The document discusses inter-municipal cooperation models for water supply and wastewater services. It presents two main models - voluntary and obligatory regionalization. Voluntary models allow municipalities to freely form partnerships while obligatory models require regionalization by law. Examples of countries using each model are provided, including Austria which uses a voluntary association model and Bulgaria which consolidated services into regional companies through obligatory regionalization. Benefits and challenges of centralized versus decentralized and direct versus delegated service provision models are also summarized.

1. E A P T a sk F o rc e
“INTER-MUNICIPAL COOPERATION: concept and forms.
Results from the OECD financed task on sustainable business models
for rural sanitation”
Rafal Stanek, 5 June 2012
1 THE SPECIALIST FOR PUBLIC CONSULTING

2. THE SPECIALIST FOR PUBLIC CONSULTING
Information about the project
 Project: Improving Environmental Quality of the Black Sea
through better waste water treatment and climate change
adaptation of the water sector in Moldova.
 Objective: improve the water quality of the Black Sea basin,
and health situation in Moldova and downstream.
 Sponsors: European Commission (DG ENV) and OECD/EAP
Task Force
 SoW: 3 tasks and task 3 is to develop a viable business model
for rural sanitation. This task comprises studies on business
models existing in other countries. Inter-communal cooperation
is a one type of business models discussed.

3. THE SPECIALIST FOR PUBLIC CONSULTING
Objectives of presentation
 Present results of the studies on IMC (business
models) for water supply and wastewater services
existing in other countries;
 Present two different approaches to inter-municipal
co-operation in WSS: voluntary and (semi)obligatory.
 Overview examples from European countries.

4. THE SPECIALIST FOR PUBLIC CONSULTING
Voluntary model
 Local authorities (municipal) are legally responsible
for organizing water and sanitation (wastewater
collection and treatment) services (WSS).
 Local authorities have free choice to form inter-
municipal partnerships to provide jointly WSS
services.
 Incentives may be provided to encourage inter-
municipal cooperation e.g. easier access to EU
grants.
 Example of countries where voluntary model of IMC
is applied for WSS: Austria, France, Croatia,
Germany, Czech Republic, Poland, Romania.

5. THE SPECIALIST FOR PUBLIC CONSULTING
(Semi) Obligatory model
 Regionalization process is required by the legislation
and heavily promoted
 England and Wales, Romania, Bulgaria, The
Netherlands (only water).

6. THE SPECIALIST FOR PUBLIC CONSULTING
France
 In France, provision of water service is a municipal responsibility
and many small towns have decided to combine service areas
to improve service efficiency with private participation contracts.
 The local representative of the central government (the Prefect)
can mandate or influence the creation and shape of proposed
aggregated structures. In particular, the Prefect can apply the
principle of “territorial continuity,” requiring that all aggregated
municipal services have a geographical boundary in common to
strengthen the technical coherence of the grouping.
 Municipal associations Municipal associations (établissements
publics de coopération intercommunale, EPCI) are widespread
in water and sanitation service.
 63% out of 36,700 municipalities is part of municipal
associations providing water and sanitation services (there are
2,000 such associations).

7. THE SPECIALIST FOR PUBLIC CONSULTING
France
 An example of a single-purpose intermunicipal association for
water supply is the Syndicat des Eaux d'Ile-de-France;
 SEDIF groups 144 municipalities in the metropolitan area of
Paris except for the city of Paris itself. Leaving private service
providers apart, it is the largest utility in France, serving more
than 4 million users.
 While SEDIF owns its infrastructure, it has contracted out
service provision to the private enterprise Veolia Eau.
 Some municipalities within SEDIF's service area have chosen to
provide water services themselves through communities of
municipalities or metropolitan communities

8. THE SPECIALIST FOR PUBLIC CONSULTING
Austria
Type of Utility / Owner Water supply Wastewater treatment
Number of water Connected Number of Connected
suppliers inhabitants [%] wastewater inhabitants [%] –
Companies
Provincial enterprise (state
run, public enterprise) 2 6% - -
Associations of
municipalities 125 21% 330 51%
(publicly owned)
Municipalities - publicly
owned 1,900 59% 1,100 38%
User Cooperatives
(cooperation of private 3,300 4% 650 1%
persons)
Private wells / cesspits* 250,000 10% 250,000 10%

