# Operation of Water Supply Systems in the Czech Republic--Risk Analysis
## 1 Introduction
### Models of Operating Water Supply Systems in the Czech Republic  
According to [PERSON] and [PERSON], the basic models of ownership and operation can be divided into two groups--mixed ownership and separate ownership models [6]. EurEau states that delegated private management (referred to as the compartmentalized operating model, belonging to the separate ownership models group), in which a responsible public entity entrusts a private company to operate the water services based on a rental, lease or a concession agreement, is prevailing in the Czech Republic (59% of the market) [1]. Even the methodology of the State Environmental Fund (SEF) lists this model of operation as the most common model in the Czech Republic [7]. The principle of this model stems from the participation of two entities, where one entity is public and owns the infrastructure and the other entity is an operator and is private. The group of mixed ownership operating models comprises the ownership operating model, the independent model, and the mixed operating model. The ownership operating model, in which the operator is established and 100% owned by a public owner(s) of the operated infrastructure, is the least frequently used operating model in the Czech Republic. Unlike the compartmentalized operating model, a municipality owns and controls the operating company which may be either purpose-built commercial companies or technical services of a city. An independent model, where a municipality operates the infrastructure itself, on its own behalf and under its own responsibility, and which is predominantly used by smaller municipalities, is another possibility [7]. Should the municipality itself be the owner of the water infrastructure, it is subject to the rights and obligations determined in Sections 7 and 8 of Act 274/2001 Coll. (Water Supply and Sewerage Act) [5]. The basic obligation under the Act is to \"ensure smooth and safe operation of water supply and Sewerage systems, to establish financial reserves for their renewal and to document their use for these purposes\". Some specialized activities can be outsourced by municipalities under a service agreement. However, due to the very extensive and complex legislation in this area and the financial constraints, municipalities often conclude operating agreements with private operators to whom they transfer part of their responsibilities and risks. Another model used quite often in practice is the so-called mixed operating model, where the entity is both the owner and the operator (the owner and the operator of the infrastructure are the same entity, different from the municipality--for example, municipalities invest their assets in a company which then becomes both the owner of the infrastructure and the operator) [7]. An overview of the possible operating models in the Czech Republic is depicted in Table 1.  
A significant proportion of the total number of operators (more than 7000 in the Czech Republic) is represented by small municipalities supplying water to less than 1000 inhabitants. However, the 50 largest operators supply around 90% of the citizens with drinking water. Among the top 50 operators according to the amount of invoiced drinking water, the compartmentalized operating model is utilized by 68% of operators and the mixed operating model by 26% of operators [8]. The IFE matrix is used to evaluate the strengths and weaknesses of the most frequently used models of operating water supply \begin{table}
\begin{tabular}{l l l} \hline \hline  & & Mixed operating model \\ \cline{3-3}
**Mixed ownership model** & owner = operator & Independent operating model \\ \cline{3-3}  & & Ownership operating model \\ \hline \hline
**Separate ownership model** & owner \(\
eq\) operator & Compartmentalized model of operation (delegated private management) \\ \hline \hline \end{tabular}
\end{table} 
Table 1: An overview of the possible operating models in the Czech Republic. systems in the Czech Republic.