While the services provided by all the public utility industries are, to different degrees, ‘essential’ to modern economies and societies, the services provided by the water and wastewater industry are arguably the most essential, given the intimate connection between these services and human health and survival. A major failure in the supply of water (such as contamination) or in sanitation services can have potentially major and widespread impacts on human health. Issues of quality in the supply of water and wastewater services are amplified by the fact that consumers are not always able to easily determine from the appearance of water itself whether it is safe to use, and in particular to drink, and that consumers in most jurisdictions, particularly residential consumers, are limited in their choice as to their local water and wastewater supplier. Moreover, there are considerable externalities associated with the industry. For example, if the water and wastewater distribution systems are poorly maintained and leak, this can create pools of stagnant water (or polluted sewage runoff) and attract disease-carrying insects, with potentially widespread public health implications. Similarly, the quality of water abstracted at specific points in a river basin can be affected by the level of abstraction that occurs further upstream, as well as any effluent or waste that is introduced into the river system upstream.
While quality issues tend to predominate in any discussion of the regulation of the water and wastewater industry, issues related to price, affordability and access are also of high relevance. Access to clean, safe and affordable water is often seen as a basic ‘right’ and, for this reason, and unlike other public utility services, in many developed countries there are restrictions on the ability of water and wastewater suppliers to disconnect customers for non-payment. There is, however, a significant gap between developed economies and transitional/developing economies in terms of both access to water, and quality of water supplies. According to recent estimates from the World Health Organisation (WHO), some 884 million people do not have access to safe water, while some 2.6 billion people do not have access to adequate sanitation facilities. Indeed, according to some estimates, more people world-wide now have access to a mobile phone than to a toilet.