The Principles of Good Regulation in the Water Sector

Abstract

In March 2014, the OECD issued a report in which it indicated that the Netherlands “has an excellent track record on water management in several areas” The OECD mentions for example that the Netherlands has developed a “strong economy and robust water industry”, this despite that 55% of the Netherlands’ territory is below sea level. However, the OECD also concluded that Dutch water governance “relies on a system of many checks and balances… [and] that system presents some limitations.” In response to the conclusion of the OECD, this paper discusses the current framework of economic regulation of the Dutch drinking water sector. The paper develops a normative framework to assess whether the current organization of economic regulation is adequate. The assessment examines to which extent the principles of good regulation are observed by economic regulation of the drinking water sector. It is concluded that the Dutch framework of economic regulation of the drinking water sector displays several weaknesses in light of the principles of good regulation. In particular, the principles of transparency and independency need better observance. As a result the protection of the interests of the users of drinking water are at stake. In order to improve the current organisation of economic regulation in the drinking water sector, this paper ends with some recommendations to enhance the quality of economic regulation of the Dutch drinking water sector.