Legitimate, effective and efficient water governance? A comparative analysis of cases in Germany, England and Switzerland

Eva Lieberherr

PhD candidate at the: 1) Governance of Infrastructures Research Group, department of Innovation Research in Utility Sectors at the Swiss Federal Institute of Aquatic Science and Technology, Dübendorf, and 2) Chair of Management of Network Industries at the Swiss

Federal Institute of Technology in Lausanne, Switzerland  

7/26/2011

- WORK IN PROGRESS -

Abstract This paper aims to contribute to the debate about the trade-offs between legitimacy, effectiveness and efficiency in different governance modes in the public service sector. We accomplish this based on a multiple case study analysis of water supply and sanitation (WSS) companies in Germany, England and Switzerland. We find that contrary to previous literature, a public governance mode is able to achieve a similar level of legitimacy and efficiency as a private mode. In terms of effectiveness, the public mode achieves a higher level in terms of common good goals than the private, while profit-oriented goals are not applicable to the public mode. Moreover, also counter to the literature we find that a network mode can have more extreme trade-offs between the three criteria than more discrete public and private modes. However, aligned with the literature, we find that a private and network mode achieve a higher level of efficiency and effectiveness in terms of profit-oriented goals.

Keywords: water governance, legitimacy, efficiency, effectiveness, trade-offs

Paper prepared for the ECPR General Conference in Reykjavik, August 25-27 2011 Section 23Innovation and change in local governance and politics

Panel 189 Democracy by performance? Trends, ideas and developments in local governance

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1. INTRODUCTION “Governance would be at best in society when there is an effective production and delivery of goods and services in an efficient way and in legitimate conditions” (Bouckaert, 1993, p. 146). The public administration literature indicates that legitimacy, effectiveness and efficiency are key

public service dimensions (Brewer, 2006). However, there is a lack of consensus regarding the

criteria’s interplay and trade-offs (cf. Beisheim & Dingwerth, 2008). For example, what may be more

efficient and/or effective, may not be the most legitimate (Hendriks, 2009: 343; Klinke, 2006).

Moreover trade-offs between the criteria are manifested differently across the variety of governance

modes: e.g., public governance modes are often associated with legitimacy due to their inclusiveness

but lack efficiency due to long decision-making processes (Bevir, 2006; Börzel & Risse, 2005; D.

Osborne & Gaebler, 1992). Conversely, private governance modes are typically associated with higher

efficiency but less legitimacy due to their non-democratic processes (Benz & Papadopoulos, 2006b;

Schmelzle, 2008).

The public service sector of water supply and sanitation (WSS) is particularly salient for analysing the

interplay between legitimacy, effectiveness and efficiency: due to this sector’s unique attributes, 1

trade-offs between the three criteria become particularly apparent. For example, at the onset of the

privatization of the WSS sector in England and Wales, private WSS companies focused on efficiency

in order to make a profit, while legitimacy and effectiveness goals were jeopardized: shareholders

received high dividends while low-income users were increasingly unable to pay and some were thus

cut-off from service provision (Bakker, 2001).

By focusing on the empirical context of the WSS sector, we aim to contribute to the current debate in

the public governance literature about how legitimacy, effectiveness and efficiency trade-offs are

manifested in different governance modes by systematically relating governance modes to the three

criteria. Specifically, we conduct a comparative case study of water utilities servicing major urban

areas (in three countries) that are representative of a certain governance mode: 1) a network mode in

Germany, 2) a private mode in England, and 3) a public mode in Switzerland. While certain indicators

(e.g., for effectiveness) are WSS sector specific, the general framework of legitimacy, effectiveness

and efficiency is applicable to other public service sectors.

In the next section we delineate our analytical framework relating governance modes to legitimacy,

effectiveness and efficiency. Then we present predominant assumptions in the literature about the

1 Such attributes include the fact that WSS are/have 1) critical for life, irreplaceable and a quasi-public good, 2) natural monopoly characteristics where average costs decrease with a rise in output, 3) difficult to transport at low costs, 4) high sunk costs, 5) network segments that are not all profitable and 6) captive consumers (cf. Cashman & Ashley, 2008; Finger, Groenewegen, & Künneke, 2005; Luis-Manso & Finger, 2009).

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relationship between governance modes and the three criteria. Next we outline our methodology and

scrutinize the empirical cases based on the analytical framework. In the ensuing discussion we

empirically assess the proposed assumptions to determine their plausibility.

2. ANALYTICAL FRAMEWORK First we briefly sketch the spectrum of governance modes and operationalize legitimacy, effectiveness

and efficiency.

2.1 Three governance modes

In this research the term governance refers to a variety of steering and coordinating modes spanning

from public to private with networks in between (Jessop, 1998; Mayntz, 2006; Rhodes, 1996).

Governance modes are often differentiated based on variable degrees of public, network, and private

elements, rather than as discrete modes (Benz, 2004, 2009). Analytically speaking, governance modes

are comprised of several dimensions, which can include: structural, actors, regulatory and goal

orientation (summarized in table 1 and described below) (Lenschow, 1999).

Table 1: Governance modes and their dimensions

Structural & Actor Regulatory Goal orientation Public (State-centric)

- public law & ownership - tight coupling of politics & management (non-autonomous) - primarily public (state admin & municipalities)

- command & control (top-down; admin. orders)

- general public interest orientation

Network - public or private law/ownership - loose coupling between politics & management (semi-autonomous) - public & private

- contractual regulation (cooperation)

- general public interest & profit orientation

Private (market)

- private law & ownership (divestiture) - decoupling of politics & management (autonomous) - primarily private

- independent regulator &/or contractual regulation (price competition)

- profit orientation

Structural and actor elements pertain to the degree of vertical and horizontal division of

responsibilities in terms of the legal, policy, administrative and financial frames (Lenschow, 1999).

Moreover, these relate to the state-society relation in terms of the degree of the state versus non-state

actors’ role in the provision of goods and services and in decision-making (Lenschow, 1999).

Regulatory elements refer to the mode of control, i.e., the tools used to control and steer (Lenschow,

1999). Goal orientation relates to the differing logics present in a certain mode. For example, in a

more public mode, goals typically relate to achieving political and social mandates, based on the rights

and duties of the state vis-à-vis the citizens (and vice versa), with the optimization of the general

public interest being the ultimate goal, making economic performance secondary (Bakker, 2000;

Schedler & Proeller, 2003). Whereas in a more private mode, the philosophy defining what is

normatively “good” typically rests on a logic of utility (e.g., capital) rather than of the general public

interest (Bakker, 2000; Schedler & Proeller, 2003: 24).

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2.2 Legitimacy, efficiency and effectiveness

What de facto constitutes legitimacy, efficiency and effectiveness may vary between institutional

contexts (Hendriks, 2009; Thornton & Ocasio, 2008). While this would call for a more inductive

approach to discover locally operational meanings, we rather rely on a deductive approach by deriving

normative as well as analytic indicators that are predominantly employed in the public governance

literature. To be able to differentiate and critically judge the degree of the criteria’s quality, we

operationalize the variability of each criterion based on empirically identifiable units. In table 2

qualitative features (i.e., indicators) are defined on a three-point ordinal scale derived that enable an

assessment about each criterion’s degree of quality (cf.: Liese & Beisheim, 2011). These are described

further below.

