Public and private answers to default in water supplying services' payment

What was the problem?

Accompanying international tendencies, Portugal has been proceeding to the water sector's mercantilization since the beginning of the 1990's. This progressive mercantilization translates into the adoption of a market logic in the sector aiming, on one hand, to recover the costs associated to the service through the collection to the final consumer and, on the other hand, making the sector economically attractive for private investors. In the frame of this process, a Water and Waste Services Regulation Authority (ERSAR) was created with the intent of regulating and supervising the public sector of water supply to the populations, apart from those of wastewaters and urban solid waste' sewerage. In 2011, several situations of domestic consumption water supply cut were spread in the media as a direct impact of the economic crisis and of the budgetary adjustment programs celebrated with the Troika. On one hand, the family households had no income to pay the water bills and, on the other, the acceleration of the mercantilization process dictated by the Troika increased the water prices. In spite of the diffused news, there was no large populational contestation process or denunciation of violation of the Human Right to Water. Performing the mapping of the economic crisis' impact on the access to water for domestic consumption, as well of the public and private entities' answers in face of default in the services' payment became, thus, indispensable, as well as of a study on the subjacent dynamics and processes which explained the generalized silence about this situation.

What did we do?

The project “PPWater – Public and private answers to default in water payments: the Portuguese case”, coordinated by Paula Duarte Lopes, enabled the general characterization of the water supply and wastewater treatment sector in Portugal in terms of the impact of the economic crisis over the population's public supply, with a comparative component between public and private entities.
In a first phase, the project focused on all the water supply and wastewater treatment management entities in Portugal (287 in 2014). The available statutes of these entities were gathered (272) and an analysis performed of the applicable rules in default cases, and of the necessary conditions (social, large family, other) to benefit of special tariffs, as well of the rules (when existent) adopted by these entities regarding costs' recovery. A small inquiry was sent to all the water management entities in order to obtain data regarding the crisis' impact, asking them to inform us, based on their experience, of their perception regarding the increase, maintenance or decrease in the number of supply cut warnings due to lack of payment, and of effective cuts (exclusively to family households) between 2010 and 2014. [The previous acknowledgment of these data's inexistence implied working with perceptions, only allowing the identification of tendencies.]
In the second phase, management entities were identified representing the different existing typologies (municipal and municipalized services, municipal companies, multi-municipal and intermunicipal consortiums, mixed-capital companies/consortiums, public state company and private concessions), taking into account their geographic location (interior/littoral) and respective social, economic and political characterization (bigger/smaller unemployment incidence, bigger/smaller poverty concentration, urban/rural, municipal management of different political parties). In this phase, the management entities of Faro's district and of the autonomous regions of Azores and Madeira were not included; the first due to the existing drastic seasonal discrepancies in the water demand, and the seconds due to project budgetary limits. 43 live interviews were performed with employees responsible for these entities' management and/or for the collection service management and/or cuts of each water management entity.
As a recommendation, the project launched the warning of the need of ensuring the principle of the universality of the access to water and that the State ensures the promotion, protection and guarantee of the universal access, as a Human Right, of the domestic users. The political recommendations were sent to all the management entities, as well as to ERSAR, the existing associations in the sector and the relevant governmental institutions

What happened?

The project determined that in spite of the economic crisis the Municipalities tended to ensure the water supply even in payment default situations and even in the case of a private management entity, demonstrating that in Portugal, at the local level, the social responsibilities are still prioritized over the financial ones. Despite everything, this situation isn't sustainable and counters some public expense management principles. Furthermore, the Human Right to Water is the States' exclusive responsibility. Which, in this case, on one hand, shielded itself in the existence of special tariffs for these situations and, on the other hand, decided not to be proactive, arguing with the inexistence of complaints for violation of that Human Right.
The project, thus, recommended to the government the ensuring of the principle of the universality of the access to water through the adoption of legal warranties that prevent the water supply interruption or refusal to domestic users due to lack of financial resources. Alerting to the need of creating resilient (efficient and flexible) instruments and mechanisms directed to every water management entity – public and private – so that these have the necessary conditions to guarantee the universality of the access to water, independently of each family household's economic situation.
This thematic was approached some years later by the Law 44/2017 of the 19th of June, which establishes the principle of non-privatization of the water sector, but which doesn't alter a thing in the mercantilist logic subjacent to this type of situations in moments of exception.