Abstract
This chapter finds that water and sewerage privatisation in England has favoured the extraction of economic value to guarantee short-term financeability and shareholder remuneration, harming long-term financeability and economic, technical, social, environmental, and political sustainability. A strong lock-in of distributive inefficiency comes together with highly regressive outcomes and cost shifting to future generations. Other lessons include: (1) it is important to consider how the pursuit of productive and distributive efficiency affects sustainable water development under different forms of ownership and governance; (2) the assumption that the public sector is an intrinsically inferior organisational mode does not hold; and (3) the problems with water privatisation in England cannot be attributed to the exceptionalism of its institutional design.
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Notes
- 1.
For the purposes of this chapter, I look at two components of organisational efficiency: productive efficiency and distributive efficiency. By productive efficiency, I mean the generation of value through the production of water services irrespective of whether and how this value is redistributed to stakeholders external to the service provider. Some call this internal efficiency; see, for example, Vickers and Yarrow (1988). By distributive efficiency, I refer to the redistribution of value to stakeholders external to the service provider irrespective of how this value has been generated. Some call this distributive equity; see, for example, Mookherjee (2006).
- 2.
On non-individualistic social welfare functions, see Desmarais-Tremblay (2016).
- 3.
The underlying assumption here is that the UK government’s commitment to respecting EU law would not depend on the public or private ownership of water utilities.
- 4.
This section focusses on leakage reduction, which is an indicator of organisational efficiency adopted across the global water sector. On the persistent problem of sewage flooding in England, see Lobina and Hall (2001) and Priestley (2016). The latter finds that in 2015–2016, 4344 properties were internally flooded by sewage in England and Wales.
- 5.
I owe this insight to Junji Hashimoto. For details, see the Ministry of Health, Labour and Welfare of Japan’s “Current trend of water administration”, 12 September 2017, particularly page 5 https://www.mhlw.go.jp/file/06-Seisakujouhou-10900000-Kenkoukyoku/0000203990.pdf.
- 6.
I owe this insight to Niels Knudsen. For details, see the Danish Water and Wastewater Association DANVA’s “Water in Figures 2017—DANVA Statistics and Benchmarking”, page 24 http://www.e-pages.dk/danva/215/24.
- 7.
See also Ofwat’s website on Leakage: https://www.ofwat.gov.uk/households/supply-and-standards/leakage.
- 8.
See Ofwat’s website on leakage: https://www.ofwat.gov.uk/households/supply-and-standards/leakage.
- 9.
For a more comprehensive discussion of leakage rates and international comparisons, see Hall and Lobina (2008).
- 10.
- 11.
- 12.
In this vein, Lobina (2018a) argues that the alignment of productive and distributive efficiency is of fundamental importance for enhancing sustainable water development and the human right to water.
- 13.
Similar considerations can however be made on the privatisation period prior to the municipalisation process of the late nineteenth and early twentieth centuries.
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Acknowledgements
I would like to thank Stéphane Saussier, as well as Kate Bayliss, Olivier Favereau, David Hall, Junji Hashimoto, Niels Knudsen and Malcolm Sawyer, for helpful comments and suggestions. All remaining errors are mine. The financial support of the Independent Social Research Foundation is gratefully acknowledged (http://www.isrf.org/about/fellows-and-projects/emanuele-lobina).
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Lobina, E. (2019). UK. In: Porcher, S., Saussier, S. (eds) Facing the Challenges of Water Governance. Palgrave Studies in Water Governance: Policy and Practice. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-98515-2_7
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