When regulating the water industry, governments have to face both the economic and the environmental problems.The theory of regulatory economics sazs that in the presence of different institutions each with a different objective (the environmental and the economic one) it is not always possible-to guarantee the optimal balance between the social benefit of an higher quality standard and the social cost of the higher prices which result from the environmental obligations. This raises three major questions: (1) how much the compliance of the obligations imposed by internal and external environmental regulators to the industry increases its costs of production; (2) how much an increase in the costs influences (a) the price level of the service and (b) the tariff structure when different kind of tariff schemes are considered; (3) which is the willingness to pay for quality by different categories of consumers. I have two objectives: (i) to consider how the most efficient role of an external institution, the European Community, in the regulatory structure of the water industry, should be defined. Then, (ii) I aim to consider each of the questions raised above and analyze how UK, France and Italy have reacted to comply with the Drinking Water Directive and the Urban Waste Water Treaty Directive
The activity within the Centre for Management Under Regulation has been mainly based, up to now, on investigation about different regulatory choices and on the response of public utilities to regulation in the UK This will be an important pillar on which I will base my international comparative study My quantitative and theoretical background acquired during the M Sc. at Warwick and during my Ph.D in Political Economy at Naples, together with the interdisciplinary nature of the CMUR will allow-me to embark on this kind of work and to pursue my objectives The Centre for Management under Regulation is a jointly funded initiative by the University of Warwick and among others,the Severn Trent (a British water and sewerage company), and the Director General of Water Services, Ian Byatt, is an active member of the Centre's Management Committee.