Assessing the impact of water service regulatory reforms in Italy: a multidimensional approach

Abstract

In 1994 the regulatory framework of water services in Italy was radically modified, by transforming a traditional ublicly operated system, which relied heavily for investments on fiscal budgets, into a system made up of self- ustaining corporate enterprises regulated at arm’s length. After 19 years, the time has come to make an assessment f what has been achieved. This paper develops an original methodology, inspired by the concept of water sustain- bility, which tries to integrate economic, environmental and financial aspects within a unique framework. Our nalysis discloses both allocative as well as distributive impacts of the reform, showing that it has been possible o generate some value for money while shifting the economic burden from taxpayers to service customers. How- ver, improvements have been too slight and many signs are showing that it will be rather problematic to speed them up without undertaking a substantial restyling

Evaluating the performance of local SoEs as output‐maximizing entities: The case of Friuli Venezia Giulia

“…Massarutto, Antonioli, and Ermano (2013) adapted this approach to the water and sanitation reform in Italy, including the impact for future generations and the environment. In this case as well, the outcome is coherent with the policy aim of achieving full‐cost recovery and permanently alleviating the financial burden for public budgets, but far less positive with respect to efficiency improvements, quality of delivered services and investments.…”

“…Acemoglu and Robinson (2012) distinguish 'extractive' and 'inclusive' institutions: while the former redirect surpluses to accomplish the wills of powerful elites, the latter are keen to reinvesting surpluses into goods that generate returns on the community as a whole, in the form of positive externalities and public goods. Over time, it has also become clear that state and market are not mutually exclusive, but can be combined in many ways, giving origin to a vast range of hybrids (Albalate, Bel, & Fageda, 2014;Bel & Fageda, 2010;Massarutto, 2015). Rather than a simplistic distinction between private and public ownership (Bel, Hebdon, & Warner, 2018), the real world provides a multi-faceted set of critical issues.…”

“…Contract completeness and information asymmetries provide a second powerful argument (Hart, 2003;Iossa & Martimort, 2015;Williamson, 1996). This is most often the case when contract duration is long due to the economic life of investments and to the prevalence of fixed over variable costs, or when it is difficult to predict all future contingencies (Massarutto, 2015). Indeed, renegotiation represents a major cause of failure of concession contracts worldwide, especially when these entail significant investments, the object is complex and the time horizon is long (Guasch, 2004).…”

“…In most utilities, for example, applied studies do not show overwhelming evidence of the superiority of private over public enterprises (Willner & Grönblom, 2017). Powerful examples come from water and sanitation (Massarutto, 2015) and municipal waste management (Bel & Gradus, 2018). However, efficiency assessment requires a measure of outputs, which should include service quality, investments, and not just the quantity delivered or the number of customers served.…”

“…Both studies led to rather critical assessments of the outcomes of liberalization, whose effects were more evident in redistributional terms (from consumers to taxpayers and shareholders) than in purely efficiency terms. Massarutto, Antonioli, and Ermano (2013) adapted this approach to the water and sanitation reform in Italy, including the impact for future generations and the environment. In this case as well, the outcome is coherent with the policy aim of achieving full-cost recovery and permanently alleviating the financial burden for public budgets, but far less positive with respect to efficiency improvements, quality of delivered services and investments.…”