Where is the wave of remunicipalization of water supply services in Spain? In a two-part series, Climatica reviews why Spain is one of the European countries with the highest privatization of water supply, what this means at a socio-environmental level in the current context of water scarcity, and what possibilities there are for de-privatizing the service in Spain. We passed part 1 through the translation:
You get up after stopping the alarm clock three times. You go to the bathroom and turn on the tap to take a shower. If you live in Spain, there is more than a 50% probability that the water that comes out of your tap is managed by a private for-profit company or by a mixed management company – and if you live in regions such as Catalonia, Murcia or Galicia, this probability may be twenty or thirty points higher. By contrast, in more than half of the EU countries, public management predominates, either directly through the state or municipalities, or delegated, where most services are managed by municipal companies or public associations.
What is the most efficient, sustainable, democratic and fair way to manage this supply is a debate of increased relevance given the increasing drought and water scarcity conditions due to the climate crisis. Especially in order to guarantee sufficient investment to avoid wasting water, reduce the carbon footprint of the energy required for its management and ensure social pricing that protects access to water according to the criteria of socio-environmental justice that most international organisations and experts are calling for.
In this first part, we review how we got here and where we stand in relation to the rest of Europe, looking at which are the main private operators in Spain and collecting what different expert sources say about what this difference means on an environmental level. In the next installment, we will explore why there are citizens’ movements that have been trying to reverse this privatisation for decades and what they have achieved in different countries, to finish by focusing on the current challenges to the remunicipalisation of supply in Spain.
The current European map: predominance of public management in the North and greater private presence in the South
The organisation of water services is the result of multiple historical, economic and cultural factors, including the tension between citizens’ organisations and pressure from business interest groups. In the 19th century, private water utilities were common in Europe, the United States and Latin America, but their importance gradually declined in the 20th century due to their inability to expand access to water, giving way to stronger public systems.
However, in the 1990s, a new wave of privatisations emerged, influenced by free market policies after the fall of communism, Thatcher’s privatisations in England and Wales, and the support of the World Bank and the International Monetary Fund, which made their loans conditional on these reforms, as explained by Gonzalo Marín, a civil engineer specialising in water infrastructure and public policies and one of the spokespersons for the Public Water Network. Already in the 2000s, the United Nations positioned itself more clearly in defence of water as a fundamental human right, especially with the 2015 report by UN rapporteur Léo Heller, in which he argued that private management implies risks for the enjoyment of the human right to water.
These historical dynamics have shaped a European map that can currently be divided into four main blocks, according to data from the European Federation of National Water Services Associations EurEau.
In a dozen countries, direct public management is total or predominant, including Luxembourg, Croatia, Cyprus, Sweden, Austria, Malta, Ireland, Greece and non-EU countries Norway and Switzerland. The second large block is made up of countries where delegated public management predominates: in the Netherlands, Belgium, Poland, Slovakia, Slovenia, Estonia, Finland, Bulgaria and Serbia (non-EU member), all or the vast majority of services are managed by municipal companies or public associations.
On the other hand, Germany, Portugal, Hungary and Romania combine direct public, delegated and private management in varying proportions, and could be considered as mixed models, while in a small number of countries there is prominent delegated private management: this is the case in France, the Czech Republic, Italy and Spain, where private operators manage a considerable proportion of supply through concessions or contracts delegated to private companies or public-private partnerships. Especially in the French and Czech cases, where more than 60% of the population is served by private concessionaires.
Finally, there are particular cases such as Denmark, where a hundred public companies coexist with 2,100 consumer-owned suppliers, while in England and Wales (and a small part of the Czech supply), the service is under direct private management, after they privatised their system under the Thatcher government, while in Northern Ireland and Scotland, they are governed by delegated public management.
The Spanish case: the ‘water bubble’ of the 2000s
In Spain, the Ley de Bases del Régimen Local establishes that municipalities are the owners of water supply and sanitation services, but allows for different forms of management, as Marín explains: ‘It can be provided directly by municipalities through municipal services, through public companies, through concessions to the private sector or through mixed companies, which represent a public-private partnership model for privatising management’.
