The Remunicipalisation of Water Services in Paris, France

The Remunicipalisation of Water Services in Paris, France Secure the Right to Food and Water

On 24 November 2008, against exponentially rising water prices, a severe lack of transparency, and poor accountability, the City Council of Paris decided not to renew its municipal water supply contracts with the private companies Veolia and Suez (two of the French powerhouses in global water services), instead remunicipalising water to be under public control.  The production and supply of Paris’ water was unified under the public entity Eau de Paris, which assumed operations of the whole system from 2010 onwards.

Despite the major financial, labour and logistical challenges that the city faced, the transition was managed on time with no difference in terms of service to the end user and impressive financial savings for the people of Paris, and surplus profits have been reinvested for the further development of the city’s water infrastructure. This policy has shown that remunicipalisation of water services can be successful on a grand scale.

At a Glance
  • In 2008, the City Council of Paris decided not to renew its contracts with the private companies Veolia and Suez, instead opting for the remunicipalisation of water services in Paris under the public entity Eau De Paris.
  • Integration of fragmented aspects to the water system led to more efficient, consistent and longer-term planning, as well as savings of 35m Euros in the first year. This permitted a consequential reduction of water tariffs by 8% in the following year.
  • The false promises of private operators and their choice not to put the needs of communities before profit, has led to many states and cities seeking alternatives. This was a landmark and symbolic defeat for private water companies who had failed to provide an efficient service.
  • Remunicipalisation has demonstrated that there are effective, transparent, and accountable alternatives to privatisation.


Policy Reference

DPE 90 – Réorganisation de la gestion du service public de l’eau à Paris, Compte Rendu Sommaire No. 11, Ville de Paris, Mairie de Paris – Séance des lundi 24 et mardi 25 novembre 2008  [in French]


Connected Policies

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Selection as a Future-Just Policy

On 24 November 2008, against a background of exponentially rising water prices, a severe lack of transparency, and poor accountability, the City Council of Paris decided not to renew its municipal water supply contracts with the private companies Veolia and Suez (two of the French powerhouses in global water services), remunicipalising water back under public control.

The production and supply of Paris’ water was unified under the public entity Eau de Paris, which began running the system in its entirety from 1 January 2010 onwards. Despite the major financial, labour and logistical challenges the city faced, the transition was managed on time with no detrimental effect in terms of service to the end user. Crucially, this new integrated approach led to a more efficient, consistent, transparent and longer-term planning organisation.

Furthermore, the financial outcomes for both re-investment and reductions in terms of the cost of water, were very impressive:

  • The shift to public ownership cost 15% of the total operating costs in the first year and saved the City of Paris 35 million Euros over the same period in comparison to its previous contracts with Suez and Veolia.
  • Re-investment into Eau De Paris allowed water tariffs to be reduced by 8% from €1.0464/m to €0.9627/m3 in 2011.
  • As of 2015 there has been an increase in the cost of production and distribution to €1.0428/m3, yet when factoring inflation between 2010 and 2015, these figures demonstrate a stabilisation of cost.

In this case, remunicipalisation has demonstrated that there are viable alternatives that are not only equal to private performance, but which can surpass it, with a greater concentration on sustainability, accountability and transparency.


Future-Just Policy Scorecard

Our “Best Policies” are those that meet the Future Just Lawmaking Principles and recognise the interconnected challenges we face today. The goal of principled policy work is to ensure that important universal standards of sustainability and equity, human rights and freedoms, and respect for the environment are taken into account. It also helps to increase policy coherence between different sectors.

   Sustainable use of natural resources

  • The integration of the previously fragmented water services has led to a more efficient, consistent and effective control of water resources, ultimately providing greater sustainability.
  • The merging of fragmented operators into one system has enabled integrated cross-checks between water production and supply departments, with a centralised overview of the water cycle.
  • Remunicipalisation of water services has revived water resource protection and research and innovation as well as an increased number of awareness-raising activities on the controlled use of natural resources.

   Equity and poverty eradication

  • Following the remunicipalisation of water services in Paris, the cost of water has significantly decreased, with water tariffs being reduced by 8% from €1.0464/m3 to €0.9627/m3 in 2011.
  • As of 2015 there has been an increase in the cost of production and distribution to €1.0428/m3, yet when factoring inflation between 2010 and 2015, these figures demonstrate a stabilisation of costs.
  • Incentives led to private companies satisfying short term interests over long term sustainability. Yet with Eau De Paris, it is estimated that as of 2015, 76 million Euros has been delivered back to the people of Paris through reinvestment.
  • With regards to actions of solidarity, Eau de Paris has increased its contribution to the ‘city’s housing solidarity fund.’ Eau De Paris’ performance contract stipulates that 0.40% of water sales will contribute to solidarity funds.
  • Eau de Paris also led a water saving campaign, which has educated the people of Paris on sufficiency and self-sustainability.

