Insights

Environmental regulation versus economic regulation

This month’s American Water Intelligence carries the US section of our annual water tariff survey (the full global dataset will be available to subscribers with the September issue of GWI). The surprise is that water tariffs in the 33 cities for which we have multi-year data showed a year-on-year average increase of 8.1% in the benchmark price of combined water...

What does an 8.1 percent water tariff increase mean?

Americans continue to buy water at half the cost that they would pay if they lived in Northern Europe. It is an amazing price discrepancy for a product that is pretty similar on both sides of the Atlantic. The main reason for this is that Americans use nearly twice as much water per capita than Europeans. This means actual household water bills are not much different,...

Veolia’s fall hurts us all. How long will it last?

We have long known that things would get worse at Veolia before they would get better. Indeed, one of my main share tips for investors over the past twelve months has been to buy Veolia shares when they hit the bottom in November this year. Even so, when the largest water company in the world issues such a grim set of results it has got to be a bleak day for water.

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Where is municipal expenditure going?

Expenditure in the water industry is not driven by demand. It is driven by the availability of money.

It is the first lesson in economics for everyone entering this industry. The needs are almost unlimited: what is scarce is the willingness to pay hard cash to meet them.

Anyone looking at the industry from this standpoint is likely to be perturbed by the news coming...

What happens to water after the gravy train wreck?

Water is typically a local government service, rather than a central government one. It means that there is a comfortable degree of distance between the water industry and the drama that is being played out in Washington and Brussels. That distance is unlikely to last, however.

You could describe this phase of the crisis as a gravy train wreck: the moment when rising...

What might we gain from losing Nalco?

There is a certain logic to Ecolab’s $8.1 billion bid for Nalco. Both companies started selling chemicals in the 1920s but have since built out a service offering based on managing the use of chemicals in the workplace. Nalco started with water treatment chemicals for boilers, and for conditioning drilling mud in the oil and gas industry. Today it looks after the...