Assessing the impact of water service regulatory reforms in Italy: a multidimensional approach

Abstract

In 1994 the regulatory framework of water services in Italy was radically modified, by transforming a traditional publicly operated system, which relied heavily for investments on fiscal budgets, into a system made up of self-sustaining corporate enterprises regulated at arm's length. After 19 years, the time has come to make an assessment of what has been achieved. This paper develops an original methodology, inspired by the concept of water sustainability, which tries to integrate economic, environmental and financial aspects within a unique framework. Our analysis discloses both allocative as well as distributive impacts of the reform, showing that it has been possible to generate some value for money while shifting the economic burden from taxpayers to service customers. However, improvements have been too slight and many signs are showing that it will be rather problematic to speed them up without undertaking a substantial restyling.