In recent decades, the percentage of the population supplied by private and public-private systems has increased steadily, from around 40% at the beginning of the 21st century to stabilise at around 55% today – adding 33% managed by private companies and 22% by mixed companies – according to the latest available data, published by the Spanish Association of Public Water Supply and Sanitation Operators (AEOPAS) in the 17th National Study of Drinking Water Supply and Sanitation in Spain (2022).
According to Marín, this change was due, in part, to austerity policies and the ‘weakness of municipalities in obtaining financing’. Many municipalities resorted to privatisation of water and sanitation services through the concession fee, an upfront payment that private companies make when obtaining a concession. Marín refers to this phenomenon as the ‘water bubble’, linked to a strategy of seeking short-term financial resources by handing over water management to the private sector.
Water management in Spanish provincial capitals
The prevalence of the multinationals Agbar and Aqualia
Many of these private concessions went to subsidiaries of Agbar and Aqualia, making, according to estimates quoted in the documentary Trileros del agua, the two together manage more than 70% of Spain’s private water supply concessions.
Agbar (initially incorporated as Compagnie des Eaux de Barcelone in Belgium) has managed the supply of the Catalan capital since 1867, but over time it has expanded to the rest of Spain. It currently operates under different subsidiaries, supplying 13 million people in almost 1,100 municipalities in Spain, according to data from its 2023 activity report. Its ownership has been changing hands, and after belonging to the French multinational Suez, in 2022 it passed into the hands of Veolia, another French transnational that is currently a world leader in water management, with operations all over the world. Spain’s other private water management giant, Aqualia, is owned by Spain’s FCC, one of Europe’s largest infrastructure and utilities groups, and the Australian investment fund IFM investors.
Both have accumulated complaints of irregularities, lack of transparency and neglect of infrastructures that cause leaks and waste of water. The case of the Metropolitan Area of Barcelona was one of the most notorious, where AGBAR operated irregularly in some twenty municipalities, a situation that the AMB tried to resolve in 2012 by creating a joint venture, majority controlled by AGBAR, to manage the service for 35 years, but without calling for a public tender or offering a technical justification, as actively denounced by the Plataforma Aigua és Vida (Water is Life Platform). More recently, at the end of 2023, the courts overturned a million-dollar contract awarded to Aqualia in San José (Murcia) due to possible indications of illegalities in the awarding of the contract.
What management is best for the environment?
Experts such as Joaquín Tornos Mas, renowned professor of administrative law and coordinator of the book El servicio de suministro de agua en España, Francia e Italia (2018), consider that the main management error in those decades was the lack of supervision by the responsible administrations, which granted concessions and allowed private companies to take control of the service almost completely, establishing very long-term contracts without adequate monitoring of investments or strict regulation of tariffs. In some cases, such as in Girona, Sarrià de Ter and Salt, these public-private partnerships incurred in ‘non-compliance with essential contractual obligations in terms of investment and replacement’ amounting to 13.2 million euros.
In this sense, Julio Barea, head of Greenpeace Spain’s water campaign, points out that privatisation makes it difficult to invest in infrastructures such as pipelines, since ‘economic profit is prioritised’, and reducing water losses, a cheap resource for them, does not compensate economically, while public companies can allocate resources more directly to minimising these losses, as Newtral reports. But both Gonzalo Marín and Germà Bel, an economist specialising in public sector reform, local public services and environmental policy, stress that public management is not per se a guarantee of more sustainable, transparent and fair management, but is more linked to issues of governance and community participation.
As an example, Marín mentions the Madrid case of Canal de Isabel II, a public entity with multiple cases of corruption linked to its expansion in Latin America, and which ‘has made progress on issues such as sanitation and purification, it is a struggle to work on issues such as the protection of ecological flows’, concluding that ‘if public management is commercialised, they are not going to have the scruples either’.
In the next installment, we will look at the response to major movements calling for the remunicipalisation of supplies in Spain and the rest of the continent, reviewing some of their successes and defeats with European data from the Public Futures platform. We will close by exploring the challenges of such de-privatisation initiatives today, with the example of cases such as that of Terrassa, which is currently in the news after it became known that Agbar is behind a report that harshly criticised the public management of water in Terrassa.
