The paper aims to examine ways of implementing water market principles
to improve urban water resource management, focussing on two key motivations-
efficient resource allocation and sustainable resource use. For this, I examine
a novel water retail market introduced in England & Wales in 2017, that
allows non-domestic customers to choose their water supplier, in the
expectation that market competition would motivate service improvement and
enhance efficiency, leading to reduced bills as well as stronger incentives for
water conservation.
The first two years of the market operation have shown moderate
stakeholder participation, with modest savings in water bill for consumers and
minor reduction in overall water consumption by large industries. Many new players
have joined the market space resulting in competition, job creation, service
innovation, along with efficiency drive to attract more customers. However,
market friction with stakeholders has increased too, leading to more consumer
complain registration than before the opening of the market (Ofwat annual
report, 2018; 2019).
Through the research, I seek to understand what benefits the market has
delivered so far, which constraints have been encountered and whether it would
be possible and desirable to replicate the market in other geographies. Preliminary
findings indicate that while competition opens several scopes of market
improvements, the outcome in form of performance efficiency as well as customer
satisfaction is linked to pre-existing wholesaler performances.