SHAMPOO INGREDIENTES AND THEIR ENVIRONMENT IMPACTS,ANALYSIS OF ADVANTAGES AND
DISADVANTAGES OF A WASTE WATER
SEWERAGE SYSTEM,CHARTER OF INCORPORATION,BUSINESS MODELS
4. 3
Washing process:
1.Oil (yellow) layer on hair
2. The head (blue) is hydrophilic. It likes water sticks out. The
lipophilic part of surfactant (tail). SLS is oriented into oil
through the tail end (orange)
3. During the shampoo rinse micelleces are formed and carries
the oil away from the hear strand. Due to surfactant the oil is
dissolved in the water.
4. Hair is cleaned without oil on the strand.
Figure.2: Washing process, Source: 2
5. 4
Sodium Laureth Sulfate (SLS):
Properties Environmental impact
• Known skin irritant
• Pollutes our groundwater
• Actually a pesticide and herbicide
• Emits toxic fumes when heated
• Corrosive properties.
• Long-term permeation of the body’s
tissues
• It’s an eye irritant.
• Nitrate and other solvent contamination
• Manufacturing process is highly polluting
• It helps other chemicals get into your
body
• SLS is a detergent and surfactant which
breaks surface tension and separates
molecules in order to allow better
interaction between the product and hair.
• Chemical formula:
CH3(CH2)11(OCH2CH2)nOSO3Na
• Made by adding sulfuric acid (from
petroleum)
• Molar mass: (288.38 + 44.05n) g/mol
• Makes a smooth opalescent solution with
water
• High solubility in polar solvent
6. 5
Properties Environmental impact
• Allergic Reactions
• Other Skin Discomfort
• Eye Irritation
• Dermatitis reaction
Cocamidopropy Betaine
• Chemical Formula: C19H38N2O3
• created by a reaction of cocamide and
glycine betaine
• Medium viscosity: (300-600 cps)
• Soluble in water, ethanol and isopropanol
• Used in bubble bath solution and hair
• Spray
• have a mild germicidal effect
• reducing static and making hair more
manageable.
7. 6
TEA-Dodecylbenzensulfonate
Properties Environmental impact
• Chemical formula: C24H45NO6S
• Functions as a surfactant, decreases the
surface tension of water
• improves the ability of water to mix with
dirt and oil in the hair
• Makes shampoo to be spread and lather
easier
• Ingestion may cause irritation of
mouth and stomach.
• Contact with eyes or prolonged
contact with skin may cause
irritation.
• Special Hazards of Combustion
Products:
• Toxic oxides of nitrogen and
irritating oxides of sulfur may form
in fire.
8. 7
Glycol Distearate
Properties Environmental impact
• Glycol distearate used in cosmetic field
as a emollient.
• Chemical formula: C38H74O4
• Used for conditions of skins and hair
• Form from a alcohol ethylene glycol and
acid stearic acid
• Molar mass: 595.01 g.𝑚𝑜𝑙−1
• Appearance: white flake
• Insoluble in water
• Melting point: 67 up to 73 °C
• Ecotoxicology Effects: due to uncertain
environmental toxin and bio-
accumulative.
• High concern for people who have
allergies.
• Caused slight irritation of skins
• Toxicity to human’s body such as,
carcinogenicity, neurotoxicity, and acute
toxicity.
• High toxicity to aquatic systems
9. 8
Dimethiconol
Properties Environmental impact
• Dimethiconol related to Silicon
polymer.
• Used in Cosmetic and personal care
products
• applications: Hair care, skin care, and
Make-up
• Appearances: colorless to light yellow,
Liquid phase, and Transparent to
slightly haze.
• Viscosity : 100.00 mPa·s.
• Chemical Formula:
• Traps bacteria, sebum, and impurities and
increase the breakouts and blackheads.
• Very high risk to sensitive skin (allergic
reaction)
• Not environmentally friendly ( non-
biodegradable)
• Cause skin irritation due to coating
property
• Prevent the skin normal activity such as
sweating, temperature regulating, and
sloughing of dead skin cells
12. Introduction
Waste water: Wastewater, also written as waste water, is any water that has been adversely
affected in quality by anthropogenic influence. Wastewater can originate from a combination of
domestic, industrial, commercial or agricultural activities, surface runoff or storm water, and
from sewer inflow or infiltration.
Rain Water: Water that has fallen as rain and contains little dissolved mineral matter Combine.
1. Combined sewer system
Combined sewer system are large
networks of underground pipes
that convey domestic sewage,
industrial wastewater and storm
water runoff in the same pipe to a
centralized treatment facility. It is
shown in Figure 1.
2. Separate sewer system
Separate sewer systems are
designed to convey wastewater
and storm water in separate pipes.
It is clearly illustrated in Figure 2.