9. THE SPECIALIST FOR PUBLIC CONSULTING
Austria
 An interesting case study for the improvement of the rural water
supply and sanitation in Austria is Oberösterreich Wasser (OÖ
Wasser), an umbrella organisation (association) representing
water and wastewater cooperatives in the federal state of Upper
Austria.
 The association is a feasible model for a sustainable waster
supply and sanitation solution in rural areas.
 The association provides support and advice on the set-up of
water cooperatives, organise trainings and offer external quality
control of of water/wastewater services provided by their
members.
 Members: 972 water cooperatives, 542 melioration
cooperatives, • 119 wastewater cooperatives and others

10. THE SPECIALIST FOR PUBLIC CONSULTING
Austria
 OÖ Wasser principles:
 Non-profit character, Professional competence, Cost
recovery , Voluntariness
 OÖ Wasser services:
 Advice and support in technical, legal, financial and
organizational questions. legal information, technical audit,
pooling program for water metering, water analyses,
measurement and detection services, leak detection,
location of pipes and valves, water loss analysis, measuring
flow rates and pressure, operational services, emergency
water supply service, advice and help to assemble and
change water meters, water analyses, measurement of
chemical, physical and bacteriological parameters,
maintenance service, spring tapping, drainage and channel
maintenance, education and training for officials and
technical personal / capacity development
 Members are outsourcing those services to OÖ Wasser

11. THE SPECIALIST FOR PUBLIC CONSULTING
Poland
 According to law on municipal self-government
(1990) municipality is responsible for the provision of
water and sewerage services within its territory.
 WSS services can be delegated to other local
government (meanings another municipality or other
tiers of local government).
 Law on municipal self government defines legal
framework for inter-municipal associations.
 Single purpose inter-municipal association is treated
as local governemnt
 Thus WSS services could be easily delegated to the
association.
 The model is not wide-spread (about 1400 WSS
utilites for 2500 municipalities)

12. THE SPECIALIST FOR PUBLIC CONSULTING
Poland – Dolina Redy i Chylonki Inter-municipal
association
 Established in 1991 by eight municipalities
(population of 446.4 thousand);
 Water/wastewater treatment, waste
management, central heating,
environmental education;
 Association set up several companies:
WSS, waste management, central heating.
 WSS utility (PEWIK Gdynia Ltd.) - 43.8% of
shares owned by Gdynia largest member of
the association.
 Interesting one of the important members of
the association (Sopot – 38 thousand) does
not participate in joint WSS project (Sopot
delegated services to private operator).

13. THE SPECIALIST FOR PUBLIC CONSULTING
Poland – Podhalańskie Przedsiębiorstwo Komunalne
Name of municipality Inhabitants Members of
 (thousand) association in
In 2003 Podhale Inter- PPK
municipal Association set up 1. Nowy Targ – miasto 33.0 No
inter-municipal company for 2. Nowy Targ - gmina 22.3 Yes
3. Poronin 10.8 Yes
joint provision wastewater 4. Biały Dunajec 6.8 Yes
treatment services in ten 5. Szaflary 10.3 Yes
municipalities from Podhale 6. Kościelisko 8.0 Yes
7. Czarny Dunajec 21.4 Yes
region 8. Czorsztyn 7.3 Yes
 The company operates 16 9. Łapsze Niżne 8.8 Yes
10. Ochotnica Dolna 8.0 No
local WWT plants and 300 km 11. Krościenko nad 6.5 Yes
of sewarage network (but not Dunajcem
water); 12. Szczawnica – miasto 7.3 Yes
Total 150.5
 Municipalities transfered
assets to the company.
 Not all the municipalities from
the association joint the
company.

14. THE SPECIALIST FOR PUBLIC CONSULTING
The Netherlands
 The degree of fragmentation is very different for
water supply, wastewater collection and treatment.
 Water supply is highly consolidated with only ten
regional water supply utilities.
 Wastewater collection is much more fragmented as
most of municipalities operate their own systems. On
the other hand wastewater treatment is responsibility
of 25 wastewater boards.

15. THE SPECIALIST FOR PUBLIC CONSULTING
Romania
 Strong regionalization process – only municipalities
that join regional structures can benefit from EU
funds for WSS investments;
 Business model promoted under reform:
 Formation of Intercommunity Development
Association (IDA)
 Setting up regional operator/regional operating
company (ROC)
 Delegating water supply and wastewater services
to a regional operator.
 Number of small operators is constantly decreasing
and the model becomes predominant.

