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Water Industry and Externalities - SW Water criticised for dismal pollution record

Geoff Riley

22nd February 2022

This is a fairly damning report in the FT on the privatised UK water industry in general and South West Water in particular.

Almost all the water companies in England and Wales have cut their capital spending in real terms since they were privatised 31 years ago.

Total capital investment across England’s water and sewage companies has fallen by 16 per cent, and wastewater capital investment by 19 per cent in real terms since privatisation. Yet dividends paid to shareholders have grown.

Increasingly frequent spillages of raw sewage into rivers that flow onto coastal waters are obvious examples of negative externalities from production that create significant social costs.

According to the FT article, " Surfers frequently become sick from exposure to sewage effluent, he said, while a study by Exeter university found that they were three times more likely to have antibiotic resistant e-coli in their gut than other people."

Read the article here

Should the UK water industry be fully nationalised? This short revision video looks at some of the possible micro and macro effects of a transfer of ownership. Synoptic questions require you too apply your knowledge and understanding to make connections across both micro and macro themes of the specification.

Nationalisation: UK Water Industry I A Level and IB Economics

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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