Table 2: Qualitative indicators for legitimacy, efficiency and effectiveness

Input & throughput legitimacy Effectiveness Efficiency High - inclusiveness: direct access to & influence

on decision making processes via democratic institutions; - accountability: clear responsibility division; clear political & administrative structures with a high level of clout; checks & balances - transparency: processes & policies comprehensible for public, documented with easy access to information; open communication between actors

- achievement of common good goals: high level of universal service provision; public acceptance; infrastructure investment & resource protection - achievement of profit-oriented goals: high return on invested capital (i.e., cost-plus)

- cost utility: minimizing internal costs with same or higher output; economies of scale & scope

Med. - partial inclusiveness: selected access to & influence on decision-making via delegation - partial accountability: partially unclear responsibility division; partial clout & checks & balances - partial transparency: processes & policies only partially comprehensible, selective access to information; selective communication

- partial achievement of common good goals: selective service provision & public health concerns; partial public acceptance; short-term infrastructure investment schemes with partial resource protection - partial achievement of profit-oriented goals: medium level of return on invested capital (i.e., cutting even/cost covering)

- partial cost utility: partially minimizing internal costs and/or increasing output; diseconomies of scale & scope

Low - no inclusiveness: exclusive decision-making process, lack of access to & influence on decision-making via democratic institutions - no accountability: lack of clear division of responsibility, no checks & balances - no transparency: inscrutable decision-making processes & policies; non-public information

- not achieving common good goals: disconnecting households from the service network & public health incidents; public discontent & inability to afford; infrastructure investment neglect with resource degradation (i.e., water pollution) - not achieving profit-oriented goals: negative return on invested capital (not cost-covering)

- no cost utility: increasing internal costs or not maintaining same output; no economies of scale or scope

In political science, legitimacy relates to the acceptable use of power (Gilley, 2006) and thus the “right

to rule” (Buchanan & Keohane, 2006, p. 411); thus an underlying tenet of legitimacy is rightfully

proceeding to fulfil the general public interest (Easton, 1965; Gilley, 2006). For analytical purposes,

we differentiate between three dimensions of legitimacy: input, through-put and output that together

contribute to making the overarching term operational (Mayntz 2003). Input and through-put

legitimacy relate to the justification via fair procedures, which can be made operable by the following

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indicators:1) inclusiveness, 2) accountability and 3) transparency (cf.: Beisheim & Dingwerth, 2008).

We define these based on the traditional (democratic) delineation of legitimacy. 1) Inclusiveness can

be met if a wide range of actors have access to (either directly in policymaking or via representation)

and influence on decision-making via democratic institutions (Klinke, 2009a, 2009b; Wolf, 2006). 2)

Accountability can be met if there is a clear assignment of responsibility and authority to actors with a

system of checks and balances (i.e., actors are held answerable with sanctions and incentives in place;

actors are directly or indirectly reliant on the endorsement of those they govern) (Jarvis & Sovacool,

2011; Scharpf, 1997).2 3) Transparency can be met if decision-making processes are open (i.e., public

access and scrutiny of information). Not only should information (laws, rules etc.) be accessible to the

public, they should also be clear and easy to understand (Jarvis & Sovacool, 2011).

Output legitimacy relates to the outcome(s) of policymaking; equated with acceptability (Scharpf,

1999) and performance (Gilley, 2006) and thus is linked to effectiveness. Following certain scholars

who use output legitimacy synonymously with effectiveness (cf.: Auel, 2007; Benz & Papadopoulus,

2006; Wolf, 2006), we employ the overarching term effectiveness while subsuming elements of output

legitimacy within this (e.g., relating to acceptability). Effectiveness thus relates to achieving goals to

solve a policy problem (cf. Scharpf, 1999). Since what constitutes the policy problem differs between

sectors, we differentiate between public and private sector goals in order to define the indicators for

effectiveness. A main distinction is that the public sector typically focuses on common good and the

private sector on profit-oriented goals (Schedler & Proeller, 2003). Thus the measurable outputs for

the public sector generally entail meeting social and environmental needs in an equitable manner. In

the WSS sector, such needs include universal provision and public health (i.e., continuous access to

potable water and disposal of waste), public acceptance (relating to general public

perception/contentment and affordability issues) and investment in the infrastructure that fosters

resource protection (leading to increased performance in terms of quality of water etc.) (Bakker, 2001;

Jarvis & Sovacool, 2011; Mayntz, 2002, 2004; Swyngedouw, Page, & Kaika, 2002). In contrast, focal

outputs for the private sector are meeting profit-making mandates (i.e., return on invested capital to

shareholders) (Nishtar, 2004).

Efficiency is typically defined as the optimal output to cost ratio (i.e., cost-utility or productiveness)

(Andrews & Entwistle, 2010; Shaoul, 1997).3 Such efficiency can be met if input costs are decreased

and output maintained; thus increasing net profits (Shaoul, 1997). Another means for achieving cost-

utility can stem from economies of scale where average costs decrease as the scale increases (i.e., the

“unit costs decrease as the capacity increases, reducing marginal costs with higher performance”)

(Maurer, Wolfram, & Herlyn, 2009: 1). Thus a utility can achieve cost advantages due to expansion.

2 We use accountability here in terms of holding actors to account to a forum, rather than as a virtue or normative good sought by actors (cf. Bovens, 2010). 3 Costs are understood broadly, as including time – e.g., long-decision-making paths are regarded as inefficient.

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Similar to economies of scale, economies of scope can also lead to cost-utility by decreasing average

costs via the provision of multiple services or by jointly utilizing inputs (e.g., labor, capital and diverse

services) (Farsi, Fetz, & Filippini, 2007). 4

2.3 Assumptions

Acknowledging the lack of consensus in the literature regarding the interplay and trade-offs between

legitimacy, effectiveness and efficiency (cf. Beisheim & Dingwerth, 2008), we overtly employ the

criteria in the manner specified above, relying on the traditional (democratic for legitimacy)

delineations in the public governance literature, realizing that there are many other ways of

operationalizing these ‘meta-principles’ (Jarvis & Sovacool, 2011). We thus present our analytical

framework as one way to analyse to what extent different governance modes achieve legitimacy,

effectiveness and efficiency. Accordingly we present two assumptions found in the literature.

Our first assumption relates to the argument that a public governance mode can generate legitimacy

via citizen’s equal rights to vote and/or have a voice in the decision-making process (Bevir, 2006;

Newig & Fritsch, 2009; van de Kerkhof, 2006).5 Yet a focus on legitimacy is criticized as being

inefficient and ineffective due to, for instance, increasing decision-making costs, long decision-making

paths and the difficulty in finding common policy solutions (Börzel & Risse, 2005; D. Osborne &

Gaebler, 1992). On the other hand, while private governance modes are argued as leading to increased

efficiency and effectiveness, they also trigger central questions regarding legitimacy, as processes no

longer match democratic institutions are no longer in place (Benz & Papadopoulos, 2006b; Schmelzle,

2008).

Assumption1: A public governance mode is associated with higher legitimacy and lower efficiency and effectiveness than a private governance mode and vice versa.

Certain scholars thus argue that network governance modes might more readily enable a balancing of

legitimacy, effectiveness and efficiency goals than more discrete public and private governance modes

(cf. Andrews & Entwistle, 2010; Börzel & Risse, 2005; McQuaid, 2000; Ostroff & Schmitt, 1993).

