Corporatization of the water sector: Implications for transitioning to sustainable urban water management

In the context of climate change, the Danish water sector is experiencing two major pressures. On one hand, a number of agents are pushing towards more sustainable urban water management (SUWM) approaches with the aim of improving surface water quality and mitigating flood risk. On the other hand, as part of an international trend, the municipal water management departments were transformed to locally created not-for-profit corporatized companies.

Main drivers for corporatization are increased efficiency and cost recovery by reduced municipal control on utility budgets. Scholars have described the influencing factors for transitioning to SUWM and highlighted the potential governance attributes for enhancing and/or constraining such change. This paper explores the corporatization of the water sector and its implications for transitioning to SUWM.

On the base of a preliminary literature review we identify the rationales for and drawbacks of corporatization and compare them with the critical factors to build institutional capacity for SUWM. Preliminary results suggest that corporatization is expected to create a range of challenges that might hinder the transition towards more SUWM approaches.

A more direct collaboration of the national regulator of competitive performances with government institutions and other non-governmental actors might be an effective answer to such challenges.