Research on the financing of investments in the drinking water sector
Elbert Dijkgraaf and Maarten Veraart conducted research on the financing of investments in the drinking water sector at the request of Vitens. Investments in the drinking water sector are increasing sharply due to, among other things, climate change and cybersecurity. However, due to the strict regulation of the drinking water tariffs they cannot be raised sufficiently to finance the investments. Debt financing is difficult given the financial ratios of a number of the drinking water companies. Equity financing is difficult given the financial position of the public shareholders. The obvious solution, therefore, is to change price regulation. The study was published in FD, see: https://fd.nl/opinie/1372548/drinkwaterbedrijf-heeft-geld-nodig-voor-een-klimaatproof-watersysteem.
The report is available here.
In addition to this research project, Dijkgraaf and Veraart broadened the analysis to include the energy distribution companies. The report is available here.