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Financing the Evolution of London’s Water Services: 1582 to 1904


  • Dan CARTER


This paper examines the evolution of water supply as a private, for-profit business from its origins in sixteenth century London until its transfer to a public monopoly at the start of the twentieth century. From 1582 onwards, 29 private water companies operated at different times in the area which became Greater London. By 1850, these had consolidated into eight local monopolies operating within mutually-agreed boundaries. The survival of private services depended on a mix of economic, institutional and political factors. Financial sustainability was achieved through early start-up investment subsidies and a pricing policy that kept the basic charge for a household connection constant in nominal terms for two and a half centuries. As quality regulation was introduced after 1852, services were transformed from low-pressure, intermittent and untreated supply, to a treated, continuous, high-pressure service universally available and affordable to all. Over the long run, users paid for services, with wealthier households providing a cross-subsidy to poorer ones through time. The policy implication is that early public sector financial support in the form of grants, soft loans or patient equity may be necessary to launch private sector solutions for water services, and that quality and price regulation is needed to drive quality improvements, achieve universal coverage and cap excess profits.

Suggested Citation

  • Hugh GOLDSMITH & Dan CARTER, 2015. "Financing the Evolution of London’s Water Services: 1582 to 1904," Departmental Working Papers 2015-02, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2015-02

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    References listed on IDEAS

    1. Hugh Goldsmith, 2014. "The Long-Run Evolution of Infrastructure Services," CESifo Working Paper Series 5073, CESifo.
    2. Antonio Estache & Marianne Fay, 2009. "Current Debates on Infrastructure Policy," World Bank Publications, The World Bank, number 27762, July.
    3. Philippe Marin, 2009. "Public-Private Partnerships for Urban Water Utilities : A Review of Experiences in Developing Countries," World Bank Publications, The World Bank, number 2703, July.
    4. J. A. Hassan, 1985. "The Growth and Impact of the British Water Industry in the Nineteenth Century," Economic History Review, Economic History Society, vol. 38(4), pages 531-547, November.
    5. Matar Fall & Philippe Marin & Alain Locussol & Richard Verspyck, . "Public-Private Partnerships to Reform Urban Water Utilities in Western and Central Africa," World Bank Other Operational Studies, The World Bank, number 11723, September.
    6. R. Maria Saleth & Ariel Dinar, 2004. "The Institutional Economics of Water : A Cross-Country Analysis of Institutions and Performance," World Bank Publications, The World Bank, number 14884, July.
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    Cited by:

    1. Hugh Goldsmith, 2014. "The Long-Run Evolution of Infrastructure Services," CESifo Working Paper Series 5073, CESifo.

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    More about this item


    History of water supply; Evolutionary economics; Utility finance; Public service regulation;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • N83 - Economic History - - Micro-Business History - - - Europe: Pre-1913
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General


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