Taking Back Control of Urban Water Distribution: The Effect of Remunicipalization on Water Bills

Germà Bel and Joël Bühler ()
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Germà Bel: IREA-UB & Universitat de Barcelona, Spain.
Joël Bühler: IREA-UB & Universitat de Barcelona, Spain.

No 202603, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Governments around the globe are considering taking back direct control as an option to reform privatized public services, particularly on the local level. Using a difference-in-differences framework, we find that remunicipalization of urban water leads to price reductions of about 3-6 cents per cubic meter in larger municipalities, but the effect does not extend to smaller municipalities. Given our finding of unchanged water usage, these reductions in large municipalities translate directly to consumers’ bills. As remunicipalization typically happens when a contract with a private firm expires, we investigate whether the threat of competition or remunicipalization arising from expiring contracts itself also leads to price reductions. After contract expiry without remunicipalization, water prices decline by 2-3 cents per cubic meter. Thus, while remunicipalization reduces prices particularly in larger municipalities, threats at contract expiry have a smaller, but more uniform price effect.

Keywords: Remunicipalization; Urban Water; Prices; Privatization; Public Services. JEL classification: H13; H41; H70; L95. (search for similar items in EconPapers)
Pages: 38 pages
Date: 2026-01
New Economics Papers: this item is included in nep-com, nep-reg and nep-uep
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202603

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