Specifically, public-private partnerships (PPPs)6 are gaining ground as a means for providing public

services (Yescombe, 2007). PPPs are often perceived as viable arrangements for sustainably fulfilling

public service provision as they are arguably cost-efficient and effective (S. Osborne, 2000; Singh &

4 While we considered the inclusion of alternative efficiency dimensions, such as allocative and dynamic, for the purposes of this paper, we focus on this traditional, technical form as this has typically been employed in the public management literature (cf. Andrews & Entwistle, 2010). 5 However, widespread participation and influence might not necessarily ensure effectiveness in terms of achieving general public interest goals as citizens do not necessarily act in favour of the common good (Dahl, 1992). 6 A PPP can be conceptualized as contractual agreement between a public actor (e.g., government ministry or department) and a private actor (e.g., for-profit organization) to accomplish a common task (Singh & Prakash, 2010).

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Prakash, 2010; Teisman & Klijn, 2000). In addition, PPPs are said to promote legitimacy through

increased participation in decision-making (McQuaid, 2000).

Assumption 2: A network governance mode is associated with balancing legitimacy, effectiveness and efficiency to a greater extent than private or public modes.

3. METHODOLOGY 3.1 Case study approach and selection A case study approach is employed due to the complexity of the WSS sector, where the context affects

the case in a real-world situation with many uncontrollable variables (Yin, 2003). The case study

approach enables analytic generalization rather than statistical (Yin, 1994). Correspondingly, the

sampling is theoretical (rather than random or stratified) (Eisenhardt & Graebner, 2007), where the

cases are selected to illuminate the spectrum of governance modes in the public service sector. We

thus select three cases within the WSS sector that cover the spectrum of modes from public, to

network to private: 1) the Zurich wastewater treatment and drainage municipal enterprise that serves

the Zurich metropolitan area in Switzerland to represent a public mode, 2) the Berlin Waterworks (a

PPP) that provides WSS services the Berlin-Brandenburg metropolitan area in Germany to represent a

network mode, and 3) Yorkshire Water (YW) (private company) that provides WSS services the

metropolitan borough of Leeds (and the Yorkshire region) in England to represent a private mode (see

appendix 1 and section 4.1 for a depiction of each case). For readability purposes we refer to these

three cases as Berlin, Leeds and Zurich.

Beyond representing different governance modes, our cases differ accordingly: while in Berlin and

Leeds the companies provide both water supply and sanitation (i.e., collection and wastewater

treatment facility, drainage as well as the collection, treatment and supply of drinking water), in Zurich

the company only provides sanitation services, as the two sub-sectors are separated at the operational

level in Switzerland. 7 However, where relevant, data about drinking water provision is given for the

Zurich case to provide reference points. Moreover, in contrast to Germany and Switzerland, WSS

governance in England8 is more uniform, as it is not organized at the municipal level but rather

according to geographic regions and governed at the national level.

3.2 Data sources, collection and analysis According to the mandate that case studies involve multiple data sources and the principle of

triangulation (Scholz & Tietje, 2002), the empirical analysis is comprised of both primary and

7 Through initial expert interviews and document research, the sanitation sub-sector was found to be more dynamic and representative of current trends than the water supply side in Switzerland. It must also be noted that while in Germany, water supply and wastewater are also typically provided by different entities. 8 While the English and Welsh WSS sector were privatized, as our case (YW) is in England, for purposes of brevity, we focus on the English sector in this paper. Moreover, we focus on England, and not the UK, because WSS services are organized very differently in Northern Ireland and Scotland.

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secondary sources, including: 1) in-person interviews; 2) documentary information; 3) archival

records. The interviewees are differentiated by primary informants (within the case in managerial

positions) who have been working in the company between 5-10 years as well as secondary

informants from WSS-related institutions in each country. The interviews were conducted in late 2010

and early 2011, with a few ex-post interviews (see appendix 2 for a list of interviewees). 9 The

sampling method for finding interviewees was purposive. The interview questions were semi-

structured according to the analytical framework.

The analysis is based on the analytical framework with governance dimensions serving as the

independent variables and legitimacy, effectiveness and efficiency as the dependent. We thus analyse

our cases based on theoretical-conceptually established criteria that have been employed in previous

empirical analyses in public governance research in Western democracies. Moreover, the case studies

are interpreted according to the primary and secondary sources, where the secondary sources

(primarily reports and articles) are used to triangulate the interview data (see appendix 3 for a list of

the main secondary sources). Similarly, the secondary informants are used to triangulate the

information obtained by the primary informants (see appendix 2).

4. EMPIRICAL ANALYSIS OF BERLIN, LEEDS AND ZURICH We first reconstruct the cases according to the governance dimensions (see table 1) thus justifying the

extent to which each case is representative of a certain governance mode. Then we analyse each case

in terms of legitimacy, effectiveness and efficiency following the indicators outlined in table 2.

4.1 Governance dimensions

4.1.1 Actor and structural dimensions

Network modes are characterized by public-private actors and ownership, which is the case in Berlin:

in 1999 the state of Berlin sold 49.9% of the Berlin Waterworks’ assets to private investors. While the

state of Berlin remains institutionally liable as the utility’s guarantor, it now owns 51.1% of the assets.

Berlin is a PPP but a public law institution. A holding company is its institutional owner with

complete access over the waterworks’ operational management (see figure 1). Moreover, financing

occurs through private investors’ equity and subsequently by a cost-plus tariff system10 that generates

a return on capital for investors (to compensate them for their investment and risk).

9 These interviews were conducted by Eawag (Swiss Federal Institute for Aquatic Science and technology) researchers (in 2007 and 2008) and also focused on legitimacy, efficiency and effectiveness categories in Switzerland. 10 The tariff system covers all the costs - a) operational and maintenance costs incurred on a daily bases, b) capital costs for large investments in the infrastructure, c) environmental costs for such externalities as water pollution, aquifer drawdown etc. based on the polluter and user pays principles – via user fees (i.e., the water price) (Rogers, de Silva, & Bhatia, 2002; Rothenberger & Truffer, 2002). Cost-plus relates to a tariff structure

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Private modes are characterized by private actors and ownership, which is the case in Leeds: in 1989

the private company Yorkshire Water (the parent company is now called Kelda) received a concession

for the Yorkshire Water Authority (see figure 2). The state retains no ownership as the assets are now

100% in private hands. Moreover, like in Berlin, financing occurs through private investors’ equity

(albeit with increasing debt-financing) and subsequently by a cost-plus tariff system that generates a

return on capital for investors.

Public modes are characterized by public actors and ownership, which is the case Zurich: the actors

are public as it is owned by the city. While Zurich underwent an autonomisation11 process in 2000

whereby it changed its legal form from a municipal agency (i.e., a bureau) to a process-oriented

enterprise; it remains a non-autonomous entity under direct oversight of the Zurich’s city council, the

parliament and the public (see figure 3). Zurich is a public service enterprise under public law within

the municipal public works department with six contract municipalities that have their wastewater

treated in Zurich. Financing occurs through a tariff system that reflects capital and operation costs;

there is no cost-plus tariff system.

Source: own representation, based on Moss and Hüesker, 2010 and Ochman 2005.

Figure 1: Ownership and Decision-making Structure of the Berlin Waterworks

that is not only based on covering costs, but also on making a (moderate) profit percentage, typically via an imputed interest (rate of return) on the capital assets (Rothenberger & Truffer, 2002). 11 Autonomisation entails increasing autonomy from the state by freeing administrative discretion from political control; thus enabling more strategic decision-making at the operational level via increased competencies.

