Reynaud, Arnaud (2010) Private sector participation, regulation and social policies in water supply in France. Oxford Development Studies, 38 (2). pp. 219-239.

Abstract

Given the prominent size of the private water industry in France and the specific Private Sector Participation (PSP), it is natural to investigate how the private sector impacts on equity, access and affordability issues. Access and affordability of water for poor households have been discussed in France since the beginning of the 1990s. An example is the Law, promulgated in 1992, creating a minimum insertion income, which states that “all families must have access to energy and water”. A recent and major change in terms of water-related social regulation has been the creation in 2000, jointly by public and private water operators, of a fund specifically dedicated to subsidizing the poorest households. If these social measures reflect a wish, both from the public authorities and the private water companies, to address the issue of water affordability there is still a lack of formal statistical analysis of the affordability of the water service for the low-income and for other vulnerable household groups in France. In this chapter, we wish to explore the various social policies and regulation taken by private water companies and by public authorities in charge of the water sector that are intended to help the poor. France has been a pioneer in terms of PSP in the water sector. The first well-documented case of private participation in France dates back to 1776 when the city of Paris decided to allocate to “Sieurs Perrier” a 15 years exclusive concession of the water supply system (Duroy 1996).1 Water affordability to poor households was already at that time an important issue since the concession contract stipulated that “The Sieurs Perrier must build water fountains in order to guarantee appropriate price for poor households”. Currently, the water industry in France is organised on a municipal level. Local communities can either directly manage water services or they may choose to delegate it to a private company through various contractual agreements including management contracts, affermage (lease contract) and concessions (here the private operator is responsible for financing all new investments over the period of delegation). Whatever the type of arrangement, water services must have the characteristics of a public service: equal access for all consumers, continuity of the service and adaptability to technical innovations. The participation of the private sector has progressively increased in France during the 20th century to reach now around 80% of the market share (Guérin-Schneider and Lorrain (2004); Pézon (2000)). The remaining of this chapter is organised as follows. In the following two sections we present the main characteristics of the French water industry and we discuss the main issues related to private participation and water affordability. Next, we focus on social policies and regulations dealing with water affordability in France. In particular, we describe and analyse critically the recent, current and proposed support mechanisms to assist low-income households in paying water and sewerage charges. We also discuss alternative approaches to the measurement of water affordability in France. Using the Family Income and Expenditure surveys published by the National Institute for Statistics and Economic Studies and the existing literature, we provide a formal definition of water affordability in France. In the last section we identify the determinants of water affordability. We focus in particular on the private participation into the water sector as a potential determinant of affordability. We conclude by deriving some policy implications from our findings.