Regionalization in Water Supply Industry: Status and Needs

Abstract

Regionalization is often recommended to help solve the water supply industry's problems but it has received little sustained policy attention. It offers three potential classes of benefits: economies of scale, extension of service to needy areas, and enhanced water quality. Recent reported trends include: consolidation of systems in growing areas, extension of the influence of strong central water suppliers, mergers of investor‐owned utilities, state government initiatives, and voluntary cooperation among utilities. Action at the local level is impeded by political considerations but cooperation or integration can be considered on a caseby‐ case basis. Action at the state level is needed because federal intervention will not be favorably received and decisive local action is unlikely except in a few major populations centers. The state level can serve as facilitator, broker, and regulator to resolve thorny institutional issues. To support such state actions, research is needed to determine the effectiveness of existing legislation and programs. The roles needed from the federal government are policy leadership and financing of research. Without the federal presence, a vacuum in policy analysis and research occurs. Little is known about industry‐wide trends in water rates, since they are not subjected to much regulatory scrutiny, and since the industry lacks centralized financial statistics. Improved data bases could aid in overcoming management problems that stem from the lack of both market incentives and economic regulation.