Figure 2: Separate sewer system
http://www.villageofshorewood.org/I
mageRepository/Document?docume
ntID=1575
Figure 1: Combined sewer system,
http://ceds.org/combined%20sewer.jpg
13. Analysis of Advantage and disadvantage Sewer system
1, Advantage and disadvantage of Separate sewer system
2, Advantage and disadvantage of combined sewer system.
The size of sewers is small.
Sewage load on treatment units is
small.
River or stream waters are not
polluted.
Storm water can be discharged
into streams or rivers without any
treatment.
Economical for sewage pumping
since the quantity is small.
Low health risk.
Advantages
Small sewer easily gets choked
and are difficult to clean.
Laying two sets of sewer is costly.
Storm water sewers are only used
during rainy season.
Require for pumping in small
ground.
Require a reliable supply piped
water.
Difficult to construct in high
Density areas, and costly to
maintain.
Disadvantages
Large sewer size does not clog
easily and are easy to clean.
Laying one set of sewer is
economical.
The strength of sewage is reduced
by dilution.
Maintenance cost is reasonable.
Moderate operation and
maintenance costs.
Low health risk
Advantages
Large sewers are difficult for
handling and transport.
Due to storm water load the
treatment plant is high.
During heavy rains sewers may
overflow causing nuisance.
Pumping is uneconomical.
Storm water is unnecessarily
polluted.
High capital costs
Disadvantages
14. For better understanding of both system, it is accounted efficient to illustrate the pathway and
emission of both systems in the following Figure.
Figure 3: Emission and pathway of both combined and separate system.
Source: http://www.winnipeg.ca/waterandwaste/images/sewage/separate.jpg
How a reasonable decision can be made to select a system?
It is difficult to say which system is better and efficient. To select a suitable and reasonable
sewer system mainly depend on the conditions and some specific factors for both systems which
are as follows:
15. The selection of a suitable system depends on some specific factors, and conditions. Such as
Environmental factors, economic factors, Site conditions and so on. Based on these factors and
conditions, the selection of the system is made accordingly.
In flat areas
If sufficient fund is not available
currently
If annual precipitations very small
Nearness of a natural river or
drain
If pumping is a must
If existing sewerage system can
be used only for sanitary sewage
Is rocky areas
Separate sewer system
reasonable for
If sufficient annual rainfall is
present
If pumping is required for both
If space is limited
If diversion of excess flow can be
provided
If existing system can carry both
sewages
Combined sewer system
reasonable for
16. References:
Alemayehu, Z. (2014). Sewage treatment and disposal. Retrieved from
https://aaucivil.files.wordpress.com/2010/01/chapter-3-sewerage-system.pdf
Seyoum, S. Type of sewer system. Retrieved from http://ocw.unesco-
ihe.org/pluginfile.php/440/mod_resource/content/1/Urban_Drainage_and_Sewerage/1_Introducti
on/Types%20of%20sewer%20systems/Type_of_sewer_systems.pdf
Walski, T. M., and T. E. Barnard (2004), Wastewater collection system modeling and design, Haestad
Press. Retrieved from http://www.worldcat.org/title/wastewater-collection-system-modeling-and-
design/oclc/57705149/editions?start_edition=1&sd=asc&referer=null&se=yr&qt=sort_yr_asc&editionsV
iew=true&fq
18. 1. Introduction
Water is an absolute prerequisite for life, a unique source, an economic, environmental, social,
cultural and spiritual good and may therefore not be treated like an ordinary commodity.
Recognizing this, governments with partnership with civil societies, business and users have
throughout cultures and throughout history paid close attention to this special character of Water
supply and adequate environmental sanitation.
Concerning Partnerships, there are various options which one of them is a Public-Private
Partnership (PPP) between the Public authorities and the local, national or International private
sector. Corporation is a process by which a public sector service provider is transformed to one
with the commercial orientation of a private company which will typically include establishment
of a distinct legal identifier for the company, under which the government’s role is clearly
identified as owner. Also, Segregation of the company’s asset , finances, and operations from
other government operations.
Nomenclature of Actors
Examples of Actors in a given PPP:
Contracting Parties: Local Council/Authority, service operator
Key Stakeholders (Strongly Influencing the PPP): Both contracting parties and national and
municipal governments, Investors, regulator, donors, trade unions, consumer NGO’s.
Stakeholders: All the above and gender and community groups, beneficiaries, households etc.
19. We, as a Consultant, have made a document concerning certain Articles of Incorporation for a
Public Private Partnership of a water supply company in which the following points have been
taken into account:
The ownership is 100 % public under council control.
The organization manages its business operations with own responsibility.
The organization is financially independent from council budget.
Transparency in appointing the board members.
Strict compliance with water laws and regulations.