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Source: own representation, based on YW documents sent by interviewee 1

Figure 2: Ownership and Decision-making Structure of Yorkshire Water

Source: own representation, based on http://www.stadt-zuerich.ch/ted/de/index/entsorgung_recycling/ueber_uns/organisation/organigramm.html (accessed July 2011)

Figure 3: Ownership and Decision-making Structure of Zurich Waste Disposal and Recycling

4.1.2 Regulatory dimension

Network modes are characterized by contractual regulation, which is the case in Berlin as there is

contractual and rate-of-return regulation as well as administrative orders (the latter reflects that it is

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still under partial public ownership). Private modes are characterized by independent and contractual

regulation which is the case in Leeds as there are (semi-independent) arms-length regulators, with

price-cap regulation.12 Public modes are characterized by command and control, top-down regulation,

which is the case in Zurich as regulation occurs through administrative orders (see table 3 for a listing

of the different regulators and consumer interest representation bodies that are, to an extent, involved

in regulation).

Table 3: Regulators & Consumer Representation

Economic Environmental (wastewater

effluent)

Drinking water Consumer representation

Berlin - Senate department for economics (constituent state) regulates profit margin - Independent economic control agency (selected by the supervisory board) & Senator for health, environment and consumer protection (constituent state) review & approve water tariffs - Cartel agency (federal) monitors the water tariff

Water (or environmental) authority (constituent state) - division within the senate department for health, environment and consumer protection

Health departments - at the district level (12 within the city of Berlin)

Consumer Protection Agency (constituent state)

Leeds Office for Water Services (Ofwat) (national) – sets the tariff via price-capping (funded by the water companies via consumers)

Environmental Agency (EA) (national)

- Drinking Water Inspectorate (DWI) (national) - Leeds city council’s environmental health service

Consumer Council for Water (CC Water) (national)

Zurich National price regulator compares fees across the country

Waste, Water, Energy and Air (constituent state) - cantonal department

Cantonal health authority (constituent state) (under food regulation)

Consumer Protection Agency (constituent state)

4.1.3 Goal orientation

Network modes are characterized by both general public interest and profit orientations, which is the

case in both Berlin and Leeds, albeit in Leeds the profit orientation (i.e., in terms of meeting the profit

mandates for the investors) is stronger than in Berlin, because Berlin also relies on public funding in

addition to private; thus Berlin is more representative of a network mode and Leeds of a private mode.

Public modes are characterized as being oriented towards fulfilling the public interest, as non-profit

organizations re-investing in the public sector. Zurich fits these characteristics as it is a municipal

enterprise that must have a balanced account and reinvest all revenue in the wastewater sector.

12 The price-cap is based on the RPI + K formula (RPI stands for Retail Price Index and K represents expected efficiency savings (ca. 2% a year) plus the amount need to cover increasing capital investment and standards) (Office for Water Services, 2011; Shaoul, 1997).The K factor is set at each 5-year price review. Ofwat permits a return on capital in the water prices so as to reimburse the private investors. In setting the return on capital, it takes the past and present value of investment as revealed in the regulatory asset base (i.e., the capital assets funded with investor money, thus the investment based on which the return on capital can be based) along with the cost of capital (i.e., the minimum return on capital that investors expect).

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4.2 Empirical assessment via legitimacy, effectiveness and efficiency

Each case is interpreted according to the three criteria based on the indicators specified in table 2. The

results are summarized in table 4.

4.2.1 Legitimacy

Inclusiveness: In Berlin a low level of inclusiveness is found because the only democratically

authorized body directly involved in decision-making is the senate; parliament is no longer directly

involved and the public cannot directly vote on issues concerning the waterworks’ operations.

However, the public has recently increased its involvement by turning to the direct democratic tool of

initiatives in order to gain access to policymaking. The public thus gained access to and influence on

policymaking via the successful civil societal initiative making the previously private contracts

(between the state of Berlin and the private actors) public in February 2011. Leeds also has a low level

of inclusiveness as democratically authorized bodies have little access to decision-making and the

public cannot directly vote on water company policies; the primary actors involved are private (the

companies and the investors) (see figure 2). Moreover, in Leeds the public lacks access to and

influence on decision-making as there are no direct democratic tools such as referenda and initiatives

because England is a centralized political system. However, in Leeds (and England in general), there

has been a trend of increasing inclusiveness since the early 1990s through the distribution of power via

multiple arms-length regulators that opened up participation and public debate in policymaking in

WSS governance. Zurich as a public enterprise within the public administration involves a high level

of direct access to decision-making via democratically authorized bodies and public involvement

through direct voting (see figure 3). However, it takes a hierarchical stance vis-à-vis its contract

municipalities, which have no decision-making rights despite their desire to have more rights.

Accountability: In Berlin there is a lack of checks and balances, as the senate is the economic regulator

and simultaneously the majority shareholder of the waterworks (thus becoming its own regulator as it

sets its rate-of-return). Moreover, as Berlin is a city-state, there is no higher institutional level (i.e., at

the constituent state level) to which the senate is held accountable to (other than the federal agencies

such as the cartel agency). Albeit the water regulator serves as an environmental regulator, it lacks

clout as it lost a great deal of control via decentralization to the local authorities. In Leeds there are

checks and balances in place as the semi-independent regulators are accountable to Defra and/or the

parliament. Moreover, there are clear administrative structures in place via the Periodic Review (also

called price review), setting company policies and price limits, which fosters horizontal

accountabilities through comparative competition among the companies.13 In addition, if there is

disagreement between the companies and Ofwat during the Periodic Review, then the Competition 13 If a company performs better than another company then this company can receive additional revenues while the poorer performer loses revenue.

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Commission, an independent public body, can be called in to conduct an independent inquiry and

issue a final decision on the company policies and price limits. However, data show that while all

regulators (Ofwat, the EA and the DWI) have regulatory authority, the EA lacks clout and resources.

Data also indicate that the government has not been clear about certain tasks: e.g., there is a lack of

clarity in the distribution of roles between the private companies and local authorities. In Zurich there

are checks and balances in place as Zurich must report to the cantonal (constituent state) department,

which in turn, is held accountable to the city council, parliament and finally the public. However, the

cantonal department lacks financial clout, as it no longer has the tool of subsidies, which it could

previously use as an incentive tool to steer Zurich. Moreover, administrative orders are lacking in

clarity as the public laws are found to be unclear and complex; these laws are currently in the process

of being re-written into one, up-to-date, concise law.14

Transparency: In Berlin policy-making is regarded as inscrutable as decision-making occurred behind

closed doors and key contracts were not only secret to the public but also to the parliament (until the

fall of 2010). Moreover, those contracts that were open to parliamentarian scrutiny are described as

highly complex where the parliamentarians were unable to fully read and understand them prior to

voting on the PPP. In Leeds, policymaking and regulation are regarded as publicly comprehensible as

“everything is public” (Interview 8.1) and the WSS companies are mandated to provide highly

detailed information during the Periodic Reviews. However, others argue that the Periodic Review

process is highly difficult to understand due to its complex econometrics and extensiveness. In Zurich,

all decision-making is open to the public, with public laws and public accounting (scrutinized by the

constituent state department).

4.2.2 Effectiveness

Common good goals Universal service provision and public health: Berlin has a high connection rate to both the water

supply and sanitation system (see table 4). While the drinking water quality in Berlin is considered

high, with a high level of compliance, data indicates that a facility might lead to public health concerns

as it is using recycled wastewater; the water regulator argues, however, that sufficient tests have been

done to show that micro-pollution levels in the water source are too low for human harm (yet data

indicate that micro-pollution is a potential threat that necessitates increased regulation in Berlin in

order to meet EU regulations). Leeds also has a high connection rate (see table 4). While Leeds could

previously disconnect households (e.g., if they did not pay), the 1999 Water Act banned this practice.

