Contemporary market structure and regulatory framework

Abstract

This diagnosis of the European Parliament and of the Council points out that water is an economic good, but not a usual one. Water is vital for the people, animals and plants. Furthermore it is indispensable for the agriculture and industry. Nevertheless the water improvement incurs costs which have to be recovered. This poses special challenges to the water management and requires unique measures from an economic point of view. Cross countries the water industry is bound to an infrastructure which implicates its status as quasi natural monopoly. The lack of a competitive market pricing always implies a discussion of the competition in the water market. Furthermore the water sector is very capital intensive and has to face extremely high fixed costs. This raises the question of the right investment and funding strategies. As TRUST focuses on sustainable solutions, economical efficiency is one piece of the puzzle. The target of this report is to point out the status quo of the European water market and its regulatory framework. Collecting and analysing this general information with focus on the economic, financial aspects, is necessary to have a basis for possible further economic developments. First, the report will focus on the economic aspects of the European Water Framework Directive, which is valid for all EU countries. After a short, representative overview of the European water market and its regulatory framework the report will give a detailed look at the situation of the water sectors in Scotland, Germany, Portugal and Norway which are characterized by their differentiation. By mapping the European water supply situation in detailed country reports of four of the TRUST relevant case study cities this report creates the starting point for further tasks.