Sustained reliable, non-discriminatory service to end-users.
Good creditworthiness.
Due care for installations and equipment.
Affordable prices to end-users.
Adaptation to changes and drive for innovation.
Transparency to stake-holders of any kind.
2. List of Articles
Article 01.
The name of this corporation shall be the UNITED WATER WORKS INC.
Article 02
Roles and Responsibilities
2.1 The Principal roles of the corporation are:
Managers of local water resources
Facilitator of local dialogues( demand, affordability studies,etc)
Operator of water services in accordance with the contract with Local Council.
2.2 The Principal responsibilities of the corporation are:
To provide the local population with a reliable supply of drinking water in
sufficient quality and quantity in accordance with national government
policies.
To ring-fence revenue flows from water and sanitation user chargers.
To provide quick and easy ways to address operational problems and deliver
appropriate solutions using Customer Hotline.
To ensure water resource management beneficial to the public.
20. Article 03
Ownership
3.1 United Water works Inc. is a government owned company. It is a limited liability company
with the city being its sole shareholder. Membership shall be realized through government
appointments while recognizing the crucial importance of a stable, reliable and equitable
partnership based on mutual trust and respect.
Article 04
Board of Directors
4.1 The number of directors of this corporation shall be nine (9) and their terms of office shall be
for a period of three (3) years: three directors to be elected each year. Such directors shall be
members of this corporation and each shall be elected by a majority vote of the membership of
this corporation. The area served by this corporation shall be divided into nine (9) districts,
based upon water users, for the purpose of director representation: one director to be elected
from each district.
4.2 The Board of Directors shall have the sole authority to make, adopt and set, the standards,
policies, and regulations, concerning the construction and operation of the system and the
delivery of water; and to set fees and determine the rates, charges, and fees, which shall be
charged and collected for the delivery of water. Such rates and charges shall be by them
determined so as to reflect the costs of construction, maintenance, operation, retirement of
indebtedness, repairs, and improvements, of said water system. Such rates and charges may be
from time to time raised or lowered at the discretion of the Board of Directors. The Board of
Directors may also assess the members for the costs of construction, operation, maintenance and
repayment of indebtedness. In the event of delinquency in the payment of water charges and
assessments, the Board of Directors shall have the power to enforce the collection thereof by
either or by any combination of the following remedies:
(a) By personal action of debt brought against the delinquent membership.
(b) By foreclosure and/or sale of the delinquent membership.
(c) By withholding the delivery of water from the service connection of the delinquent
member
4.3 The officers of this corporation shall be a President and a Vice-President, who shall be
members of the Board of Directors, and a Secretary and a Treasurer, who may, or may not, be a
member of the Board of Directors. The office of Secretary and the office of Treasurer may be
held by the same person. The term of office of the officers of this corporation shall be for a
period of one (1) year, or until their successors are duly elected and qualified as provided in the
By-Laws.
Article 05
Financial Independence
5.1 The company will be operated as a financially viable, self-sustaining entity that will be run
under commercial principles without any direct financial flows between the company and the
local government.
21. 5.2 The source of revenues are customers through tariffs, fees and subsidies.
5.3 Consumer friendly billing and payment will be established to improve collection rates.
5.4 The government can intervene if the standards and outputs are not satisfactory, i.e., taking
control, or issuing a fine or even appointing a new private partner/contractor
Article 06
Compliance of Water laws and Regulations
6.1 The Legal department will work to ensure voluntary compliance to water laws and
regulations to protect the local/district/public drinking water and supplies from contaminants by
establishing safe standards for drinking water
6.2 A special team will be put up to ensure compliance of the water laws and regulations through
frequent inspections of utilities, visitation to water storage area, visitations and checkups on
businesses and household usage of the water and its facilities.
6.3 When the Voluntary compliance is not established, the department will take firm and
assertive actions including stringent penalties including “polluter pays” principles and in some
special cases, offer incentives to those who are out of compliance in order to bring them in line
with the regulations.
Article 07
Services
7.1 The company shall treat all consumers equitably.
7.2 Consumers will be actively informed about the service and represented in decision making
on their behalf in terms of user charges, service levels and service extension.
7.3 All Consumers shall have easy, non-discriminatory access to independent consumer rights.
7.4 Consumers complain will be resolved quickly and in cases where long term action is
required, will be notified promptly.
7.5 The company shall with the approval of the local council make efforts to include low income
users in the design and implementation of projects that affect their interest.
7.6 The Company will ensure that water and sanitation services will be available to the poor.
Article 08
Creditworthiness
8.1 Mechanisms of accountability and consultation will be established with each actor having at
least one counterpart he/she is accountable to. Effective oversight from the counterpart will
further ensure accountability.
