Water Network Management: The Creation of the French Model
To understand the specificities of the French organization, one must start with a two-player game between the State and the local authorities. Over time, this dynamic has transformed into a tripartite game encompassing the State, local authorities, and private enterprises, all working together to fulfill the demands of users.
Indeed, the Ancien Régime bequeathed two types of water. On one hand, there were the royal waters: straight lines from which water privilege holders tapped into. On the other hand, there was water management by cities, focusing on sensitive areas of public space such as barracks, hospitals, schools, and public fountains. Consequently, water supply to residential areas was neglected in France, and private companies took charge of it. However, they couldn't adopt the English model of pumps drawing water with abundant and cheap coal, as in the United Kingdom.
The involvement of three players in this model has demonstrated remarkable flexibility. It enables the terms of the contract to be modified as needed to confront emerging challenges and distribute responsibilities effectively. By doing so, it effectively mitigates the risks associated with long-term underinvestment or bankruptcy, risks that are often prevalent in single-player systems, as observed in the United States.
Grégory Quenet
Between the State and the cities: The birth of a model
The French may not realize it, but the model that has governed their water and sanitation service for over a century has inspired the world. In fact, French companies in this sector are internationally recognized, with Asian, African, Middle Eastern, and North and South American countries turning to them to manage water services. Since the early twentieth century, companies such as Compagnie Générale des Eaux (CGE, now Veolia), Lyonnaise des Eaux (now Suez), and SAUR (Société d'Aménagement Urbain et Rural) have engaged in fierce economic competition. Each of these companies has its own specific culture, but all three have contributed to the development of what is known as the French water model. This model is based on a public-private partnership (PPP)—the delegation of public service and the principle of “water pays for water,” which largely relies on subscribers to finance infrastructure rather than governments.
By developing expertise in water treatment, these companies have also enabled the sourcing of water closer to users, from surface or underground sources. The goal was to avoid laying pipes far away from homes to access better water, which initially resulted in significant losses in places like California and Spain. Thanks to this strategy, water has remained a highly localized service in France, rather than being managed by a central authority. The sector gradually established itself as an industrial activity that required substantial investments. By gradually integrating the entire value chain, from pipe manufacturing to wastewater treatment plant construction, both the Compagnie and the Lyonnaise became indispensable in the public services landscape. However, these private companies could have disappeared multiple times “at their own risks and perils,” as stated in concession contracts. Research conducted by CNRS researcher Dominique Lorrain on these companies demonstrates that the “French water model” was not conceptually designed by different stakeholders in advance. It is, in fact, the result of multiple adaptation strategies employed by various actors in response to different situations and challenges.
Challenging beginnings
Far from being a smooth journey, the history of the French water model is turbulent. When Compagnie Générale des Eaux was established in 1853, twenty-seven years before Lyonnaise des Eaux, it had to create almost everything related to water distribution as we understand it today. Even though there were modest water distribution services under consideration locally (such as the project by engineer Jégou in Nantes, later taken over by CGE in 1853) or already in existence (like the Société Générale des Eaux de Nice in Nice, then part of the Kingdom of Piedmont, acquired by CGE in 1864). During this time, the relationship between municipalities and private operators could be contentious because, according to French law, it was the municipality's responsibility to provide potable water distribution. This prerogative, reaffirmed by the municipal law of 1884 for reasons of public order and hygiene, said that the municipality decides whether to enter into a contract. Private operators faced the possibility of municipal takeover, or regie, in which the municipality would take over the direct management of water services, as early as the 1880s. This debate between regie and public-private partnership would shape the history of drinking water in France up to the present day.
Beginning in the late 1870s, disputes arose between Compagnie Générale des Eaux and certain municipalities. Such was the case in Nantes, for example, where the two co-contracting parties struggled to reach an agreement on who should finance the replacement of a deteriorating Chameroy pipeline, which had developed significant leaks. The water quality was also questioned by the municipality, which expressed its desire to repurchase the concession as early as 1895. Ultimately, Nantes repurchased its water service and transitioned to municipal management in 1900, even though the contract was supposed to run until 1914. Other cities soon followed suit: Lyon (repurchased in 1900, before the contract's original end date of 1952), Rouen (1912 instead of 1941), and Toulon (1912 instead of 1944). In the early twentieth century, water distribution became a more profitable venture, especially for larger cities with partially established networks and the means to extend potable water services to new neighborhoods.
