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A strategy for introducing competition in the water sector

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Cave, Martin and Wright, Janet. (2010) A strategy for introducing competition in the water sector. Utilities Policy, Volume 18 (Number 3). pp. 116-119. ISSN 0957-1787

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Official URL: http://dx.doi.org/10.1016/j.jup.2010.01.002

Abstract

The authors took part in an independent review of competition and innovation in the water industry in England and Wales, undertaken for United Kingdom and Welsh government ministers. Privatised twenty years ago, subject to a price control regime which has permitted high levels of investment, and unchanged as a set of vertically integrated regional monopolies, the sector now faces fresh challenges associated in particular with the consequences of climate change. The review identified a programme for the introduction of competition and use of market-type instruments into the sector, beginning with opening up retailing to business customers and reforms of the arrangements for abstraction and discharge which are intended to achieve a more rational use of water resources and to stimulate trading across company boundaries. Then, subject to an appropriate governance structure, competition would be introduced into upstream treatment activities, either by the creation of a single buyer of wholesale water or through a common carriage regime. At the same time, the balance of risk of and return to companies’ remaining regulated activities would be changed to encourage more innovative approaches, especially those which avoid heavy capital investment. Heightened stimuli to investment would also flow from relaxing restrictions on mergers and takeovers, and measures to enhance the innovative capabilities of companies. The paper explains the logic of the proposed measures and of their sequencing.

Item Type:

Journal Article

Subjects:

H Social Sciences > HF Commerce
T Technology > TD Environmental technology. Sanitary engineering

Divisions:

Faculty of Social Sciences > Warwick Business School

Library of Congress Subject Headings (LCSH):

Water-supply -- Great Britain, Water-supply -- Economic aspects -- Great Britain, Water-supply -- Government policy -- Great Britain

Journal or Publication Title:

Utilities Policy

Publisher:

Pergamon

ISSN:

0957-1787

Official Date:

September 2010

Dates:

Date	Event
September 2010	Published

Volume:

Volume 18

Number:

Number 3

Page Range:

pp. 116-119

Identification Number:

10.1016/j.jup.2010.01.002

Status:

Peer Reviewed

Publication Status:

Published

References:

Cave, Martin, 2008. Independent Review of Competition and Innovation in Water
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industry/cavereview.
Cave, Martin, 2009. Independent Review of Competition and Innovation in Water
Markets: Final Report available at: www.defra.gov.uk/environment/water/
industry/cavereview.
DEFRA, 2009. Consultation on the Cave Review of Competition and Innovation in
Water Markets. Department for Environment, Food and Rural Affairs.
Littlechild, Stephen, 2008. Constructive Engagement and Negotiated Settlements e
A Prospect in the England and Wales Water Sector?, mimeo.
MVAConsultancy, 2007. Setting Strategic Direction: Competition Research with
Business Customers available at: www.ccwater.org.uk.
Rowe, Lyndon, 2008. Competition in the water and wastewater industry. Network
(Issue 29, September), 2e8.
WICS, 2009. Competition in the Scottish Water Industry. Water Industry Commission
for Scotland.