete for investment funds on the open capital markets, in contrast to a time gone by when governments – whether local, regional or national – were willing and able to fund water infrastructure projects. Given the fiscal position of many governments around the world, this source of investment funding is not going to be very generous in foreseeable future. As a result, the overall subdued status of the economies in the world, characterised with high unemployment, government austerity measures, and low returns on capital, makes users very sensitive to pricing of all utility services, including water.