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Public-Private Partnership in Finnish Water Services

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Public-Private Partnership in Finnish Water Services A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Pietilä, Pekka E.; Katko, Tapio S.; Hukka, Jarmo J. Article Public-Private Partnership in Finnish Water Services CESifo DICE Report Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Pietilä, Pekka E.; Katko, Tapio S.; Hukka, Jarmo J. (2007) : Public-Private Partnership in Finnish Water Services, CESifo DICE Report, ISSN 1613-6373, ifo Institut für Wirtschaftsforschung an der Universität München, München, Vol. 05, Iss. 2, pp. 27-32 This Version is available at: http://hdl.handle.net/10419/166908 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Forum PUBLIC-PRIVATE ally from private enterprises for specific service pro- duction), and 2) outsourcing (the public sector con- PARTNERSHIP IN FINNISH tracts the private sector to produce specific services). WATER SERVICES In practice this means that strictly speaking public- private partnership does not exist as it is commonly understood, but rather public-private co-operation. EKKA IETILÄ P E. P *, A special feature of Finland is that there are numer- TAPIO S. KATKO AND ous – close to half a million – holiday residences (summer cottages) in rural areas, typically by lakes, JARMO J. HUKKA** which used to be inhabited only during summer hol- idays, but are nowadays increasingly used the year n Finland, municipalities are responsible for water round. These buildings are outside population cen- Iand wastewater services. Finnish centralised water tres and thus have to rely on their own water supply and wastewater services have been run by munici- systems. palities since the first piped water supply schemes were built in the late 1800s. Finnish rural areas have In international comparison, with regard to water a long tradition of private, consumer-owned and services, Finland is blessed with abundant water managed water systems that operate on a small scale resources and a relatively low population density (16 on a non-profit basis. Municipally run water distrib- inhabitants/km2). The country’s available water ution and sewerage networks were built only in pop- resources amount to over 20,000 m3/per capita, and ulation centres while those living in rural areas had only two percent of the renewable water resources to come up with their own water supply and sewer- are in use (Pietilä 2005, 77). The water services infra- age systems. structure is relatively new and well maintained. Municipal and industrial wastewater treatment is of a In Finland, the involvement of the private sector in high European standard. However, the watercourses the production of water services takes place mainly in Finland are very sensitive; lakes are shallow and in two ways: 1) competitive tendering (the public coastal areas are fragmented into thousands of is- sector is required to invite a compulsory tender usu- lands.Thus, very effective wastewater treatment is re- quired to preserve water quality, Figure 1 and increased nitrogen removal WATER-CONSUMING AMENITIES OF FINNISH DWELLINGS FROM 1950 TO 1994 is necessary in many localities. 100 Water supply 80 The development of centralised 60 water supply, sewerage and wastewater treatment has been 40 remarkably fast in Finland. In 1950 only 25 percent of the Fin- sewer hot water 20 nish population received piped water pipe bath/shower WC sauna in dwelling central heating * Pekka E. Pietilä is a senior researcher 0 at Tampere University of Technology / 1950 1960 1970 1980 1990 1994 CADWES Research Group, Finland; ** Tapio S. Katko and Jarmo J. Hukka are adjunct professors at the same insti- Source: Katko (1997), p. 58. tute. 27 CESifo DICE Report 2/2007 Forum treatment plants. Since 1994 all the wastewater of the The largest water suppliers in Finland in 2004 city has been treated in a single treatment plant which Water supplied City Population served also purifies the wastewater from five neighbouring million m3/year municipalities, thus serving a total population of Helsinki 920,000a) 80 Espoo 220,000b) 20 750,000 people. The longest conveyance distances to Tampere 200,000 20 the treatment plant are in the region of 50 kilometres Vantaa 180,000 16 which seems to be the maximum viable distance in Turku 175,000 17 Oulu 125,000 10 Finnish circumstances (Helsinki Water 2007). a) Includes residents of neighbouring municipalities. – b) Excludes water supplied to neighbouring Water utilities and industries discharging wastewater municipalities. have to apply for an environmental