It also became a matter of public hygiene and met the expectations of residents: local authorities wished to manage the service themselves, even though the high compensation entailed by the early repurchases of concessions represented uncertain economic interests.
© La Pompe de Cornouailles Association
British and German Water Distribution Models
In the second half of the nineteenth century, England and Germany were ahead of France in terms of domestic water distribution. The cities in both countries industrialized faster and faced significant sanitation issues that had to be addressed through water distribution and treatment. However, the national historical context in which these services emerged did not allow for the establishment of benchmark companies.
In England, the demand for water was so high that it had to be sourced from distant locations or treated on-site, resulting in substantial investments. The real cost of water increased by 50 percent during the nineteenth century, and private companies were not willing to engage in this market due to inefficient billing systems. As a result, municipal authorities took over water services, benefiting from the ability to charge for water through taxation indexed to property value. This ensured stable revenues regardless of actual water consumption. The hygiene argument also played a significant role in England, even earlier than in France. The Public Health Act of 1848 entrusted local authorities with “the responsibility for water supply and empowered them to enforce their will over local water companies.” In 1914, English municipal administrations reached their peak, followed by a strong regionalization of services, divided into ten hydrographic districts. Later on, water services were nationalized in 1973 and then privatized in 1989 under Margaret Thatcher's government. However, users began to perceive a decline in service quality, similar to the waste management sector.
In Germany, cities have always had more power and autonomy than in France. In the nineteenth century, the Prussian state reserved the option for municipalities to create municipal enterprises known as Stadtwerke. Consequently, by the early twentieth century, thirty-eight out of forty-one German cities with over 100,000 inhabitants managed their own water services. Over time, these enterprises also consolidated various public services within their operations (transportation, energy, etc.), effectively monopolizing matters related to residents' well-being, similar to what is sometimes called the “welfare state” in France. For the population, municipalities could even be seen as a safeguard against the despotic tendencies of the central state. This proved to be a successful approach, as these municipal utilities or Stadtwerke survived wars and the Third Reich and continue to exist today, particularly through the Länder. However, this system did not foster the emergence of an industrial champion capable of leading global innovation in the sector, despite Germany's success in many other industries.
© La Pompe de Cornouailles Association
Through Precedents and Legal Decisions, a More Precise and Robust Model Emerged
Before World War I, two out of three cities with over five thousand inhabitants were managed by municipal authorities for water distribution, abandoning the concession system that had previously prevailed, where the community delegated the management of its water service. While the Compagnie Générale des Eaux (CGE) had been instrumental in developing water infrastructure in major French cities, whether industrial (Lyon, Lille, Lens) or tourist destinations (Nice, Antibes, Menton), it was now under threat in many of its strongholds.
However, the Company faced challenges by diligently defending its rights when necessary. “It is a structuring actor during disputes with municipalities,” says Christelle Pezon, a French professor and drinking water expert. “It appeals to the Council of State, in order to establish legal precedents. The Company has contributed to shaping the law around this type of contract, which subsequently constrained all actors involved.” Between 1880 and 1920, CGE was involved in one-third of the decisions made by the Council of State. Alongside the evolving concession model, which struggled to align the interests of local authorities and the company, the concept of affermage contracts emerged, now called “public service delegations.” In these contracts, the private company became the operator of the facilities owned by the local community: the financing of new investments was borne by the community, while the maintenance and management of existing infrastructure were undertaken by the company. In summary, the French contractual model for water and sanitation services was built through disputes and amendments between cities and the company.