8.2 Stakeholders will have the possibility to contest :
Insufficient accountability or
Individual wrong doing by the party
8.3 Investments in Water supply and sanitation systems from the company or the local authority
will be publicly reported
8.4 The dispute commission can overrule information request inducing excessive cost.
Article 09
Installations and Equipment
9.1 The company will establish a strategy for good operation and maintenance.
9.2 The minimum requirements of the strategy will be as follows:
Preparation of a plan for operation and maintenance every 3 months.
Provision of required personnel to operate and maintain.
22. Provision of capacity building programs for old and middle age personnel.
Inventory every month to ensure available of spare parts for water pumps, sucks, and
other water system equipment.
Preparation of water audit and leakage control plan.
Maintaining records on all water systems in the locality including history of
equipment, costs and life.
Article 10
Prices
10.1 Tariffs for water supply and sanitation services will be determined annually by the utility
and approved by the city council.
10.2 Tariffs will be designed in an open consultation process.
10.3 Normal profits on water and sanitation services are acceptable if the affordability criteria
are met.
10.4 Economic realities of the local people or users will be considered annually and government
subsidies will be allowed if necessary in case of high pricing decisions.
Article 11
Transparency
11.1 All stakeholders must apply a no-tolerance policy towards corruption and make every
possible effort to eradicate bribery in their activities, including transparency of financial flows.
11.2 There will be a separation of powers and functions within the water supply and the
sanitation sector.
11.3 External audits of service providers and privately managed Water entities will be
established to verify the transparent flow of financial resources.
11.4 All stakeholders are committed to open exchange of undistorted factual information.
Article 12
Adaptation and Innovation
12.1 The Company shall always be in the process of improving its expertise as well as
technology.
12.2 The Company shall ensure managing water demand, with particular emphases on
mechanisms that can adjust water demand to availability (such as pricing complemented by
sound metering, and flexible water abstraction limits: one for normal and another for emergency
situations) and on the use of alternative water sources (rainwater; reclaimed water, when it is fit
for use).
12.3 The company shall ensure upgrading existing infrastructure to meet future challenges and
cope with the risks associated with climate change (e.g. aeration facilities for ammonium
oxidation; pre-sedimentation ponds or river bank filters; shifting from shallow wells to more
reliable sources of water supply, such as surface water and confined aquifers; small scale,
sustainable solutions for sanitation in rural areas)
23. References
Affairs, S. S. (2005). Public-Private Partnerhsip for water supply and sanitation. Swiss Re.
company, M. W. (n.d.). Amended Articles of Incorporation, A non-profit organisation. Retrieved August
05, 2016, from http://montezumawater.org/articles-of-incorporation.shtml
Ho-Li. (n.d.). Laws and Regulations, United States. Retrieved August 6, 2016, from
http://www.pollutionissues.com/Ho-Li/Laws-and-Regulations-United-States.html
Inc., V. P. (2009). Article of Incorporation.
Ministry of Works and Housing, G. (2009). National Water Policy.
organisation, C. P. (2005). Operation and Maintenaince of water supply systems. New Delhi.
25. 1. Introduction
In order to choose the best decision from four business models, an evaluation of 10 criteria
regarding water management will be described. The four business models can be
described as follow:
Model 1
A public organization owned and operated by local government (city, association of
cities, association of cities and villages etc.) – the original option which was challenged
in court.
Model 2
A private company, to be given an exclusive contract after a bidding and thereafter subject
to regulation as a natural monopoly (the bidding includes the transfer of infrastructure at
a competitive price to the private company).
Model 3
A private company under exclusive contract after a bidding by the local government for
a set time period (15 years) in the shape of a Public Private Partnership with the following
responsibilities: Built, Own, Operate, Finance, Transfer (the existing infrastructure is
handed over for a nominal fee into ownership of the private company).
Model 4
A private company under contract by the local government for a set time period (12 years)
in the shape of a Public Private Partnership with the following responsibilities: Built,
Operate, Transfer (the existing infrastructure remains in public ownership, but required
investments for extensions need to be made by the private company).
26. 2. Analysis of business models
The business models will be evaluated according to the following criteria defined by the
Administrative Court:
1
Assuring continuous uninterrupted delivery corresponding to laws on water in
force.
2
Assuring delivery at lowest possible cost in order to allow for a „fair price“ for
water services.
3
All costs of all operations must be covered by revenues from the delivery of the
services without any local government grants out of tax revenues.
4
Assuring the financial creditworthiness of the organization delivering the
services at any time.
5 Assuring affordability, especially for household users.
6
For each „household member“ (average size = 3.5 persons), 15 m3 of drinking
water should be delivered per month at a price not exceeding 1.5 % of average
monthly income.
7
Maintenance and adaptation of the water infrastructure to the needs of the user
groups.
