As to the financial strain: Given an average water consumption of 150 litres per person and day (with EUR 1,09/m3) this would amount to a monthly cost of EUR 5,09 for the entire water service. Including invisible services (e.g. the protection of water resources) this amount is definitely negligible compared to other household expenses!

As to the savings potential: if about 80 percent of the total cost are fixed costs for the distribution network, then the “incredible” amount of 20 percent would remain for extraction and management, as well as for rationalisation measures.

In plain text this means that if 10 percent could be saved in this field this would reduce the monthly water costs in our example by EUR 0,11! If one considered a similar magnitude of savings in wastewater this would result in a total cost reduction of ATS 0,22 per month.

Therefore the question automatically arises whether this could be the solution to the financial problems of Austrian households!

As to privatisation: the foremost objective of private enterprises is to maximise profits. This target can only be reached when the company is more successful than its competition. Amongst other things, it is successful when it produces as efficiently as possible, and subsequently when the product is offered to the consumer as cost-efficiently as possible.

It is evident that privatisation alone will not be able to provide for more efficient structures – only if competition is introduced at the same time as privatisation will the whole thing make sense. In the water sector different models have developed according to the “added value chain” mentioned above to take advantage of the dynamics of market economy.

In this sense, the idea of privatisation is not new at all, since in individual sectors the public authorities have been using the advantages of the private sector and the offers of private economy already for a long time.

New developments exist in the fields of operation and management of facilities, whereas total privatisation, particularly the ownership of supply facilities, would rather have a thwarting effect on competition, since competition would be eliminated.

In this respect the water sector is special because several competing suppliers cannot be active in networked systems at the same time – therefore it is a natural monopoly.

As to liberalisation: it is simply claimed – similar to the power sector – that everybody should have the right to feed his water into the water supply system. The opinion is prevailing that competition is promoted by the creation of trans-European distribution networks.

However, some fundamental qualities of water are neglected in these considerations: water is a sensitive comestible, it is perishable and also the quality plays a major role. Waters of different origins have different make-ups and an uncontrolled mixture may cause considerable technical and qualitative problems in the distribution network.

Water has a huge mass, a fact which can lead to high transport costs already over distances of about 500 km. In addition, the free mixing of different waters in the system has to be avoided, or rather the rules of miscibility – in the case of controlled mixing – have to be observed.

Equally unfavourable are frequent changes of flow direction, qualitative alternating zones and particularly stagnation areas. All these requirements can be implemented by appropriate engineering, but they need again more investment, which could neutralise by far the advantages of competition!

The biggest issue in the “opening of networks”, however, is the fact that a customer does not or only partly get the desired water due to changes in flow and mixture in the network.

Due to the above facts, but mainly to assure consumer rights, a higher level of control on the side of the authorities is required – with all the costs involved.

To continue please see "Is therefore no need for Action?" – Part III

(Source: aqua press Int. 3/2001)
Dipl.-Ing. Helmut Jung