permit for their Source: Pietilä (2005), 78. wastewaters.Typically, permits are granted for a five- year period, and so far the trend has been toward water into their homes – by 1980 this figure had increasingly tighter requirements for wastewater jumped to 90 percent (Figure 1). effluent quality. Except for nitrogen removal, Fin- nish wastewater discharge permits are generally In Finland, each municipality typically has its own tighter than the requirements of EU directives. water and wastewater utility. The largest municipal water utilities are shown in the Table. In addition to The largest water user in Finland is and has been the roughly 400 municipal utilities, there are more than pulp and paper industry which uses four times more 1,000 co-operatives and various forms of supramu- water than the 5.2 million residents of the country. nicipal co-operation, in particular for bulk water Consequently, the initial wastewater pollution loads supply and wastewater treatment. The largest bulk from this industry have been much larger than the pol- water supplier is the Helsinki Metropolitan Area lution from residential sources. The Water Act of 1961 Water Company which supplies water to about one gradually pressured forest industries, however, to re- million people (20 percent of the population of duce their loadings to watercourses. The development Finland) in eight municipalities. has been remarkable – since 1970 their production has more than doubled while the total loadings to receiv- Wastewater treatment ing waters have been reduced to less than one twenti- eth (Figure 3).Thus, the load per one ton produced has The first wastewater treatment plants for urban fallen to less than two percent compared to 1970. areas in Finland were built in the 1910s. Until the 1950s, only few wastewater treatment plants were in Unlike several other countries, the Finnish state does use, and pollution control was based on the natural not subsidise the construction or improvement of self-purification capacity of watersheds. The Water larger wastewater treatment plants. The responsibili- Act of 1961 enabled authorities to set legal requirements and Figure 2 time schedules for water pol- CONSTRUCTION OF URBAN WASTEWATER TREATMENT PLANTS IN FINLAND luters (Katko 1997, 59). This put DURING 1910–1994 number of wastewater treatment plants pressure on municipalities to re- 70 duce wastewater pollution loads, and the 1970s, in particular, was 60 an extremely active period in 50 wastewater treatment plant con- struction (Figure 2). 40 30 Finland has seen a gradual devel- opment towards larger units in 20 wastewater treatment, especial- 10 ly in the Helsinki metropolitan area. In the 1970s the city of Hel- 0 sinki, with a population of about 1910 1914 1918 1922 1926 1930 1934 1938 1942 1946 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 half a million, had 11 wastewater Source: Lehtonen (1994), p.64. CESifo DICE Report 2/2007 28 Forum ty for their financing lies entire- Figure 3 ly on the municipalities and PRODUCTION OF PULP AND PAPER INDUSTY AND RELATED WASTEWATER LOADS their water utilities and compa- nies. State subsidies are avail- able only for the improvement of water services in rural areas, or to support co-operation between rural municipalities. In 2004 the total state support to water and wastewater services in Finland was only EUR 10 mil- lion, a mere four percent of the total annual investments of around EUR 240 million in the early 2000s (Pietilä 2005, 81). Source: Finnish Forest Industries Federation (2007). Rural areas will see much devel- opment in wastewater treatment and on-site sanitation during the next ten years. The of good quality due to soil conditions.The flat topog- Decree on Treating Domestic Wastewater in Areas raphy was favourable for farming, but cattle required outside Sewer Networks (2003) clearly states that the large volumes of water of good enough quality.Thus traditional solution of a three chamber septic tank is people joined forces to draw water from distant no longer sufficient for individual households or sum- sources since it made sense to work together towards mer cottages, and something more efficient has to be a common goal. Co-operatives had been established introduced by 2014. There are altogether 200,000– earlier for other joint undertakings and became 250,000 rural properties which have to improve their commonplace also in water supply. wastewater treatment facilities (Pietilä 2006, 76). Some Finnish co-operatives are quite large serving In Finland stormwater collection and disposal was more than 10,000 people.
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