The impediment to consolidation is frequently rigidity of thought of the water utility owners, their executives and municipal managers. Owners are not yet ready to consolidate their holdings into larger, more economically viable organizations. Managers, both municipal and private, are not yet willing to face the loss of power which they perceive will result from consolidation. When the purchase price is high enough or the operating costs of small systems intolerable, owners and managers will promptly seize the economies of scale. With America's distribution systems built and water universally available, the time has come to focus on the most effective way to improve the infrastructure and to streamline operations.
Competition is usually the most effective way to improve efficiency.
The issue is, what is the best way to introduce competition into our water systems, particularly the municipals. Operating contracts are far more likely to succeed than the sale of assets because the US tax laws convey many structural advantages to municipal ownership. On the other hand, competitive bidding to design, install and operate America's water and waste facilities is eminently possible. The process has been going on for years, and has recently received a boost from Mayors such as Giuliani of New York and Goldsmith of Indianapolis. By 1998 industry sources estimate that there will be over 800 outsourcing contracts for water and waste water.