Water and waste tariffs in Greece and

the Netherlands

Vlasis Oikonomou

Foundation Joint Implementation Network, Groningen,

the Netherlands

ISSAERE, Torino, 15/9/2009

Structure of the presentation

• Background

• Water market in Greece

• Water market in the Netherlands

• Waste market in Greece

• Waste market in the Netherlands

• Conclusions

Selection of countries

• Greece and the Netherlands are

different water markets in terms of

implementation of EU Directives and

market structure

• Greece and the Netherlands present

differences in their morphological

structure and water availability (South

vs North)

Does water have a uniform price?

Water resources in Greece

Low precipitation, highly uneven spatial distribution of water resources,

diminishing from West to East and from North to South, while rivers in

the south are dry in summer and flooding in winters

GR

Water supply and demand

Determinant factors of demand:

• Population change

• Specific consumption in large

regions

• Industrial and professional uses

• Water leakage

• Seasonal variation of consumption

GR

Total population is 11 million

• Yearly demand is 1046hm3,

amounting to 200 lit/p/d and 300

lit/p/dn for tourists

• Summer period there is a peak

growth of demand with pressure

on supply

Water regional demand

GR

37%

Water demand forecasts

GR

Water market legislation

• Until 1981: Privatization of water resources,

adoption of Directives (e.g. on flooding) as EU

member

• Until 2000: Water Law (1987) implemented, water

as a public good, participation of policy actors, 14

water regions, National Bank of Hydrologic and

meteorologic information. Several administrative

changes in water management, over 300 legislative

changes…

• 2000 and on..: Implementation of Water

Framework Directive (2003) and National Water

Council

GR

Legislative problems

• Centralised system, but regions of water

authority are not the same with

administrative regions and there are not

hydrological criteria for the regional division

• Administrative burden due to high number

of authorities involved

• Delays in implementation of the Water

Framework Directive, leading to sanctions

GR

Water market structure

• Regionally fragmented market with 214 companies

• Two main companies supplying two large cities

• 171 regional water companies (belonging to regional

authorities) under the association of EDEYA

• 41 remaining regional water companies

• All companies are natural monopolies

• No competition in market price and quantities

envisaged, as customers are regionally based

• Competition only in terms of water exploitation and

groundwater permits

GR

• Min AC= Produced at level

of higher demand,

equilibrium in MR=MC

• Price is higher than

marginal costs, depending

on demand elasticity

• Price of water = Social

marginal costs, taking into

account shadow prices

• Monopolist supplies on the

elastic part

Pricing ways:

a. State determines P=LMC

b. P=LAC, where price cannot

send signals to consumers

Natural monopolies in water

GR

Max

profit

Water tariffs

• Independent tariffs from municipalities

• Calculated as a sum of a fixed tariff and a variable tariff (per

m3 in the bill).

• Cost calculated= Cost of groundwater+ Cost of maintenance+

Cost of investments+ cost of natural resources (around 0.6

€/m3)+ Opportunity cost of disposable income of consumers

• Bills are on 2-3-4 months

• Some regions apply uniform tariff, others distinguish

residential (lowest), professional, agricultural, and industrial

(highest)

• Increase in tariffs reduced demand, with elasticity (-0.55 to -

024)

• Average final price is 0.69 €/m3

GR

Water tariff social system

• All regions use progressive pricing

• Bill consists of 5 scales

• Minimum limit of consumption 2 m3 per month

• Category of socially protected groups

GR

00.5

11.5

22.5

33.5

0 10 20 30 40Ποσότητα

Τιµή

Pros and Cons of social system

Pros:

Relatively easy recovery of financial cost

Access of everybody to public good

Rational use of natural resources

Cons:

Difficulty in determining initial scales,

equalising price with marginal cost, increase

market water allocation

Calculation based on total consumption and

NOT on the size of household…

GR

Water tariff values: Effect?GR

Consumption/Month Cost

m3

€

0-5 0.4017

5 to 20 0.6283

20 to 27 1.8025

27 to 45 2.5235

35+ 3.1416

0-1.000 0.8137

1000+ 0.9579

Domestic (minimum

consumption 2 m3)

Professional/ Industrial

(minimum consumption 100

Category

Only short

term!!!

