The dynamics of privatization and regulation of water services: a comparative study of two Spanish regions

Abstract

As in other economic activities, privatization of water delivery has not resulted in the retreat of the public sector, but rather a change in the way in which the government intervenes in the water industry. This paper illustrates this situation by comparing urban water services in two Spanish regions, Andalusia and Catalonia. Water service delivery is structured very differently in these two regions with respect to private involvement, the degree of market concentration and, as a result, problems in competition. The characteristics of the two regions' respective regulatory agencies reflect the different paths taken to privatization: in Catalonia private firms have much more tradition and operate throughout the region; in Andalusia their introduction has been much more recent and limited in scope.

Keywords:

• privatization
• regulation
• water services
• regulatory agencies
• Catalonia
• Andalusia

Acknowledgements

The authors are grateful for the financial support from the Spanish Ministry of Economy and Competitiveness (projects ECO2012-32189, ECO2012-38004, ECO2009-06946/ECON and ECO2009-08824/ECON). Germà Bel also acknowledges funding from the Autonomous Government of Catalonia (project SGR2009-1066) and ICREA Academia. Andrés J. Picazo-Tadeo appreciates the financial support from the Autonomous Government of Valencia (project PROMETEO/2009/098). Francisco González-Gómez acknowledges financial support from the Junta de Andalucía (project P11-SEJ-7039). A preliminary version of this paper was presented at a 2011 workshop in Granada on water pricing and the roles of the public and private sectors in efficient urban water management, organized by the Universidad de Granada and Global Water Intelligence. Comments by anonymous reviewers and by Cecilia Tortajada have been very useful.