Remunicipalization of water services in France and inter-municipal cooperation: who’s at the helm?

ABSTRACT

In this paper, we address the remunicipalization question from a novel perspective: by looking at ”who is at the helm”. Using a comprehensive panel dataset covering the complete universe of French drinking water services from 2009 to 2021, we show that the type of local governments in charge of supervising water services (inter-municipal cooperation or not) influences the decision to remunicipalize. We argue that this is because the costs of negotiating the remunicipalization of water services as well as the level of involvement in the investment and supervision of water services vary according to the type of local government. We conclude by discussing the lessons to be learned from our study concerning the future of remunicipalizations in France.

KEYWORDS:

• Remunicipalization
• contract renewals
• private management
• water tariffs
• renegotiations
• Inter-municipal cooperation

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Over the period 2009–2021, we observed in our data more than 390 privatisations defined as the transition from direct public management of water services to concession contracts. Those privatisations concerned less than 2 million users. We have not observed any back-and-forth situation over the period studied.

2. In France, cross-subsidies are prohibited. The principle is that”water pays for water”, i.e., the service must be able to entirely finance itself. This principle is stipulated in Art. L2224-12-3 of the CGCT (General code of local and regional authorities): ‘Drinking water and sanitation charges cover expenses resulting from investments, operation and renewals necessary for the provision of services, as well as charges and taxes of any kind relating to their execution.

3. The dataset is open access and available here: http://www.services.eaufrance.fr/donnees

4. In the administrative divisions of France, the department is one of the three levels of government under the national level, between the administrative regions and the communes. Ninety-six departments are in metropolitan France, and five are overseas departments.

5. We considered the way water services are run at t + 1 to be absolutely sure that the governance choice we observe is the one following the renewal date. For the same reason, we considered the municipality water tariff shares at t-1. Results do not change if we observe both variables at time t. Results are available on request.

6. The NOTRe law adopted in 2015 provided for a mandatory transfer of water and sanitation responsibilities to urban communities and communities of municipalities as of January 1, 2020. Article 1 of the Ferrand law of August 3, 2018, introduced a blocking minority mechanism regarding the transfer of competence to communities of municipalities. Thus, member municipalities of a community of municipalities may oppose the transfer of these responsibilities in 2020. In this case, the transfer will be carried out no later than January 1, 2026.