Liberalisation of drinking water, in Europe and developing countries

Ladies and Gentlemen, what does an economist know about water? This is what most people asked me when I told them I would be the first economist to become a professor at the UNESCO-IHE Institute for Water Education. I would like to answer that question this afternoon. The short answer is not much, but I hoped that the picture on the invitation would have convinced you that at least I have tasted the water. In the water sector economists are nowadays asked more often to give advice; in the first place, because water is increasingly considered an economic good; and secondly, because many technical solutions do not seem to work, if institutional, economic and social aspects are not taken into consideration. Finally, more efficiency in the water sector (better quality together with lower cost) is considered important in today’s world and economists are expected to make a contribution to achieving this aim. This Chair concerns Water Services Management, meaning ‘all services necessary to bring water to customers and to get waste-water treated’. In this inaugural address I will only deal with drinking water. As one colleague at UNESCO-IHE described my task: “We produce a certain quality of drinking water and you should try to bring it to the customers in an efficient way and get them to pay for it.” I will only deal with one key issue in drinking water, namely, the role of the public and the private sector. This is clearly an economic issue and very relevant for the water sector