Decentralization of the Water Industry in the Context of Economies in Transition

Abstract

This research focuses on network industries, specifically on the water industry in the context of the Czech economy in transition between 1992-1998, the state of the water industry towards the end of the 1980s, key legislative changes between 1991-92 that touched upon key administrative questions, and the future ownership of the water network and water market. The Czech Republic chose a specific way to approach the transformation of the water industry by gratuitously transferring the ownership of the previously state-owned infrastructural properties to individual cities and municipalities. The next part outlines the effectiveness of such (de)regulation process based on development of key industry indicators. Very slow development of industry indicators and lack of state financial support for capital investment in water infrastructure led to the subsequent privatization of water companies, which can be considered as a completely rational outcome of unsustainable market developments.