Leeds also has a high level of compliance, following World Health Organization guidelines for

drinking water, with the DWI annually publishing extensive data on drinking water quality (see table

14 The cantonal water protection laws - Introductory Act to Water Protection, Einführungsgesetzes zum Gewässerschutz and Water Resources Law, Wasserwirtschaftsgsetz

13

4). However, Leeds does not pass all inspections. Zurich also has a high connection rate (see table 4)

and passes all wastewater inspections with certain parameters below the legal threshold. Yet in terms

of drinking water, in Zurich (as in Switzerland in general), it is presumed that there are water borne

diseases with annual incidences, but due to the lack of data and reporting, the statistics and causes

cannot be specified.

Public acceptance: Berlin has a low level of public acceptance, primarily due to the exclusive

policymaking processes (as described under legitimacy). Moreover, rising water prices (22% since

privatization in 1999) have been a source of discontent. Leeds reports a high level of public acceptance

(based on a survey indicating that 91% of its customers are satisfied with its performance). However,

Leeds faces affordability issues as it predicts that 10-12% of its customers are in water poverty (i.e.,

spending over 3% of their disposable income on water). Moreover, water prices have increased by

44% in real terms – since privatization, which weakens public acceptance and exacerbates

affordability concerns. In Zurich, municipal surveys indicate that citizens are satisfied with Zurich’s

service provision. Affordability is not an issue in Zurich; albeit wastewater prices are above the Swiss

average these are still low (2.6 Euro per cubic meter in a one person household) – particularly when

compared to electricity and gas prices.15 Moreover, Zurich was able to reduce its prices by 24%

following its autonomisation process in 2000 and waive the infrastructure fees for the users, due (in

part) to pressure from the price regulator.

Infrastructure investment and resource protection: Berlin has a high level of infrastructure investment,

as it exceeds its investment mandate. Yet the investments do not necessarily support resource

protection as the incentive is to invest so as to safeguard the return on capital - as the rate of return is

based on the value of the asset base, increasing the asset base will increase the return on capital: “The

private shareholders rejoice about every Euro that is invested because they can then re-invest this Euro

and make a profit… [and the original cost of investment is borne by the consumers via increasing

water prices]” (interview 1.1). Data thus indicates that increasing the asset base does not necessarily

foster resource protection because this might lead to facilities that are not needed. Indeed, Berlin is

found to be operating more facilities than needed: due to decreasing water use in Berlin, data indicate

that it would be technically plausible and more functional to only operate two waterworks (instead of

nine). Moreover, the waterworks is found to not have invested in what the parliament calls

“environmental investments” (e.g., any investments that foster water quality, such as increasing the

connections to the network, improving wastewater treatment). In addition, while Berlin complies with

legal mandates, it lacks self-initiative to safeguard effluent water quality (e.g., micro-pollution); Berlin

has the standard three-levels of wastewater treatment and is tending towards a fourth to combat micro-

15 This holds true for Berlin and Leeds: what people pay for water is minimal in comparison to what they pay for electricity and gas.

14

pollution, albeit the waterworks is reluctant as it does not view this as a priority. In contrast, the water

regulator perceives micro-pollution as a priority.

Leeds also has a high level of investment, as it exceeds its investment mandate. Yet Leeds’

investments are also found to focus on expanding the asset base so as to maintain financing, rather

than on environmental or social targets. Moreover, Leeds is described as having high aspirations to be

environmentally responsible on paper but is not achieving good environmental performance as there

are many compliance failures. In a recent report to Ofwat, Leeds acknowledges unsatisfactory

pollution incidents (i.e., untreated waste into water bodies). Furthermore, Leeds is described as

complying with legal mandates, but as lacking self-initiative to safeguard effluent water quality and

take risks; “they will only do something if there is a mandate to do so” (interviews 7.2). Albeit it must

be acknowledged that in terms of bathing waters, Leeds is doing more than its legal requirements, data

indicate that Leeds was unwilling to be proactive regarding micro-pollution issues. In addition, in

Leeds (and in England in general) there is no move towards more levels of wastewater treatment to

combat micro-pollution concerns – the focus is rather on dilution, where some wastewater treatment

plants have the most basic mechanical treatment level, despite EU regulations mandating biological

(i.e., at least two levels of treatment) in urban areas. The attitude in Leeds is generally that EU

regulations are too stringent.

In Zurich it is more difficult to assess its level of investment because it lacks the mandates that Berlin

and Leeds have due to the privatization contracts. However, Zurich reports sufficiently investing in its

infrastructure - covering its own investment costs with revenue and remarking that this is “better than

supporting banks” (interview 16.1) - and is not in-debt. In addition, Zurich achieves a high level of

effluent quality, above the legal standards. Indeed, Zurich has four levels of wastewater treatment that

transcends the three-level treatment status quo. The attitude in Zurich is to achieve EU standards or to

exceed them, even though it is not legally bound to do so.

Profit-making goals Both Berlin and Leeds achieve their profit-making goals: e.g., Berlin transferred 127.2 million Euros

to the private investors and Leeds made 140.3 million Euros in profits and paid 236.2 million Euros

(dividends) to its parent company in 2010; see table 4 for the profit percentages. Zurich as a public

entity has no profit goals as it cannot make a profit; a balanced accounting system is mandated where

revenue is tied to the wastewater sector and used for investment in the infrastructure.

4.2.3 Efficiency

Minimizing costs with higher output: Berlin achieves cost-utility as it has a decrease in operating costs

(by 11% since 1999) and an increase in annual net profits (moving from negative cash flow in 1999 to

15

almost 121.6 million Euros in 2011). While water prices have increased rather than decreased, data

indicate that prices would have increased more had Berlin not achieved cost-utility gains, as Berlin has

to meet its rate of return requirements to the shareholders. Leeds also achieves cost-utility as it has

surpassed Ofwat’s efficiency targets from 2005-2010 and became ranked as an efficiency benchmark

in the English water sector; cutting internal costs and increasing net profits. However, data also

indicate that Leeds is highly inefficient due internal procedures such as too many meetings and red-

tape, particularly since it underwent internal re-structuring in 2010. Indeed it is described as recently

“dropping off” from the top utility rankings (interview 7.2). Moreover, while the regulatory system

strives to increase efficiency in the English water sector, some argue that this system is in fact causing

inefficiencies as it has become highly complex and the water companies are obligated to provide

detailed information during the Periodic Reviews. Furthermore, water prices have also increased rather

than decreased (which was the initial policy goal in England). Data indicates that the price increases

are due to dividend requirements, not efficiency deficits. In Zurich, cost-utility is achieved as it has

has quicker decision-making paths (due to its restructuring in 2000) and was able to decrease

wastewater fees by 24% due to internal cost-utility.

In sum, we find that 1) Berlin achieves a low level of legitimacy and effectiveness (in terms of

common good goals) but a high level of effectiveness (in terms of profit-oriented goals) and

efficiency; 2) Leeds achieves a medium level of legitimacy, effectiveness (in terms of common good

goals) and efficiency but a high level of effectiveness (in terms of profit-oriented goals); and finally 3)

Zurich achieves a medium level of legitimacy, high effectiveness (in terms of common good goals)

and medium to low efficiency; since profit-orientation is not within its set of goals, this indicator is not

applicable for this case. These mixed results shed light onto potential trade-offs between the three

criteria that vary in the different governance modes; this is discussed further below.