16. THE SPECIALIST FOR PUBLIC CONSULTING
Montenegro
 “Light” regionalization. In 2005 the government together with several
municipaliteis (Bar, Tivat, Herceg Novi, Budva and Kotor) set up a Joint
Service and Coordination Company for Water and Waste Water
Services for the Montenegrin Coast and the Municipality of Cetinje
(Vodacom).
 The company works as the agency for implementation of the KfW loans
and grants, and as a partner for municipalities and water utilities in their
work on improving the overall functioning of the network, water
distribution, and waste water collection and treatment in the coastal
region.
 Except project preparation and implementation services, Vodacom
performs some consulting services for water utilities operating in the
region. These includes performing benchmarking, organizing trainings,
GIS system and hydraulic modeling, preparation of business plans and
recently “Vodacom“ performs a tariff studies for it member local
governments.

17. THE SPECIALIST FOR PUBLIC CONSULTING
Bulgaria
 Service delivery is highly consolidated by creating
regional WSS companies.
 Only a few municipalities have not participated in the
regional companies and provided services on their
own.
 According to new law (2012 proposal) all
municipalities will be obliged to join regional
companies.
 Publicly owned regional water & wastewater utility
companies. According to new policy utilities will be
operators of the infrastructure, assets ownership will
be transferred to municipalities and state.

18. THE SPECIALIST FOR PUBLIC CONSULTING
Basic Features – centralized vs. decentralized
Co-operation Tariff policy
Decentralised - There is no co-operation between municipalities. Tariffs are set by local
- Services are provided predominantly by individual municipalities authorities.
or utilities to which municipalities delegate responsibilities.
Light - Services are predominantly provided by individual municipalities Tariffs are set by local
regionalisation or utilities to which municipalities delegate responsibilities. authorities (advice can be
- Regional agency is set-up to facilitate service provision and provided by the regional
project preparation (it has mostly advisory role, some technical agency).
services, however, maybe subcontracted to regional agency etc.).
Voluntary - Municipalities enter formal cooperation to provide jointly the Tariffs are set by inter-
regionalization services. municipal structures
- Inter-municipal utility is set-up to provide services. (agreement necessary
between municipalities).
Obligatory - Governmental policy requires that the services are provided on Tariffs are set by regional
regionalization regional level; structures.
- Country is divided into regions – regional utilities are set-up

19. THE SPECIALIST FOR PUBLIC CONSULTING
Basic Features
Advantageous Disadvantageous
Decentralised - Good understanding of local population - Limited technical and institutional capacities
needs to operate and maintain the infrastructure
(e.g. lack of qualified structures capable to
react quickly to emergency situations).
- Limited capacities to prepare investment
programmes.
Light - Technical advice provided to local - Regional agency do not have direct control
regionalisation governments with regard to over the system (advisory role may yield
investments preparation and system limited benefits).
operation.
- Some technical adivce
Voluntary - Firm and formalized commitment to - Due to local political factors some
regionalization provide jointly the services. municipalities may stay out of the inter-
- (Potential) benefits ensuing from municipal structures (even if they are in
economies of scale. geographical system boundaries). This may
interrupt investment optimisation.
Obligatory - (Potential) benefits ensuing from - Municipalities that are capable to provide
regionalization economies of scale. services in more cost-efficient manner than
regional utility are worse-off.

20. THE SPECIALIST FOR PUBLIC CONSULTING
Basic Features – direct service provision by municipality or delegated
service provision
Direct Delegated
Decentralised - Direct service provision by - Municipality delegates service provision to selected
municipality or its department utility (e.g. private operator or neighbouring
municipality that has more developed sanitation
system).
Light As above - As above.
regionalisation - There is also possibility to delegate some services
to regional agency (e.g. maintenance services).
Voluntary No direct service provision Service provision is delegated to inter-municipal
regionalization institution. In this model inter-municipal bodly may
be service provider or services may be further
delegated to private operator.
Obligatory No direct service provision Service provision is delegated to regional institution.
regionalization In this model inter-municipal body may be service
provider or services may be further delegated to
private operator.

21. THE SPECIALIST FOR PUBLIC CONSULTING
Consolidation & privatization
Consolidated
(regional)
England & Wales
1989
1990
Bulgaria
2012
Lithuania
Private
Public
0% Romania
20% 50% 80%
2007-2013
France
1999
1973
Czech Republic
1990s
1990s
Poland 2000-2004
Denmark 2009
Fragmented
(municipal)