8
Assuring the highest possible satisfaction of users of water services with
appropriate instruments: information through public relations, complaints
management, transparency management, etc.
9 Setting incentives to water users to care for water resources conservation.
10
Assuring an effective and fast remediation of case of serious interruptions,
emergencies etc.
The following 10 tables describe the evaluation of the 10 criteria according to the 4
different business models.
27. 1. Assuring continuous uninterrupted delivery corresponding to laws on water in force.
Criteria Risk Conclusion Measure
Model 1
The company is government owned and is able to
provide an uninterrupted service of water to
everyone including the areas of population with
small density or areas hard to reach.
Territorial planification
to reach all the points
where water is needed.
Model 1 fulfills the
criteria 1.
Government must create
laws to ensure a continuous
uninterrupted delivery of
water for public owned
water supply companies.
Model 2
As a characteristic of a private company, there is a
natural tendency to it maximizes its profits. The
tradeoff for the company it is investing where the
benefit is higher than the cost.
No incentive for the
private company to
invest in places with
small population
meaning not continuity
of the service.
Model 2 does not fulfill
criteria 1.
Government must create
laws to ensure a
homogenous distribution of
delivery of water even in
low density places.
Model 3
The private company will ensure that the water
infrastructure will be maintained in this period (15
years) but based on the profit maximization criteria.
Possibility of
interruption of the water
delivery after the 15
years because the
company didn’t invest
long term oriented.
Model 3 does not fulfill
the criteria 1.
Government must create
laws to ensure that the
private partner will deliver
the water system excellent
conditions in the end of the
period (penalties in case of
not maintenance).
Model 4
In this case, model 4 has the same characteristics of
model 3 but the private company will be less
interested in investing because of the shorter period
(within 12 years).
Possibility of
interruption of water
delivery caused by
maintenance of just short
term oriented.
Model does not fulfill
criteria 1
Same as model 3, but the
government must consider
higher penalties in case of
not maintenance of the
infrastructure due to the
shorter period.
28. 2. Assuring delivery at lowest possible cost in order to allow for a „fair price“ for water
services.
Criteria Risk Conclusion Measure
Model 1
The public owned water company is functioning as
a public welfare organization, which has the
ambition of a zero operation profit policy. This fact
ensures a fair affordable price even for the low-
income population.
None.
Model 1 fulfills the
criteria 2. None.
Model 2
As a characteristic of a private company, there is a
natural tendency to it maximizes its profits
Empirically, profits have increased in many
countries where water has been privatized.
Increasing possibility of
high prices caused by the
natural monopoly status
quo.
There is a high risk that
model 2 does not fulfill
the criteria 2.
Government could set
regulations or laws to ensure
fair prices for the users but
providing solvency for
private companies.
Model 3
Since the infrastructure is rented for 15 years by
paying a fee, the private company can act as a
natural monopoly, which has the same ambition
like model 02 to maximize their profits.
Higher interest rates than
Model 02 due to the
additional cost caused by
the fee for the water
infrastructure.
Model 3 does not fulfill
the criteria 2. Same as model 3.
Model 4
Since the infrastructure is owned and financed by
the local government but operated and by the
private company, the operating cost for private
company are lower than in model 2 and 3.
The incentives are still
high to increase the rates,
because of the natural
monopoly status.
Model 4 is partly
fulfilling the criteria 2.
Regulations and laws for a
fair price are likely to be
established since the
operating cost will unlikely
(compared to Model 02 and
03) cause insolvency.
29. 3. All costs of all operations must be covered by revenues from the delivery of the services
without any local government grants out of tax revenues.
Criteria Risk Conclusion Measure
Model 1
The government has to ensure a fair and affordable
price. This can cause that the operating cost will
exceed the revenues.
Marginal operating cost
> Efficient profits
Model 1 has a risk not
to fulfill the criteria 3
Government must ensure a
fair price for everybody.
Model 2
The goal of the private company is to maximize
profits and cover all the costs.
The private company
will definitely
compensate the costs for
all operations by their
revenues.
Model 2 is appropriate
to fulfill the criteria 3.
The government must create
a law to permit a maximum
margin for privates
companies
Model 3
Since the water supply infrastructure is owned for
15 years by the private company, the same results
like in model 2 are likely to happen.
Same as model 2
Model 3 is appropriate
to fulfill the criteria 3.
Same as model 2
Model 4
The existence of an infrastructure in public
ownership could lower the operations costs for the
private company.
Because the operation
cost are lower they will
be definitely be covered
by the revenues
Model 4 is appropriate
to fulfill the criteria 3.
The government must create
a law to permit a maximum
margin for privates
companies
30. 4. Assuring the financial creditworthiness of the organization delivering the services at any
time.
