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Freedom to meet targets

 

The transparency of the French governance model works for the public management of its water and waste water services

Water services should be subject to solutions adopted locally. In France, this principle is applied to its extreme, leaving municipalities free to determine how to meet water policy targets that are defined at European or national level. This common sense approach shapes the way economic actors bring their know-how and innovation capacity in technical, social, contractual and environmental matters to municipalities and their citizens.

This freedom needs to be balanced by a strong public governance to frame and make the most of this local democracy. One example is the possibility to disclose data about the quality of service and its price in a harmonised manner so that citizens may understand the issues. Elected officials benchmark the solutions and results for more informed choices.

Municipalities’ organisation for water services delivery

Water and waste water services, legally, are ‘public services of a commercial nature’, placed under the responsibility of municipalities or their groupings. There are more than 30.000 municipalities but 70% of people have their drinking water and waste water services organised jointly with other municipalities in inter-municipal services.

Municipalities and inter-municipal bodies have a duty to determine water tariffs, the service level requirements and investments. Furthermore, they consult with the Municipal Commission for local services and establish local rules for services.

The choice of the service delivery mode is enshrined in the principle of free administration of municipalities. This remains the ultimate decision making body in any political, financial and technical matter and remains accountable to citizens and control bodies. For example, the law on municipal administration of 1837 stated: “The municipal councils shall deliberate on and settle the following matters: water…”. In concrete terms, a municipality may either manage the services itself or vote to tender out this task to private operators. There are 7.000 ongoing contracts and with close to 700 tenders per year in water/waste water services, with an average contract duration of 12 years.

 

Transparency in public water supply and waste water services

Naturally, citizens demand information about the performance of water and waste water services, in particular, to make sure they are getting value for money. Since 1995, French mayors have had to publish an annual report on the price and quality of water and waste water services. These reports contain information about how services are organised, as well as costs, prices and investment.

The question of shared indicators, which could describe the quality of the service, was raised in the early 2000s and the federations representing cities, operators and AFNOR (the French standardisation body) started building a set of performance indicators that would detail the service’s performance, using the publications of Alegre et al, 2000 and Matos et al, 2003. The performance indicators take into account the contracted service performances and any room for improvement in areas such as the quality of drinking water, service continuity/quality provided to consumers and the implementation of knowledge tools by the local authorities for their underground assets.

One of the actors’ objectives was to reflect on the main technical performance items such as compliance and leakage but also on social aspects such as the price and the recourse to the solidarity fund, and also to give a view on the financial sustainability of the service.

As early as 2004, private operators started gathering data and in 2006, the Law on Water and the Aquatic Environments (implementing the EU’s Water Framework Directive) recognised the list of indicators and created a new agency, the National Office for Water and Aquatic Environments, which took charge of organising data collection, storage and interpretation of collected data. In practice, the database is fed by local authorities and allows each city and citizen to benchmark the performances of its own city with those of similar characteristics. The updating of this database became mandatory in 2015.

Records show that performance improves gradually for most services. For example, in the case of Paris, the drinking water networks operations were delegated to two private operators from 1985 to 2009. The results show leakage rates declining from 22% in 1985 to 4% in 2009.

These improvements were obtained through district metering, the installation of GSM sensors to locate leaks and active leakage control measures. In other cities, 100% of meters are equipped with automatic meter reading, increasing the frequency of metering and enabling daily consumption control on the internet.

The benefits of this setting are numerous, starting with the increasing awareness of citizens about water matters and also the settling of a number of earlier debates which lacked evidence, and are now substantiated, regardless of the public or private nature of the local operator.

Another obvious benefit is that academics have an extensive database enabling the identification of possible improvement factors or the impact of the service structure on the performance or price, with a view to sharing such knowledge through peer reviewed scientific literature.

For example, research has shown that the apparent 10% price difference between in-house and delegated management is fully cancelled when taking into account the characteristics of the service (network, quality of raw water, etc) (Chong et al, 2015), illustrating that competition is a common sense solution to ensure organisations strive for performance.

 

 

Tighter regulatory context

This increased transparency should be seen as part of a wider modernisation of the legal environment of the sector, which makes the most of the technology commonly available, the progresses in legal terms, especially during the 1990s with the Barnier and Sapin laws on transparency and public tendering, or with the legislation requesting municipalities to separate the accounting for water and waste water services from the other municipal services. These changes were called for to ensure traceability of budget decisions and avoid cross-subsidisation. At the same time, the various regulatory authorities were given more powers of verification.

Conclusion

The French governance model for water services is decentralised and presents an important level of private participation through delegated public management, in which competition is fierce. Over the past 20 years, the involvement of users in the organisation of water services has greatly improved, including improved public reporting on performance indicators.

The benefits are many: improved benchmarking of services’ performance for decision-makers and citizens; efficiency gains through more informed choices; reducing asymmetry of information; detecting aggressive bidding more efficiently and increasing stakeholder participation. The Federation of French Water Companies (FP2E) supports the transparency of water services performance at EU level, as good governance solutions to enhance the public management of services.

By Dominique Gatel, Director of Public Affairs/ Water, Veolia and Chloé Simeha, Head of EU Public Affairs, Suez

Read more: Water Matters

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