16

Table 4: Summary of level of legitimacy, effectiveness and efficiency

5. DISCUSSION AND CONCLUSIONS Now we interpret the trade-offs between the three criteria and how these play-out in different

governance modes by addressing our assumptions presented in section 2.3. These are then followed by

our conclusions.

Assumption 1

Contrary to the first assumption that a public mode is associated with higher legitimacy and lower

efficiency and effectiveness than a private mode, we find that our case representing a public

governance mode (Zurich) has a similar level of legitimacy as our case representing a private mode

(Leeds); albeit different legitimacy indicators are at play within these two cases. While Zurich

Case Legitimacy Effectiveness Efficiency Berlin

Low - exclusion of parliament & public; public including itself via initiative right - lack of accountability: insufficient checks & balances, double role of senate as regulator & majority shareholder - non-transparent: non-public process & contracts initially secret to public & parliament

Low for common good, high for profit-oriented Common good goals: - high level of universal service delivery (99.8% for water supply and 99% for sanitation) & quality (no chlorine), albeit some concerns regarding micro-pollution - public discontent: increasing water prices (by 22% since the PPP) & lack of transparency; controversial cost-plus tariff system under cartel agency scrutiny - mixed performance in terms of infrastructure investment & resource protection; lack of self-initiative to protect resources; 3 levels of treatment Profit-oriented goals: - profit-making goals of shareholders achieved: 22% rate on return

High - increased cost-utility: minimizing costs via automation, in-sourcing etc., increasing annual profit of the waterworks - economies of scale & scope

Leeds Med. - low formalized access but new means of access via open regulatory process - extensive accountability structures in place: vertical & horizontal; lack of clarity between company & local authority goals - everything is public but Periodic Review is highly complex & difficult to understand

Med. for common good, high for profit-oriented Common good goals: - high level of universal service delivery (ca. 100% for water supply and 97% for sanitation) & quality (meeting 99.96% of drinking water quality targets and 100% of wastewater treatment works requirements), relies on chlorine - high level of public satisfaction but rising affordability concerns (rising prices by 44% since privatization) - mixed performance in terms of infrastructure investment & resource protection: favouring asset expansion rather than resource protection, has pollution incidents, lack of self-initiative to protect resources; no set level of wastewater treatment (dilution principle) Profit-oriented goals: - Profit – 22.6% rate on return

Med. - minimizing internal costs but also regarded as being bureaucratic, wasting time & resources; highly complex regulatory system - economies of scale & scope

Zurich Med. - high level of formalized access but exclusive vis-à-vis contract partners - unclear public laws; constituent state department lacking clout - comprehensible & easy to access documents & decision-making

High for common good, NA for profit-oriented Common good goals: - high level of universal service delivery (ca. 100% for water supply and 99% for sanitation) & quality (no chlorine), albeit some concerns regarding lack of drinking water quality data - high level of public acceptance, no real affordability concerns (decrease in prices by 24%), albeit had pressure from price regulator to reduce prices - high level of performance in terms of infrastructure investment & resource protection: self-financing & proactive in terms resource protection; 4 levels of treatment Profit-oriented goals: - Non-profit – no rate on return

Med/Low - restrictive political system but increase in cost-utility via autonomisation - certain level of economies of scale; no economy of scope

17

involves the most direct access to decision-making, the exclusion of its contract municipalities in

decision-making weakens its legitimacy. Moreover, Zurich has a lack of clear laws and weak

accountability structures, as the constituent department is found to lack clout. However, Zurich has a

high level of transparency as all decision-making and policies are open to the public. In Leeds, despite

its low formalized access to decision-making (lacking participatory rights via referenda and

initiatives), inclusiveness is achieved via the open regulatory process inclusive of diverse actors.

Moreover, Leeds has a high level of accountability with its extensive regulatory process and checks

and balances. However, this same regulatory process also weakens Leeds’ legitimacy due the fact that

it is highly complex. Here we see a trade-off within the legitimacy criterion: while the inclusive

regulatory process is positive for inclusiveness and accountability, it is negative for transparency (as

well as efficiency).

Also contrary to the above assumption is our finding that Zurich has a higher level of effectiveness in

terms of common good goals than Leeds; particularly in terms of infrastructure investment and

resource protection. Our Zurich case thus shows that it is not necessary to have a private mode in order

to safeguard adequate investment, which is contrary to the privatization rationale in England that

couched the water privatization as the only way to safeguard adequate investment (Bakker, 2000;

Shaoul, 1997). While it could be argued that this finding is due to the different institutional contexts in

Switzerland and England, other studies in England have also found indicators that there could have

been the same level of investment without privatization, as investment has been funded via high water

bills; i.e., investment is more dependent on the size of water bills than on private capital (Shaoul,

1997). Conversely, in Zurich, where there are no private investors (the utility was able to finance all

investments via revenue and was proud that it did not have to borrow money from banks) the common

good goals (i.e., relating to consumers and the environment) are benefiting more than in Leeds (e.g.,

lower user fees and higher effluent quality in Zurich than in Leeds).

However, aligned with the first assumption is our finding that Leeds is achieving its profit-oriented

goals, which is not applicable to Zurich as it cannot make a profit. Also partially aligned with our

assumption, is the finding that Zurich has a slightly lower level of efficiency (medium/low) than Leeds

(medium). Yet due to its autonomisation, Zurich was able to shorten decision-making paths while

remaining in the public mode. Moreover, Zurich was able to lower prices by 24% after its

restructuring due to increased cost-utility. These results indicate that a public mode can increase its

efficiency while remaining in the public domain. Conversely, Leeds’ efficiency is weakened due to

internal bureaucracy as well as the highly complex regulatory process. We thus find that a public

governance mode can have a similar level of legitimacy, (almost same level of) efficiency and higher

effectiveness (in terms of common good goals) as a private mode. It is only in terms of profit-oriented

goals that the public differs drastically from the private mode.

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Assumption 2

In contrast to our second assumption that a network mode is associated with balancing legitimacy,

effectiveness and efficiency more than public or private modes, we find that our network case of the

Berlin PPP entails more drastic trade-offs between the criteria than in our private and public cases

(Leeds and Zurich). This is evidenced by Berlin’s low level of legitimacy and high level of efficiency.

Albeit Leeds has the most detailed and explicit responsibility divisions with extensive economic

regulation, which both Berlin and Zurich lack, Zurich has a higher degree of accountability than Berlin

as the constituent department is accountable to a higher institutional level (i.e., the constituent state

council), which the senate in Berlin lacks as Berlin is a city-state. Moreover, while both Berlin and

Leeds face public discontent due to rising water prices, the discontent seems to be higher in Berlin

than in Leeds. Conversely, in terms of efficiency, while such negative indicators as long-decision-

making paths and internal inefficiencies were found in Zurich and Leeds, none were found in Berlin.

Moreover, we find more similarities (in terms of how the three criteria play-out) between the network

(Berlin) and private (Leeds) mode, with Zurich being more of an outlier. A major difference between

Zurich versus Berlin and Leeds is that the latter cases have dual goals of ensuring profitability on the

one hand and providing affordable WSS services on the other (Bakker 2000); i.e., they have both

common good and profit-oriented goals, while Zurich only has the former. Accordingly, a significant

difference between Zurich versus Berlin and Leeds is that Zurich (as in Switzerland in general) has no

return on capital, which eliminates the issue of cost-plus tariffs and the ensuing price increases.