Criteria Risk Conclusion Measure
Model 1
The public company is owned by the local
government. A financial default is impossible.
The financial
creditworthiness by
public company is
provided
Model 01 fulfills the
criteria 4. None.
Model 2
The private company has full risk of financial
problems.
The private company has
high potential of
financial
creditworthiness
problems or even
insolvency.
Model 02 does not fulfill
the criteria 4.
Government must ensure the
best financial market
conditions for private
companies to get access to
fluid capital through the
capital market.
Model 3
The financial risk is limited to the period of 15
years, which may lead to better creditworthiness
than model 2.
It stills exists financial
risk during the period of
15 years
Model 03 does not fulfill
the criteria 4.
Same as model 2
Model 4
The infrastructure and the financing for the existing
infrastructure remain under local government
control.
There is just a financial
risk for building new
infrastructure, for the
operation and the transfer
of the private company
Model 04 partially fulfill
the criteria 4 Same as model 2
31. 5.Assuring affordability, especially for household users.
Criteria Risk Conclusion Measure
Model 1
The public owned water company is functioning as
a public welfare organization, which has the
ambition of a zero operation profit policy.
The public owned water
supply company is
owned by the public
government. It has to
ensure water
affordability to
everybody.
Model 01 fulfill the
criteria 5
None
Model 2
The companies are not obligated to provide water
or water service when water is characterized as a
marketable commodity
Affordability might
cause loses because the
marginal costs are higher
than efficient profits
causing an insolvency
Model 2 does not fulfill
the criteria 5
Government must set
regulations to define the
water as a human right and
giving to the private
companies support in case
price lower than marginal
Model 3
The same outcome like in model 02.
The nominal fee for
renting will be
transferred to the end-
consumers, which will
cause even a higher price
resulting
in lower affordability
Model 03 is does not
fulfill the criteria 5 Same as Model 2
Model 4
Higher potential of affordability than model 02 and
03 but lower than model 01.
Theoretically the final
costs are lower than
model 3 and the
affordability is provided
by the local government
by owning the
infrastructure.
Model 04 partially fulfill
the criteria 5
Same as Model 3
32. 6. For each „household member“(average size = 3.5 persons), 15 m3
of drinking water should
be delivered per month at a price not exceeding 1.5 % of average monthly income.
Criteria Risk Conclusion Measure
Model 1
As a role of the government, it must guarantee a
fair price for drinking water. However, the water
price, for example, may vary according to water
availability in specific regions. The government
may compensate the higher prices by subsides.
Null. Model 1 fulfills criteria 6. None.
Model 2
As a characteristic of a private company, there is a
natural tendency to it maximizes its profits.
There are high
possibilities that the
drinking water price
exceeds the 1.5 % of
average monthly income.
Model 2 does not fulfill
criteria 6.
Regulations that would
not allow the private
company to increase
significantly the water
price.
Model 3 In this case, model 3 has the same characteristics
of model 2.
Same as model 2.
Model 3 does not fulfill
criteria 6.
Same as model 2.
Model 4
Despite of similar characteristics of model 2 and 3,
the existence of an infrastructure in public
ownership could lower the water price. The reason
is that investments in building new infrastructures
would be minimized.
There is still risk of
exceeds the price of 1.5
% of average monthly
income. However, the
risk is lower than models
2 and 3.
Model 4 does not fulfill
criteria 6.
Same as models 2 and 3.
33. 7. Maintenance and adaptation of the water infrastructure to the needs of the
user groups.
Criteria Risk Conclusion Measure
Model 1
The responsibility of maintenance and adaptation
of the infrastructure will be from the government.
It means that a significant amount of funds will be
necessary to ensure these actions.
The high costs of
maintained and adaption
of infrastructure could
lead, for instance, to an
increase of water price or
increase the taxes.
Model 1 fulfills criteria 7.
Minimizing the costs of
maintenance and
adaptation from the
government.
Model 2
Private companies will maintain and adapt the
infrastructure in a way that it can be profitable.
Some regions, for instance, with difficult access
and with low population, could be non-profitable.
In this case, there is a
risk that some
infrastructures in some
regions will not be
maintained and adapted.
There is a risk that model
2 does not fulfill criteria 7.
Government should
ensure by regulations
that all the regions can
be fulfilled.
Model 3
Model 3 has similar characteristics to model 2.
However, the private company must ensure
maintenance and adaptation for a period of 15
years.
The risks are similar to
model 2. In addition,
long term issues (after 15
years) of maintenance
and adaptation of
infrastructures could be
omitted.
There is a risk that model
3 does not fulfill criteria 7.
Government must ensure
that all the regions can
be fulfilled. In addition,
after 15 years,
satisfactory
infrastructures
conditions will be
ensured.
Model 4
Model 4 has the same characteristics of model 2.