Initially, as explained by Nathalie Dufresne, a former Veolia lawyer, “The first concession contracts consisted of a maximum of fifteen pages, despite committing to long durations of forty, fifty, or sixty years. In essence, it was necessary to finance investments and agree on who pays for what. The water price was fixed, and periodic meetings were scheduled to adapt the contract, and that was it! Nowadays, we sometimes have contracts spanning two hundred pages with a thousand pages of annexes.” The evolving legal framework is based on the three principles of public service established by the courts since the late nineteenth century: continuity (ensuring permanent access to the service), equality (no distinction between users), and mutability (considering that a contract can evolve based on circumstances). It took decades to develop a solid legal framework based on these principles, which was later replicated in all European countries undertaking public-private partnerships. Developed experimentally between the two world wars, affermage became the model contract after 1945, supported by a standard specification set by the Council for Industrial and Commercial Public Services in 1951.
These lengthy legal battles allowed the Compagnie Générale des Eaux to withstand the assertiveness of municipalities and, most importantly, the inflation that emerged after World War I, as invoice prices were not indexed at the time. By shaping the affermage contract, these battles also led to the establishment of a resilient business model that did not bear the direct burden of sometimes significant investments—a “CapEx light” model, as it is known today.
The Main Types of Contracts Through History
What Is a Public Service Delegation?
Public service delegation involves a municipality, department, or region outsourcing the management of a public service, such as drinking water or waste collection, to a private company. The decision to outsource may stem from the technical complexity of the activity, the lack of material and human resources available to the local authority, or the desire to protect the authority from the financial risks associated with operating the service. However, the public entity retains decision-making power and control over the service, as the private operator is required to report on its technical and financial management. Three types of management are distinguished in public service delegation, defined in part by the degree of autonomy granted to the concessionaire operating the service. In order of increasing autonomy: concession, lease, and interested management.
Concession Contract
In this type of contract, the company must not only manage the service but also finance and carry out the necessary investments for its operation and maintenance. The delegate finances, builds, and operates the public service at their own risk. The activity is therefore entirely outsourced. In return, the company is remunerated based on the service's operating revenues. CGE’s initial contracts were concession contracts.
Lease Contract
This is an agreement between a local authority, known as the “grantor,” and a private entity, known as the “lessee.” In this contract, the grantor provides the lessee with the necessary equipment for operating the delegated service. The lessee is solely responsible for operating the service, although the contract may stipulate that certain maintenance or renovation works are the responsibility of others. In return, they are allowed to collect the service's operating revenues but are required to contribute to the public entity in exchange for its provision of the infrastructure. Lease agreements are generally shorter in duration than “concessions,” in the jurisprudential sense, because there is no need to amortize the cost of significant construction works. Lease contracts gained legal recognition in France between the 1920s and 1950s and are now the most common type of contract in the water industry.
Interested Management
This is a mixed delegation mode in which the co-contractor is responsible for operating the service but is remunerated by the local authority, which remains responsible for directing the service. This allows the local authority to retain control while delegating operational management. The co-contractor's remuneration consists of a fixed portion paid by the local authority (a “fee”) and a profit-sharing component linked to the operating results. Depending on the level of risk assumed by the concessionaire, interested management may be classified as a “public contract” or a “service concession.” The contract concluded in Paris in 1860 with Baron Haussmann was an interested management arrangement.
The Company as a Trusted Third Party of the Jacobin State
The State, in turn, asserts its own role by maintaining a balanced position between the two parties involved: municipalities and companies. It even seeks, through various means, to limit and minimize the actions of municipalities in the water distribution sector. It is not the municipality as a public entity that is attacked—public interventionism is not only accepted but advocated for. It is the local community, whose rationality is challenged and who must yield to a rationalizing and modernizing State: municipalities are not seen as progressive entities. It is in the same spirit that the State challenges their capacity to provide certain services and gradually removes them, including social assistance in 1934 and the maintenance of national roads in 1936.
In terms of water, “the State advocates for a rational management of the activity, organized [...] around three key ideas: ensuring budgetary balance in water services management, going beyond the municipal level to rationalize technical choices, and managing the resource globally.”1 Between 1935 and 1939, the State issued a series of decrees to uphold this doctrine by strengthening its control over local public service concessions.
