Managing Competition in City Services: The Case of Barcelona

ABSTRACT:

“Clean and safe” strategies are part of urban regeneration in the entrepreneurial city. These strategies are often characterized by privatization and public–private partnerships that enhance investment and create a city space more amenable to tourists and consumers. While such approaches promote increased investment, and differentiate services by district, they raise challenges of competition, cost escalation, and public participation. Barcelona’s solid waste management strategy is presented to show the importance of a strong public coordination role when using competition to promote technological innovation and improved quality in city service delivery.

Notes

1 A driving factor in privatization is the effort to achieve economies of scale (Bel & Fageda, 2007; Bel & Miralles, 2003).

2 In solid waste, economies of scale prevent smaller cities from splitting their markets, but on average about 10% of U.S. cities report mixing public and private production in solid waste (Warner & Bel, 2008).

3 These ratios have been calculated from information available on the web site of the Department of Environmental Issues (Government of Catalonia). Data provided by the regional government do not exactly match the data provided by the city of Barcelona, because the municipality of Barcelona measures selective collection, whereas the regional government measures actual recycling. Despite the conceptual difference, the trends for selective collection and recycling are similar. For comparison purposes, we use the data from the regional government as this guarantees the accuracy of comparisons with other territorial jurisdictions.

4 The local government decided to extend the contracts, initially scheduled to finish in 2007, for two additional years to 2009. The primary reason is satisfaction with performance under the new system. The municipality wants more time to prepare a new bidding process that further increases competition and properly meets the diversity of solid waste generation and the different needs for street cleaning among the districts.

5 Private production of solid waste collection covers 56.3% of the population in Spain, and 91.1% in Catalonia. All data on private production and market shares are for 2003, and are taken from Bel (2006a).

6 The survey asks citizens to express their level of satisfaction with service delivery, on a scale 0 (very bad) to 10 (very good). The survey sample is usually 4,000 people, and each one of the 10 districts in the city receives 400 interviews. The 2006 survey (http://w3.bcn.es/fitxers/ajuntament/barometreoctubre2006.481.306.pdf, accessed October 20, 2008) showed an improvement in citizens’ opinions of the street cleaning service (5.7/10), reversing the downward trend shown in 2004 and 2005 (5.4/10 each year), when citizens’ perceptions had worsened with respect to previous years. Street cleaning (+0.3 points), together with solid waste collection (+0.4) and parks (+0.3), were the services with the highest increase in citizens’ satisfaction in 2006. Overall, citizen satisfaction increased in half of the 22 services measured.

7 All data were directly obtained or calculated from the Annual Reports of the Municipality of Barcelona, and from the Government of Catalonia.

8 Another factor that helps explain the growth in costs is that municipal investment in infrastructure related to these services increased from 15.0 million euro in 2000 to 58.05 million Euros in 2005. Bel (2006b) and Bel and Costas (2006) show that scale economies are exhausted for municipalities with population over 20,000 inhabitants. Therefore, we can disregard the increase in costs due to loss of scale economies from splitting the delivery market.