However, the private company is under a contract
of 12 years and the infrastructures that belongs to
the government remains belonging to the
government.
The risks are the same of
model 3, but in this case,
for 12 years. In addition,
the maintenance and
adaptation
infrastructures that will
remain to the
government may be less
profitable.
There is a higher risk that
model 4 does not fulfill
criteria 7.
Government must ensure
that all the regions can
be fulfilled, that after 12
years the all
infrastructures will be in
satisfactory conditions.
34. 8. Assuring the highest possible satisfaction of users of water services with
appropriate instruments: information through public relations, complaints
management, transparency management, etc.
Criteria Risk Conclusion Measure
Model 1
As a public company, there is high interest provide
and improve public relations, complaints
management and transparency management. In
order to do that, specific sectors in the company
has its specific roles.
Null. Model 1 fulfills criteria 8. None.
Model 2
In the case of model 2, as a private company,
public relations, complaints management and
transparency management is usually part of the
companies’ policy. However, there is no
motivation to be improved.
There is a risk that the
satisfaction of water
services would not be a
concern for the
company.
There is a risk that model
2 does not fulfill criteria 8.
The government should
make regulations which
determine several
conditions that the
company must follow in
order to ensure the users
satisfaction.
Model 3
Model 3 is, in this case, completely similar to
model 2.
As model 2, there is a
risk that the satisfaction
of water services would
not be a concern for the
company.
There is a risk that model
3 does not fulfill criteria 8.
Similar to model 2, the
government should make
regulations in order to
ensure the users
satisfaction.
Model 4
Model 4 is, in this case, completely similar to
models 2 and 3.
As model 2 and 3, there
is a risk that the
satisfaction of water
services would not be a
concern for the
company.
There is a risk that model
4 does not fulfill criteria 8.
Similar to model 2 and 3,
the government should
make regulations in
order to ensure the users
satisfaction.
35. 9. Setting incentives to water users to care for water resources conservation.
Criteria Risk Conclusion Measure
Model 1
As a public company, there is no aim of profit.
Consequently, actions encouraging water
conservation can be constantly done.
Lack of interest of the
government.
There is a low risk that
model 1 does not fulfills
criteria 9.
Government must create
activities to promote
water resource
conservation.
Model 2
As a private company, conserving water resources
is a aim, due to the fact that the water is the
product which will provide profit for the company.
On the other hand, the more water is consumed the
more profit will be generated for the company.
The aim of profit may
lead to the company to
encourage the users to
consume water.
Therefore, wasting water
can occur.
There is a moderate risk
that model 2 does not
fulfills criteria 9.
Government must create
regulations that the
companies should care
for water conservation.
For instance, limit the
water consumption for
each user.
Model 3 Model 3 has no interest in conserving water
resources for more than 15 years.
The fact that, there is no
interest that water will
be preserved more than
15 years, wasting water
can be promoted.
There is a high risk that
model 3 does not fulfills
criteria 9.
Government must make
regulations, so that the
company must make a
long term water
preservation plan.
Model 4
Model 4 has no interest in conserving water
resources for more than 12 years.
Similar to model 3, there
is no interest that water
will be preserved more
than 12 years, wasting
water can be promoted.
There is a high risk that
model 4 does not fulfills
criteria 9.
Similar to model 3,
government must make
regulations, so that the
company must make a
long term water
preservation plan.
36. 10. Assuring an effective and fast remediation of case of serious interruptions,
emergencies, etc.
Criteria Risk Conclusion Measure
Model 1
Public companies according to law must assure, if
necessary, an effective and fast remediation of
water in case of serious interruptions.
Inappropriate
preparation to the serious
interruptions or
emergencies.
Model 1 fulfills criteria 10.
Proper preparation to
interruptions and
emergencies.
Model 2
In order to avoid losses, private companies are
usually prepared and able to fast remediation in
case of interruptions and emergencies.
Although private
companies are usually
prepared for
emergencies, it is not
100% assured.
Model 2 fulfills criteria 10.
Government should
make regulations that
guarantee that the
companies can assure
effective and fast
remediation in
emergencies.
Model 3
Similar to model 2, private companies are usually
prepared and able to fast remediation in case of
interruptions and emergencies.
Similar to model 2, it is
not 100 % assured that
these companies are
prepared for
emergencies.
Model 3 fulfills criteria 10.
Similar to model 2,
government should make
regulations that
guarantee that the
companies are prepared
for emergencies.
Model 4
Similar to model 2 and 3, private companies are
usually prepared and able to fast remediation in
case of interruptions and emergencies.
Similar to model 2 and 3,
it is not 100 % assured
that these companies are
prepared for
emergencies.
Model 4 fulfills criteria 10.
Similar to model 2 and 3,
government should make
regulations that
guarantee that the
companies are prepared
for emergencies.