Policy actors in water management• Ministry of Environment, Physical planning and public works: securing water supply,

supervises two public water companies for Athens and Thessaloniki, resolves

conflicts among water uses, responsible for infrastructural works for water supply

• Ministry of Agriculture; planning responsibility for water for agriculture, issues

licenses for agricultural use of water,

• Ministry of Development: former major role, now grants groundwater abstraction

permits

• Ministry of the interior: responsible for civil uses of water, deals with conflicts

among water uses, monitors public water companies for municipalities>10.000

inhabitants, but for smaller ones, municipalities are competent authorities

• Ministry of public health and social security: responsible for application of

safeguarding quality civil water use

• Ministry of commerce: planning for selling and transporting water (interministerial)

• Ministry of transportation: Issues licenses for transporting water

• Prefectures and municipalities: planning procedures concerning their jurisdictions

• National tourism organisation: responsible for curative and recreational uses of

water

• NGO;s: WWF monitors environmental index of water resources

• EDEYA: Union of public companies for water and municipal waste

GR

TOO MANY ADMINISTRATIVE

BODIES, LEADING TO

DIFFICULTIES IN DECISION

MAKING!!!

Changes in administrative processesGR

Ministry of

development

Ministry of

environment,

physical planning

and public works

Ministry of

Health

Ministry of

interior

Representative

of Universities

Representative

of NGO’s

National

Water

Council

Water in Greece in a nutshell

• Lack of competition in the water market.

• Tariffs are regulated by municipal

governments

• Social system of water provision is applied

• Administrative burden so far makes water

policy blurry

• Currently modifications are expected after

the implementation of the Water Framework

Directive

GR

Water resources in the Netherlands

• Small (37,400 km2) and densely

populated country (16.3 million)

• In the dealt of three major NW EU

rivers: Rhine, Meuse, Scheldt

• Average annual rainfall is 800mm

(deficit only in summer months)

NL

Water supply and demandDrinking water

NL

Other water

Water residential demand

Water market legislation

• de EG-Drinkwaterrichtlijn

• de Waterleidingwet en het Waterleidingbesluit

• de EG-Kaderrichtlijn Water

• de Wet op de Waterhuishouding

• de Wet Verontreiniging Oppervlaktewateren

• de Grondwaterwet

• de Wet Bodembescherming

• Water framework Directive implemented in 2005

• Currently (2009), all these laws and guidelines are being

superseded by the ‘WATER ACT’ aiming at an integrated

Water Regulation Framework, preventing floods and

water shortages, and improve the chemical and

ecological quality of water systems

NL

Water market structure

NL

Water companies

10 companies in charge of water

supply, members of VEWIN

All companies operate regionally,

forming natural monopolies

with a form of state control

(under law)

27 water boards treat

wastewater

These water companies are

publicly owned but contract

services (customer service

and repairs) to private sector

There is only one private

company expected to be

taken over

NL

Water companies’ market size

NL

Workforce Water supply Profit Customers

x 1.000 m3 x 1.000 x 1.000

Waterbedrijf Groningen 199 42.901 45.046 587

Waterleidingmaatschappij Drenthe 155 28.182 33.769 435

Vitens 1.295 332.224 428.120 5.399

PWN Waterleidingbedrijf Noord-Holland 458 99.056 151.326 1.637

Waternet 4643 65.923 100.004 892

Duinw aterbedrijf Zuid-Holland 469 69.945 111.894 1.192

Oasen 241 47.087 72.753 750

Evides 466 164.929 208.675 1.991

Brabant Water 716 165.074 182.516 2.425

Waterleiding Maatschappij Limburg 429 72.806 100.871 1.124

th e Ne th e r lan d s (to ta l) 4.893 1.088.126 1.434.973 16.431

Company name

• Calculated as a sum of a fixed tariff and a

variable tariff (per m3 in the bill).

