D. Areas of Future Work

126. In some cases, more work is needed to properly design and implement sound policies to respond to the challenges and opportunities above and provide sustainable services for all. This first State of the Sector study consolidates a vast amount of information from which early trends can already be discerned, but it has also revealed areas in which more work is needed in order to be able to draw clear conclusions and inform public policies responding to some of the challenges identified above.

  • Population without piped or public water supply. A significant number of people do not benefit from piped or public water services in the region, often because they lie outside of the services areas of utility companies. In the absence of better information on whom they receive service from, at what cost, and with what quality, and what would be the welfare and economic impact of providing them with higher levels of service, it is challenging to determine how governments can ensure that their entire population benefits from sustainable services. More work should also be done to understand what least-cost or cost-effective service provision technologies (see box in Chapter IV), models, or support mechanisms could be implemented to support those populations without necessarily overburdening existing utility companies by making them responsible for those.
  • Drivers of utility performance. Improving utility performance is key to the sustainability of services provided to three-quarters of the population in the Danube region. Yet, little is understood about why some utilities thrive and others do not. Many countries are currently collecting some type of data on utility performance, and this report has presented some early analysis of utility performance drivers. However, the availability of more systematic data for longer time series should in the long run help decision makers better understand the trends and drivers of utility performance in their respective countries and draw informed policy conclusions.
  • Long-term affordability and subsidies. Most countries are not yet facing significant tariff affordability problems. There are, however, some exceptions, and many countries expect to see continued increases in tariffs beyond inflation rates. Since few countries have set up targeted subsidy schemes to allow the cost recovery principle to be implemented without creating social problems, the proper design and implementation of such subsidy scheme should be further explored.
  • Wastewater management. For most of the countries in the Danube watershed, managing wastewater and sludge remains an important challenge in the context of their EU accession process. The Urban Waste Water Treatment Directive mandates significantly higher levels of collection and treatment than currently available, and the new infrastructure that is being built or needs to be built creates financial and technical strains for utility providers. Operating costs and difficulties mean a number of plants are not functioning as intended, and alternative service delivery models, involving innovative financing models and institutional arrangements, should be developed.

127. Most of these areas should be addressed at the national level in the countries where the corresponding challenges are most pressing, but further work at the regional level would also help document and inform policy work more broadly. Academic institutions, think tanks, and development partners will all play a role in ensuring that those knowledge gaps are addressed. In addition, the authors hope that the Danube Water Program will be able to support work to address some of the above points in the coming years, together with interested governments and stakeholders.

128. This report has presented the state of the sector and its main challenges and opportunities, but it does not provide policy recommendations. If policy makers and utility managers take only one thing away from the report, it should be the importance for each government and each management to analyze their current challenges based on solid information, learn from others’ successes and mistakes, and develop a way forward that will reflect their local realities and regional and international experience. Many of the challenges and opportunities highlighted above are current areas of work of the Danube Water Program, and the program will seek to work alongside its partners to continue filling the gaps revealed by the analysis. It has been an endeavor of the Danube Water Program to help inform such processes by documenting experiences throughout the region and fostering a dialogue across institutional and political boundaries. The authors hope this report will contribute toward the realization of smart policies, strong utilities, and sustainable services for all.