As early as 1935, the State imposed obligations in terms of water quality. While defending the franc and strengthening its financial oversight of municipalities, the State granted itself direct control measures in addition to those held by municipalities in 1937. It required public commercial interests “to balance their revenues and expenses, meaning they must cover their costs solely through the resources generated by water sales.” Water tariffs were “subject to prefectural approval,” and it allowed “for municipalities and, especially, their concessionaires to request the Minister of the Interior to terminate or revise their agreements if the delegated water services' accounts are consistently unbalanced.”
While these provisions have also imposed constraints on companies, it is undeniable that the Jacobin State designates the specialized water management company as a trusted third party in its relationship with municipalities. It relies on their expertise and defined scope to ensure service quality and budgetary control. “Delegating to private operators within a standardized framework offers the State a means to discipline municipalities without confronting them directly.”2
Through these decisions, the central State has asserted its primacy in territorial development. Paradoxically, this aligns with the nationalization of railways and the creation of the SNCF (the French National Railway Corporation) during the heart of the 1930s. Both approaches respect each network's specificities and the models they organize: the railway's aim is to create a national network, hence the relevance of nationalization for the State; water networks operate at the local level, with no communication between catchment areas, necessitating the State's reliance on municipalities to achieve its goals and regulate them. Although these approaches seemingly adhere to different economic schools of thought, Marxist or liberal, neither will be questioned outside of political back-and-forth.
A Relationship of Trust to Achieve the Water Miracle
While local authorities were concerned about being custodians of the collective heritage represented by water infrastructure, the Compagnie Générale des Eaux managed to adapt during the interwar period through leasing contracts. While the company’s profits decreased, it simultaneously managed to limit its investments. Contracts were then made on an individual basis, intuitu personae, a Latin phrase meaning “based on the person.” It is from this relationship of trust that the parties could establish the foundations for continuing the contract.
In such cases, there was inevitably a “bonus for the outgoing” operator already involved in the game, who could recoup past expenses. The State kept an eye on the situation, transferring “the responsibility for approving concession contracts exceeding thirty years to the Council of State” and leaving “the approval of shorter-term contracts to prefects, to encourage municipalities to sign shorter contracts.” The Générale des Eaux was particularly renowned for its operational and contractual expertise, prudent management, and understanding of local elected officials' concerns.
Once the leasing system was established and everyone’s role clarified, conflicts diminished among the various actors: the private operator acted as an intermediary between the municipality and subscribers, undertaking tasks such as installing meters and bill collection, while the local community decided on necessary construction works and managed financing. In the middle, the State financed half of rural water service development during this period (the other half coming from water bills), and it knew it could rely on large private companies to operate the industrial management of the network on the ground. They were, in a way, the armed force for its vision of territorial development. That is why the State promoted affermage contracts when subsidizing municipalities that required infrastructure investments in water services. As a result, according to Christelle Pezon's analysis, “the population served by private operators doubled between 1962 and 1982, from 16.95 million inhabitants to over 33.5 million.”
In the end, this historical compromise between three actors, each concerned with preserving their prerogatives, allowed France to achieve an efficient organization of its water services. During this period, contracts remained long, and this mixed model even gave many consumers the impression that employees of major private companies were, in essence, civil servants.
To Develop the Entire Territory: Increasing Cooperation
Equipping Suburbs and Rural Areas: Growing Collaboration and Subsidies
While no longer operating in most major cities at the beginning of the twentieth century, the Compagnie Générale des Eaux chose to invest in the suburbs. It thus participated in the incredible growth of the Parisian and Lyonnaise suburbs, which continued to attract new residents to often left-leaning municipalities. These municipalities faced numerous challenges and formed alliances in the form of syndicates. The objective was to entrust their water services to a private company under the benevolent auspices of the State, which was concerned with ensuring essential water services for public hygiene. A new type of contract was implemented: the régie intéressée (interested management), initially contracted by the Syndicat des Eaux d'Île-de-France (SEDIF) and later by the Syndicat des Eaux de la Banlieue de Lyon (SIEBL). In this type of contract, small municipalities made investments but were able to share costs, define the work program, and provide service at the best price by pooling their resources.
