Monopolisation, Market Liberalisation and Madness: Comparative Approaches to Water Supply Governance

Abstract

This chapter considers governance issues in the context of a ubiquitous and necessary resource: water. In many countries, water was traditionally supplied to the public through monopolistic, often government-run, entities. Over the past quarter century, governments around the world have moved from government-owned and operated monopolistic water supply structures to corporatised or, in some cases, privatised regimes for the supply of water to households and businesses. Some jurisdictions have even introduced competition in water supply. The variety of ways that jurisdictions have tackled these issues, and the extent to which these reforms have themselves been subject to change, illustrate the increasing level of disorder that currently characterises the global water sector. What had been a staid, stable sector is now in a state of flux across jurisdictions. Such changes have raised questions as to the best ways to balance efficient management of water assets, particularly given the prevalence of natural monopoly characteristics in the industry; the desire for profitability; conservation and safety concerns; and the critical issue of affordability of this necessary good. Accordingly, this chapter first examines structural characteristics of the water supply industry. It next reviews how the Australian water supply regime has evolved over the past 20 years. It then examines how jurisdictions in the United Kingdom have approached the supply of water and considers the extent to which options tried there may offer lessons for Australia. The chapter concludes that models trialed in other countries may indeed offer useful solutions as the Australian water industry continues to evolve. At the same time, the chapter concludes that global disorder in this area, as a result of attempts to tailor solutions to local conditions, might be a positive outcome.

Keywords: water supply governance, monopolisation, commercialisation, corporatisation, GBE

JEL Classification: K23, K22, K32, H42