37. 3. Overall evaluation of each business model
1 =Requirement fulfilled;
0,5 = Partially fulfill (moderate and low risk to not fulfill);
0 = Requirement unfulfilled (high risk to does not fulfill.
CRITERIA
MODEL
1
MODEL
2
MODEL
3
MODEL
4
1. Continuous uninterrupted delivery corresponding to laws on water in force. 1 0 0 0
2. Delivery at lowest possible cost in order to allow for a “fair price“ for water services. 1 0 0 0,5
3. All costs of all operations must be covered by revenues from the delivery of the
services without any local government grants out of tax revenue.
0 1 1 1
4. Assuring the financial creditworthiness of the organization delivering the services at
any time.
1 1 1 0,5
5. Assuring affordability, especially for household users. 1 0 0 0,5
6. For each „household member “(average size = 3.5 persons), 15 m3 of drinking water
should be delivered per month at a price not exceeding 1.5 % of average monthly
income.
1 0 0 0
7. Maintenance and adaptation of the water infrastructure to the needs of the user groups. 1 0 0 0
8. Assuring the highest possible satisfaction of users of water services with appropriate
instruments: information through public relations, complaints management,
transparency management etc.
1 0 0 0
9.Setting incentives to water users to care for water resources conservation. 0,5 0,5 0 0
10. Assuring an effective and fast remediation in case of serious interruptions,
emergencies etc.
1 1 1 1
Result. 8,5 3,5 3 3,5
Ranking (1: best model, 2 second best models, 3 worst model) 1 2 3 2
38. 4. Evaluation of each business model
Model 1:
In this model the company is government owned operated which fulfilled most of the
criteria with exception of criteria 3 that is not fulfilled, and criteria 9 that is partially
fulfilled. Because of the social role responsibility and public welfare focus, the public
organization can provide access to water and water services, including all the required
maintenance, and with a fair and an affordable price since there is no ambition to
maximize profits.
Model 02:
In this case a private company is responsible for providing the water service with the goal
to maximize profits and minimize costs. There is a risk that the private company can
performance as a natural monopoly without other competitors. Because of that, a social
role does not exist to ensure fair and affordable price for the users. It also will not invest
in infrastructures if the costs are higher than the profits. As a result, it has just fulfilled
03, 04 and 10 criteria out of 10, with one partially fulfilled and the rest remains
unsatisfactory. The problem could be solved by certain laws and regulations again
monopoly and supporting free competition. But these regulations might cause some
restrictions due to the higher marginal costs that can exceed the realized profits, leading
to financial problems or insolvency.
Model 03:
In the Model 03 represents a partnership between a public and a private stakeholder. The
private stakeholder gets the permission to operate the infrastructure for 15 years for a
nominal fee payment. A risk exits of not providing proper maintenance to the
infrastructure because the limitation period of operation (15 years). The lack of not having
a preventive maintenance program in of long term will cost problems that will appear
after the 15 years’ operation period. Therefore, model 03 is even a worse choice than
model 02.
As a result, 3 criteria out of 10 are fulfilled. To avoid this problem, it will be necessary a
rule that make mandatories preventive maintenance programs for water companies
operating water services. But this will lead to higher operation costs and less profits and
finally financial problems.
Model 04:
Model 4 is a partnership as the model 3 but under the conditions a BOT-contract (Built,
own, transfer) for a limitation of 12 years’ period. The infrastructure is owned by the local
government control conditions; this fact reduces the operational cost in comparison with
the model 3. The private partner only has to finance the new extension and improvements.
Like in model 2 it has the ambition to maximize profits. Since it is still under local
government control, the 4th model has less operational costs than model 02 and 03. In the
39. best case it can provide a better price than the 2nd and 3rd model, but remains far from
being an affordable one for the users like the model 1.
5. Best business model and reason for that
After the overall evaluation of the models and providing a consulting point of view we
figured out that the 1st model fulfilled most of the criteria and has the social focus needed
for affordability and fair price for the users.
The evaluation shows the public owned company has a social role responsibility and
public welfare focus, that a private company does not have (the goal of the private
company is to maximize profits). So in providing access to water and water services,
including all the required maintenance, and with a fair and an affordable price, the public
owned water company is the best option. It also ensures the most effective maintenance
alternative of the infrastructure and all operations which are related to it.
Water is a basic need and its continuity as a service for each user despite of fact of far
location is only possible to obtain in a public owned company.
40. References
Friedmann, M. (1997). Hidden Order.
Grigg, N. S. (2011). Water Finance;Public responsibilities and private opportunities.
OECD. (2016). OECD studies on water;Water Governance in cities. Paris.
Pariso, V. (2013). The water supply service in Europe. Giuffre Editore.