Engineer and researcher Bernard Barraqué has highlighted the ability of companies like CGE to negotiate with such diverse stakeholders. The uniqueness of the French system lies in its network of thirty-six thousand municipalities and an equal number of mayors elected by universal suffrage, with whom one must engage. This requires true expertise, and it is no coincidence that companies like CGE, Lyonnaise, and Saur quickly diversified into transportation and urban sanitation, which are other essential regional services. During that time, the “red belt” around Paris was filled with modest houses built to accommodate the large numbers of employees and workers who were moving in. Communist mayors, as well as priest-builders driven by the social doctrine of the Roman Catholic Church, pressured the government to provide infrastructure such as roads, gas, electricity, sanitation, and water to the suburbs. With the municipal elections of 1935, which saw twenty-six communes fall under the common banner of the French Section of the Workers' International and the French Communist Party, the State was convinced to provide subsidies to contribute to the development of SEDIF municipalities.
© SEDIF Archives
After 1945, the same alliance emerged between a planning State and local communities, whose needs were soaring, both in urban areas and in the countryside. It was now unthinkable that everyone did not have access to the modern comfort of tap water, even in the most isolated villages in France, although it was clearly “financially foolish in certain rural areas,” as noted by Professor Christelle Pezon. To make such investments sustainable, it was necessary to pool resources for infrastructure development. “Rural engineers at the time developed water development plans that covered three hundred municipalities at once, for example,” explains Professor Pezon.
However, none of this would have been possible without the involvement of the Ministry of Agriculture and Fisheries, which predominantly financed the creation of water networks through the FNDAE (National Fund for the Development of Drinking Water Supply), established in 1954. Nearly half of these funds were sourced from a levy on horse racing bets, known as “PMU's share,” which remained in effect until 2003. None of this would have been possible without the CGE, which mobilized its expertise throughout the country.
Subsequently, the Compagnie Générale des Eaux managed the distribution of drinking water, often through leasing contracts, in thousands of municipalities, sometimes grouped into communities, following the example set by major suburbs before them. Today, Veolia remains one of the few services truly present in certain hamlets, small town halls, or rural communities, through a permanent presence or a mobile bus during billing periods. The establishment of the FNDAE after the war was also a matter of public health. With agricultural and industrial activities, as well as the emergence of new uses (chemical cleaning products, modern toilets, hygiene products), wastewater began to release increasing amounts of pollutants into rivers and groundwater. It was no longer possible to drink untreated water as was done in rural communities in the past.
To Protect Water Resources, the Organizing State, the Principle of “Polluter Pays,” and the CGE All Faced Criticism from Major Corporations
Pollution issues were of such significance that the Pompidou government enacted the first major water law in 1964, the result of extensive work initiated by the Water Commission established by Prime Minister Michel Debré in 1959. The new law represented an administrative revolution. In a highly centralized country where the State is strongly present and covers the territory with its network of prefectures and sub-prefectures, the law laid the “foundations for decentralized management,” as emphasized by Hervé Paillard, Director of the Process and Industrialization Department at Veolia. Six major hydrographic watersheds were established to organize a “comprehensive water management.”
Water agencies were created to oversee these six watersheds, becoming operational in 1972. And beginning in 1992, the State implemented a six-year planning tool known as SDAGE (Directives for Water Management and Planning). As early as 1990, Prime Minister Michel Rocard aimed to put water policy on the agenda, having “always shown a keen interest in public water management policies, following an inspection mission of water agencies that he coordinated while working at the Inspectorate of Finance.”3
The 1964 law also marked a revolution in terms of economic responsibility, with the first application of the “polluter pays” principle. The model was doubly incentivizing, as taxes were levied on polluting activities on one hand, while subsidies were granted for sanitation works on the other. The 1964 law also established a water police force with four types of mission: construction on watercourses, water withdrawals, sanitation, and drinking water. According to Veolia's President Antoine Frérot, “The 1964 law created an institutional framework that mandated water sanitation and provided funding to accomplish it."
