Bringing competition to urban water supply
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This paper proposes a market-based reform that would introduce competition into the
provision of urban water. This proposal calls for a decoupling of infrastructure control
and ownership of water whereby the property rights to water would be transferred
to private hands. The proposal involves periodically allocation (e.g. by auction) of
existing water stock held in urban catchments to virtual suppliers who then compete
in providing bulk water. This change when coupled with effective third party access
and retail competition would lead to a competitive market for the provision of urban
water. The approach aims to address concerns over inefficient pricing and infrastructure
provision under the current arrangement.