   Precautionary approach

  • Central control of Paris’ water by the public sector has allowed for greater control and regulation of the natural water supply in the city.
  • Eau De Paris, as a public operator, has demonstrated a greater commitment to water quality control.

   Public participation, access to information and justice

  • The French consumers’ association, UFC Que Choisir, has praised the transparency measures of the new system.
  • Eau de Paris is investing in its general communication, as well as interactive tools, enabling users to better monitor their consumption of water. These tools can also be used to monitor the quality of water in their street and neighbourhood, and any planned works that might disrupt water supply and services.
  • The City of Paris set up a ‘City Water Observatory’ to promote citizen engagement with Eau de Paris.
  • Eau De Paris has created specific campaigns with areas on its website to inform and promote ways in which people can save water, providing information as to how people can contribute to creating sustainable futures.
  • With regards to public participation in decision-making, 11 members of the governing council of Eau de Paris are city councillors, two members are worker representatives and five are civil society representatives (one from the Observatory, but also water and sanitation experts, and representatives from an environmental NGO and a consumer organisation).

    Good governance and human security

  • Remunicipalisation of water services has led to strong control and good governance in terms of distribution and water management, with increased technical know-how and research.
  • A lowering of water tariffs and stabilisation of prices has led to an increase in accessibility and reduction in cost, fundamentally crucial to increased security.
  • Profits are now reinvested back into water services, securing long-term effective asset management.

   Integration and interrelationship

  • Merging the three previous operators into one integrated same-service system has enabled savings, with a clearer institutional structure between water production and supply departments, and a centralised overview.
  • Eau de Paris has demonstrated an interest in protecting water resources and tackling water pollution challenges over the long term. For example, it has established partnerships with farmers around water catchment areas to help them switch to organic agriculture.

   Common but differentiated responsibilities

  • It is also worth nothing Eau de Paris’ renewed interest in protecting and securing water resources, whilst tackling water pollution challenges over the long-term. For example, partnerships and strong bonds have been established with farmers around water catchment areas to help their transition to organic agriculture or at least to practice agricultural methods that require far fewer chemicals.


Context

In 1984, the then-mayor of Paris, Jacques Chirac, signed a 25-year contract with Veolia and Suez to manage Paris’ water supply and billing services.

In 1987, the water production and control mechanism for the two private companies in charge of supply, were also partially privatised with the creation of a mixed capital company, SAGEP (Société Anonyme de Gestion des Eaux de Paris). An outsourcing contract was signed between Paris and SAGEP, whose capital was 70% owned  by the city, 28% by Veolia and Suez (each owning 14%), and 2% by the Caisse des Dépôts et Consignations (CDC), a public national investment bank. The private companies’ shares in SAGEP placed them in a clear conflict of interest since the latter was supposed to oversee the concession, a situation mentioned in a 2003 city audit as creating “a paradoxical role, and partnership relationships that are not favourable to a controlling exercise.

The city’s internal Water Quality Control Service also became an independent public body, the Centre de Recherche et de Contrôle des Eaux de Paris (CRECEP). Under this new institutional set-up, water tariffs increased massively, by more than 265% between 1985 and 2009 for drinking water alone and with automatic tariff updates every three months. When contrasting to general inflation of 70.5% over the same period, an unequitable uplift in water prices becomes apparent.

Such a vast increase led to a strong suspicion of excessively high rates of profit through the provision of essential water services. For example, in other major French cities (with over 100,000 inhabitants), water tariffs only increased by 51.5%, whereas in Paris – over the same period – there was a 90% increase. The contracts were increasingly criticised for their lack of transparency.

Paris’ politicians consequently initiated a series of legal, technical and financial audits, as well as extensively consulting Eau De Paris on  the termination of the contracts. On the 24 November 2008, through the culmination of the rising water prices, the severe lack of transparency, and poor accountability, the City Council of Paris decided not to renew its municipal water supply contracts with Veolia and Suez.

As soon as the decision for the remunicipalisation of water services was taken, a task force was created to organise the transition. It was an enormous undertaking given the short 18 months left before the contract’s expiration, with major challenges of technical expertise, labour and logistics to be overcome.

While there was initial widespread resistance from the private companies over the handover, combined with them believing that their global commercial position had been compromised, the handover was successfully managed and Paris’ water control and management returned to public municipal control.