While water prices will naturally increase, due to inflation and other external factors, the return on

capital has an extra impact on the prices, above and beyond the operational and capital costs. In short,

in Berlin and Leeds, private investors make a profit on the public service by making investments that

earn them an interest, which in turn leads to an increase in water prices, as the interest rate is in

included in the cost-plus tariff system so as to compensate the investors for their risk. Thus we find

that while in a public mode, the burden of risk is placed on the government, in a private and network

mode the burden is placed on the users as they have to compensate for the risk via higher fees (water

prices) to ensure dividends to the private investors. This is evidenced by our findings that in both

Berlin and Leeds (as network and private modes) prices have majorly increased since their

privatizations (i.e., in the past 10-20 years by 22% and 44% respectively), while in Zurich prices were

lowered after its autonomisation (by 24%). Our findings thus cohere with Shaoul’s (1997) argument

that private equity financing in the water sector “necessitate[s] higher prices if all these claims [private

investor dividends, investment needs etc.] are to be met” (p. 499). Moreover, Shaoul (1997) argues

that in a private mode, “the customers bear not only the costs of tax, maintenance and investments but

also of dividends to private shareholders’ asset base” (p. 500).

19

Not only is the profit-orientation linked with increasing prices, but it is also associated with less of a

focus on common good goals. This is evidenced by Berlin and Leeds having low and medium levels of

effectiveness in terms of common good goals. Specifically, we find that in Berlin and Leeds there is an

incentive to invest to increase the asset base in order to increase their rates of return rather than to meet

social and environmental needs. In contrast, in Zurich, there is no incentive to increase the asset base

(as there is no interest rate) and its investments are found to increase resource protection (via high

levels of treatment). While Berlin and Leeds are reluctant to take proactive measures fostering

environmental protection, Zurich is proud to have an effluent water quality as high as possible. These

findings are aligned with Graham and Marvin’s (1994) conclusions on the overall shift in the goal

orientation in the English utility sector that occurred with privatization: “Instead of the concept of

universal public service, utilities are now dominated by the drive to develop highly profitable services,

an over-riding concern for market potential, and a new focus on the ability of customer to pay”

(Graham & Marvin, 1994, p. 116). This is also aligned with what Bakker (2000 p. 17) calls the

“inevitable contradictions between the ‘logic of capital’ and the ‘logic of citizenship’ ” in such public

service provision as WSS.

How to safeguard common good goals (such as universal service provision and resource protection) in

the context of private and network modes? Previous empirical evidence in the public service sector

(and other environmental policy areas) indicates that when complex governance modes with market-

based elements and private actors are implemented, increased regulatory measures are needed to

ensure that environmental and social needs are met (cf. Bakker 2001;Peterson, Klauer, & Manstetten,

2009; Rothenberger & Truffer, 2002). Specifically, “strong regulators…[that] can genuinely ensure

the equitable development of utilities, are vital” (Graham & Marvin, 1994, p. 119). Neither Berlin nor

Leeds appears to be achieving such mandates. While increased environmental and economic

regulations are implemented in Berlin, there is no independent economic regulator to ensure

transparency and accountability. Leeds has achieved a high level of accountability via semi-

independent regulators yet there are trade-off with transparency and efficiency due to the increase in

regulatory complexity, involving econometric modelling and increasing regulatory resources; thus

there is now a call to decrease the level of economic regulation (Bakker, 2000; Dassler, Parker, &

Saal, 2006; Gray, 2011). In light of the above literature indicating that increased regulation should be

in place with more private and network governance modes, a decrease in economic regulation might

exacerbate the current situation in terms of meeting common good goals. Even in the public

governance mode of Zurich, we found that economic regulation (via the national price regulator)

played a role in terms of decreasing consumer prices.

This paper takes a step towards clarifying the relationship between governance modes and the

overarching criteria of legitimacy, effectiveness and efficiency; particularly in terms of the trade-offs

20

between the criteria in different modes. We thus move beyond the existing literature, offering a first

indication that contrary to the general assumptions in the literature that public governance modes are

associated with a higher level of legitimacy and lower efficiency and effectiveness than a private

governance mode and vice versa, a public governance mode can have the same level of legitimacy and

(almost same level of) efficiency as a private mode. In terms of effectiveness, we found that the public

mode even has a higher level in terms of common good goals than the private mode, while profit-

making goals are not applicable to the public mode. Moreover, in contrast to certain claims that

network modes are associated with balancing legitimacy, effectiveness and efficiency requirements,

we show how a network mode can have more extreme trade-offs between the criteria than more

discrete public and private modes.

The research faces several limitations. A main limitation is that we analysed three different companies

that function differently and within diverse institutional contexts, which makes comparisons

challenging. For example, Switzerland and Germany lack the extensive regulatory system with

complex performance indicators and statistics that are present in England. Moreover, cultural

mentality issues, such as the mentality in Zurich to be proud to over-achieve quality parameters and

not rely on private capital versus Leeds’ mentality that EU regulations are too stringent and that

private equity is the only means to safeguard investment, merit further exploration. Another limitation

of this research is that only three empirical case studies are analysed (only one case per governance

mode), which makes transferability of our results difficult. However, as such governance modes exist

in other public service sectors, our analysis may be applicable for similar governance modes in other

sectors.

We thus propose that further research analysing multiple cases within one governance mode as well as

different governance modes within one country and also governance modes in other sectors would be

fruitful to make more robust conclusions regarding the relationship between governance modes and

legitimacy, effectiveness and efficiency. Moreover, while our analysis is static, i.e., on the current

level of legitimacy, effectiveness and efficiency in the three modes, such results on the level achieved

today can be used in future dynamic analyses, looking at the transformation of governance modes and

their relationship with legitimacy, effectiveness and efficiency. Thus, ultimately, this research aims to

contribute to finding governance modes that are marked by “an effective production and delivery of

goods and services in an efficient way and in legitimate conditions” (Bouckaert, 1993, p. 146).

21

APPENDIX 1: CASE CHARACTERISTICS

Zurich Berlin Leeds Population 2 million inhabitants,

largest city in Switzerland 5 million inhabitants, largest city in Germany

4.9 million inhabitants, 2nd largest in England

Number of users

Wastewater: ca. 400,000 users

- Water supply: 3.7 million users - Wastewater: 3.9 million users

- over 5 million users

Assets - 1 centralized plant – treating 70 to 90 million cubic-meters - 4,000 km of sewerage/drainage mains

- 6 wastewater treatment plants - 9 water supply plants - treating 233 million & supplying 189.4 million cubic-meters of wastewater & drinking water annually - 7,886 km water supply & 9,571 km of sewerage/drainage mains

- 69 water treatment works - 631 wastewater treatment works - treating 356 billion & supplying 452.6 billion litres of wastewater & drinking water annually - 64,373.8 km of water supply & sewerage mains

Organizational form

- Municipal enterprise - Public-private partnership

- Private company

Special characteristics

- Representative of predominant organizational form in Switzerland - Transformation – autonomisation but still public

- Representative of increasing trend towards public-private interaction in Germany) - Transformation from public to public-private

- Representative of common organizational form in England - Transformation from public to private

Sources: http://www.stadt-zuerich.ch/ted/de/index/entsorgung_recycling/abwasser.html, http://www.bwb.de/content/language1/html/1107.php, http://www.yorkshirewater.com/about-us/what-we-do.aspx (accessed July 2011).