• In average fixed tariff is 42.15 €/year, and

variable 1.05 €/m3

• Harmonization of tariffs is on the way (as

some regions impose higher network costs)

• Two taxes: VAT (6%) and Pipe tax (BoL)

(from 0.002 to 0.02 €/m3 regionally

calculated) and regional fee for

groundwater use is 0 to 0.11 €/m3

Water tariffsNL

Water tariffs in regionsNL

Water price

NL

• Prices have increased over the years, but currently stabilised and

reducing

• They are in accordance to the overall inflation and the tax

components

• There is no distinction between the costs of natural resources and

the environmental costs of water production

Policy actors in water management

NL

VEWIN

(association

)

Association of

municipalities

Union of

waterboards

Universities

and NGOs

Interprovincial

labour union

Water policy formulation –

Integrated water management

NL

Ministry of Transport, Public Works

and Water Management

Rijkswaterstaat

Water resources policy and

managing of surface water

Inspectorate

Monitoring compliance with

regulations

Provinces (12)

Groundwater management

and policy implementation

Waste market in Greece

• Directive 91/271/EC:

– Construction of network for all >20.000

– Waste treatment plants dependent on the

degree of treatment (three degrees)

– National laws supporting this process

– Although 14% of these regions still not

covered…

GR

Waste market

GR

• Regionally fragmented market with 214 companies

• Two main companies supplying two large cities

• 171 regional water companies (belonging to regional

authorities) under the association of EDEYA

• 41 remaining regional water companies

• All companies are natural monopolies

• No competition in market price and quantities

envisaged, as customers are regionally based

• Often conflicts of non harmonized legislation and of

regional NIMBY issues (waste landfills)

Waste tariffs

• Ranges of waste tariffs

are from 40 – 70% of

water tariffs

• No uniform pricing

method, some regions

use space (m2) as a

benchmark

• In the total bill a

special fee of 80% of

the total value is

imposed

GR

Waste

% of water price

65% and 45% for

gardens>200m2

65%

Category

Domestic (minimum

consumption 2 m3)

Professional/ Industrial

(minimum consumption 100

Average waste tariffs (per year)

GR

0

100

200

300

400

500

600

700

800

2004 2005 2006 2007

Waste final cost

100m2

Waste final cost

200m2

Waste quantities

GR

Waste market in the Netherlands

• Market is based on Directive

91/271/EC: concerns the collection,

treatment and discharge of:

– Domestic waste water

– Mixture of waste water

– Waste water from certain industrial

sectors

NL

Waste market

• 27 water boards are in charge of wastewater

treatment

• 467 Municipalities are in charge of sewerage

• Each water board has the authority to impose taxes.

The central government contributes to this system

by paying for the cost of constructing and

maintaining the water barriers and the main

waterways. The costs of water treatment are

financed by a water pollution levy, which is based

on the polluter pays principle.

• Waternet is the only integrated utility for sanitation

and water supply

NL

Waste tariffs

• Average waste tariff is 1.77 €/m3 (for

10m3 consumption), including VAT

• Average sanitation tariff is 2.09 €/m3

• 58% of municipalities uses a tariff

based on the size of the household

• 30% of municipalities uses a tariff

based on the amount of waste of a

household

NL

Waste differentiated tariff

NL

Regional waste tariffsNL

Waste costs management

NL

Average waste tariff per household

NL

0

50

100

150

200

250

3001

99

1

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Household

Multiperson

household

Single person

household

Discussion points

• Is social pricing finally an efficient

way?

• Should all stakeholders participate in

policy decisions over water?

• Is it more effective to use private

companies in water supply?

• Is the market oriented approach in

water market always suitable? Does

geography play a role (e.g. conflicts

over scarce water?)

Thank you for your attention

For more information please contact me:

vlasis@jiqweb.org

http://www.jiqweb.org