Objectives

  • By deciding not to renew municipal water supply contracts with the private companies Veolia and Suez (two of the French powerhouses in global water services), remunicipalise water back under public control.
  • Through the reduction of operational costs and reinvestment of profits, permit a consequential reduction of water tariffs, saving the people of Paris millions of Euros.
  • Create a more transparent and accountable alternative organisation, increasing public participation and information sharing.
  • Integrate the fragmented aspects of the water system, leading to more efficient, consistent and longer-term planning organisation.
  • Introduce a series of new technological upgrades to increase efficiency in water distribution, water quality and implement cross checks that enable a greater understanding of water supply.


Methods of Implementation

  • The non-renewal of contracts with the private companies Veolia and Suez enabled a transfer of water supply and services back under public control.
  • The public company Eau De Paris was created by municipal authorities as the sole operator for Paris’ water management and supply.
  • A performance contract was signed between Eau De Paris and the city, defining the new public company’s objectives, putting it under closer scrutiny than any pre-existing local water provider, in an effort to demonstrate that the public sector can be operated in a transparent and efficient manner.
  • The contract was reviewed and approved by the municipality with indicators that enable the City Council to monitor performance and to communicate to workers and the wider public what the political objectives of the new water systems are.


Impact

This policy reform demonstrates that even in a market dominated by water privatisation, the remunicipalisation of water services can be not only effective, but a viable alternative, demonstrating that controlling water under the public sector – as a common good –  allows a more transparent, sustainable and accountable future for water supply and sanitation services.

 Financial

  • Overall Eau de Paris has saved the city Council of Paris some €35 million per annum on its contracts previously held with Veolia and Suez following remunicipalisation.
  • Savings of approximately 15% were achieved within the first year, with water tariffs lowered by 8% the following year.
  • Remunicipalisation of water services is estimated to have saved the people of Paris some 75m Euros up to 2015.
  • As of 2015 there has been an increase in the cost of production and distribution to €1.0428/m3, yet when factoring inflation between 2010 and 2015, these figures demonstrate the stabilisation of costs.

Efficiency

  • The integration of the fragmented parts of the drinking system has led to a more efficient, consistent and longer-term planning organisation. For example, Eau De Paris has implemented a series of new technological upgrades such as InTouch HMI hardware that enhances video monitoring applications and streams real-time data back to their operating systems. This has ensured increased efficiency in water distribution as strategic decisions can be based on over 20,000 variables of information delivered by the system.
  • Moving from three providers under public-private partnerships to Eau De Paris being the sole provider has enabled greater control of both water quality and cross checks that enable a greater understanding of water supply.

Research

  • An independent public water research centre called Agua Futura aims to create a centre of excellence for public water, with “the purpose to build a venue of excellence by working closely with different universities, small businesses in the industry, the Laboratoire Eau de Paris and the regional authorities” at the Ivry-sur-Seine site, where the City of Paris owns 22 acres with a set of some thirty outdoor filter basins (43,000 square meters).


Potential as a Transferable Model

 

“The success of the Paris remunicipalisation, our ability to make profits and lower prices, has convinced many other cities, whatever their political colour, that public water is an option.”
Celia Blauel, new head of Eau de Paris.

The remunicipalisation of water services is a highly transferable model implemented by many cities which have taken back control of their collective water systems. Since Paris’s decision to remunicipalise, there have been other examples across France:

Rennes
In 2013, Rennes decided to remunicipalise its water service. Like Paris, Rennes’ water supply had also been managed by Veolia (for over 120 years) and this decision was the result of a long battle between local civil society, the private company and local officials. Returning public control was no easy task, as Veolia had forged strong political ties which ultimately disrupted the transfer of water control from the private to the public sector. 

Nice
In 2013, Nice also made the decision to end its contract with the private provider Veolia, remunicipalising management of its water services. Despite conservative political control of the city – with a strong tradition of privatisation – the successes demonstrated by other cities taking control of their water management under local municipalities were identified as the best option to stabilise the cost of water services, and control the water supply with greater efficiency.

Worldwide, cities such as Buenos Aires, Barcelona, Seville, Berlin, and Cochabamba are all examples of how through commitment and effective implementation, remunicipalisation of water services is a viable alternative to privatisation. In the case of Cochabamba, a central Bolivian city, protests over water prices set by private cartels even led to the right to water being enshrined in the Bolivian Constitution.


Additional Resources

 

 

Water Remunicipalisation Tracker.

The Guardian, Water privatisation: a worldwide failure?, January 2015.

Transnational Institute, Putting Water Back in Public Hands, March 2012.

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