22

APPENDIX 2: INTERVIEWEE LIST

No. Institution No. of people

Date Informant quality

Berlin case study 1.1 1.2 1.3

Berlin Waterworks representatives 3 Feb. 2011 Primary

2.1 2.2 2.3

Senate department for Health, Environment and Consumer Protection (Environmental Regulator)

3 Feb. 2011 Secondary

3 Berlin Competence Centre for Water 1 Feb. 2011 Secondary 4.1 4.2

Leibniz Institute for Regional Development and Structural Planning

2 May 2010, Feb. 2011

Secondary

5 Helmholtz Centre for Environmental Research 1 Sept. 2010 Secondary 6.1 6.2

Association for Municipal Enterprises (VKU) 2 Feb. 2011 Secondary

Leeds case study 7.1 7.2 7.3 7.4 7.5

water@leeds & University of Leeds 5 Jun. 2011 Secondary

8.1 8.2

Long-term experts in water industry, research & development

2 Jun. 2011 Secondary

9 Yorkshire Water representative 1 May 2011 Primary 10 Office for water services (Ofwat) 1 Jun. 2011 Secondary 11 Consumer Council for Water (CC Water) 1 Jun. 2011 Secondary 12.1 12.2

Environmental Agency (EA) 2 Jun. 2011 Secondary

13 Competition Commission member 1 Jun. 2011 Secondary 14.1 14.2

Drinking Water Inspectorate (DWI) 2 Jun. 2011 Secondary

15 Water UK (water industry organization) 1 Jun. 2011 Secondary Zurich case study 16.1 16.2

Zurich wastewater treatment and drainage municipal enterprise

2 Jul. 2010, 2007

Primary

17.1 17.2 17.3 17.4

Zurich cantonal department for Waste, Water, Energy & Air

4 Aug. 2010, 2007

Secondary

18.1 18.2 18.3 18.4 18.5 18.6

Swiss Federal Institute for Aquatic Science and technology, Eawag

6 Nov. 2009, Jun. 2011

Secondary

19 Swiss Federal Department of the Environment 1 Dec. 2009 Secondary 20 Swiss National Association for water supply

and gas 1 July 2010 Secondary

23

APPENDIX 3: SECONDARY SOURCES Two dissertations on the partial privatization process of the Berlin Waterworks, based on extensive

interviews with experts involved in the policymaking process, were recently completed; rather than asking these experts the same questions, we draw from these two dissertations as well as from an older dissertation on the Berlin Waterworks:

o Beveridge, R. (2010). A Politics of Inevitability: the privatisation of the Berlin Water Company, the Global City Discourse and Governance in 1990s Berlin. Doctoral Thesis, Newcastle University, UK, Newcastle.

o Hüesker, F. (2011). Auswirkungen von Privatisierungen auf die Gemeinwohlfähigkeit des Daseinsvorsorgestaates – untersucht am Fall der Wasserbetriebe des Landes Berlin. München: Oekom verlag

o Ochman, D. (2005). Rechsformwahrende Privatisierung von öffentlichen Anstalten: Dargestellt am Holdingmodell zur Teilprivatisierung der Berliner Wasserbetriebe. PhD, Universität Bochum, Bochum.

EU reports: o de la Motte, R. (2005). WaterTime case studies - Cardiff, UK and Leeds, UK (pp. 1-47).

London: European Commission. o Lanz, K., & Eitner, K. (2005). WaterTime case study - Berlin, Germany (pp. 1-30). Hamburg:

European Commission. o Passadakis, A. (2006). The Berlin Water Works: From commercialization and partial

privatization to public democratic water enterprises. In S. Wagenknecht (Ed.), (Vol. 10, pp. 1-49). Berlin and Brussels: Vereinigte Europäische Linke/Nordische Grüne Linke, Europäisches Parliament.

o EUWID. (2011). Berliner Wasserbetriebe erwirtschaften leichtes Umsatz-Plus und Gewinn von 121.6 million Euro. EUWID Wasser und Abwasser, 26, 5.

Academic articles on the case study areas: o Dassler, T., Parker, D., & Saal, D. (2006). Methods and trends of performance benchmarking

in UK utility regulation. Utilities Policy, 14, 166-174. o Bakker, K. (2000). Privatizing Water, Producing Scarcity: The Yorkshire Drought of 1995.

Economic Geography, 76(1), 4-27. o Bakker, K. (2001). Paying for water: water pricing and equity in England and Wales.

Transactions of the Institute of British Geographers, 26(2), 143-164. o Moss, T., & Hüesker, F. (2010). Wasserinfrastrukturen als Gemeinwohlträger zwischen

globalem Wandel und regionaler Entwicklung - institutionelle Erwiderungen in Berlin-Brandenburg Interdisziplinären Arbeitsgruppen IAG Globaler Wandel - Regionale Entwicklung (Vol. Diskussionspapier 4, pp. 32-41). Berlin: Berlin-Brandenburgerische Akademie der Wissenschaften.

o Graham, S., & Marvin, S. (1994). Cherry picking and social dumping: Utilities in the 1990s. Utilities Policy, 4(2), 113-119.

o Shaoul, J. (1997). A critical financial analysis of the performance of privatized industry: the case of the UK water industry. Critical Perspectives on Accounting, 8, 479-505.

Reports, publications and website information from the water companies and consultants:

o Yorkshire Water. (2009). Periodic Review 2009: Final Business Plan - Striking the right balance for Yorkshire. Bradford: Yorkshire Water.

o Yorkshire Water. (2010). Annual Report and Financial Statement for the year ended 31 March 2010. Bradford: Yorkshire Water.

o Yorkshire Water. (2011). June Return 2011 Board Overview (pp. 1-30). Bradford: Yorkshire Water.

o Kelda Group. (2011). Taking responsibility for the water environment for good: A contribution to the debate on the future of the water industry from Kelda, parent company of Yokshire Water. Bradford: Kelda Group Limited.

o Pauli, U. (2009). Geschäftsbericht 2008. Zürich: Stadt Zürich, Entsorgung und Recycling. o Wiederkehr, P. (2004). ERZ/Geschäftsbereich Kompositier- und Klärwerke Abwasserpreis

Schweiz (pp. 1-3). Zurich: VSA, FES.

24

o Oelmann, M., Böschen, I., Kschonz, C., & Müller, G. (2009). 10 Years of Water Services Partnership in Berlin: An assessment of the public-private partnership between the state of Berlin, RWE Aqua and Veolia Wasser (pp. 1-34). Berlin: wik Consult.

o Aufsichtsrat. (2010). Geschäftsbericht 2010. Berlin: Berliner Wasserbetriebe. o http://www.stadt-zuerich.ch/ted/de/index/entsorgung_recycling.html (accessed April 2010). o http://www.bwb.de/content/language1/html/1102.php (accessed July 2011). o http://www.stadt-

zuerich.ch/ted/de/index/entsorgung_recycling/abwasser/klaerwerk_werdhoelzli.html (accessed July 2011).

o http://dwi.defra.gov.uk/about/annual-report/2009/index.htm (accessed July 2011). o http://www.yorkshirewater.com/policy-source/position-statements.aspx (accessed June 2011). o http://www.yorkshirewater.com/ (accessed July 2011)

Public documents and websites from the case study areas:

o Gray, D. (2011). Review of Ofwat and consumer representation in the water sector (pp. 1-115). London: Department for Environment Food and Rural Affairs and Welsh Government.

o Kunz, Y., von Gunten, U., & Maurer, M. (2009). Wasservorsorgung 2025: Vorprojekt (pp. 198). Dübendorf: Eawag.

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