"Companies in the sector realized that there were opportunities for diversification beyond drinking water. This created the second aspect of the water business, which includes wastewater treatment and sanitation.” With this impetus, France had equipped itself with thousands of wastewater treatment plants in both urban and rural areas within a few years.
The Compagnie Générale des Eaux paid a price for its active support of the adoption of this law, as it was ostracized by the French employers' organization CNPF (the National Council of French Employers), the predecessor of MEDEF (the Movement of the Enterprises of France), until 2005. “And even then, only as an observer, which lasted for another five years,” adds Frérot. This is a testament to Veolia's unique vision and status within the French business landscape, being both integrated into the market economy and a promoter of new regulations.
Ivan Chéret
The trajectory of Ivan Chéret may resemble that of many other engineers who, like him, graduated from prestigious schools in the French Republic. However, his story contains more than one unique episode. A key figure in the 1964 Water Law, this former student of Ecole Polytechnique and Ecole des Ponts et Chaussées was born in 1924 to a Russian father who had become a naturalized French citizen, passing on to him the distinct manner of rolling his R’s characteristic of those from beyond the Ural Mountains. He never lost this trait, which would have potentially marginalized him at Ecole Polytechnique if not for its liberation from the Vichy regime's xenophobic and anti-Semitic laws. Promoted to Ecole des Ponts et Chaussées in 1944, he truly joined his classmates in 1945. At that time, he already showed a penchant for nonconformity, as he was the only student to accept a scholarship to go to the United States. In an interview, he recalled, “My time in the US in 1949 was completely atypical compared to people my age. I was drawn to everything that was different. My parents were not of French origin. We lived in Marseille during the war, and an English refugee had given me lessons.” Following this internship, he traveled to Africa, joining other engineers tempted by developing countries.
Thus he became responsible for the Development Mission of the Senegal River from 1950 to 1953, then the Chief of the Hydraulic District in Bamako, and finally the Deputy Chief of the Hydraulic Service of French West Africa from 1954 to 1958.
His experience in countries facing water scarcity would later shape his vision of water management, which he would partially implement with the 1964 Water Law. This approach emphasized governance at the watershed scale, requiring stakeholders to collaborate in resolving conflicts. He explained years later, “In Senegal, I was able to witness what agriculture is like in a poor country, as well as the complexity of river basin development, not only from a technical standpoint, but especially from a human perspective. Water is used by all human activities, and favoring only one of these activities can greatly harm the others.”
In 1959, amidst the decolonization process, Cheret returned to mainland France. The homecoming proved more challenging than expected, but with a few connections maintained in Africa and “a lot of luck,” he became the General Reporter of the Water Commission of the Plan and later the Head of the Permanent Secretariat for Water Issues (SPEPE) in 1960. These bodies played a crucial role in shaping the key principles of the renowned Water Law. At the time, the stakes were high, as urgent challenges arose from rapid urbanization: ensuring access to drinking water for all, expanding sanitation networks, and combating pollution. As he recounted during a colloquium in 2011, “The 1960s was a different world. There was industrial, agricultural, and urban development. All of this required water, and everyone was taking it. Everyone needed to discharge waste, and everyone was doing so. Therefore, the law was passed in Parliament to put an end to this.”
Negotiations surrounding this law would be fierce, particularly with local elected officials and industrialists who were clearly the targets of certain proposals. Industrial business leaders argued that implementing the law would mean the death of the industry in France. Ivan Chéret quickly engaged in discussions with powerful fishermen's associations, who had significant electoral influence and were directly affected by fluctuations in water quantity and quality during the summer. Their lobbying proved invaluable in the battle against the industrialists, who were pushing for the classification of watercourses based on their quality—an approach that implied “sacrificing” some of them. Under the influence of engineers from the Mines, Bridges, and Roadways schools, and with strong support from the Compagnie Générale des Eaux, the 1964 law demonstrated wisdom by relying on financial and economic tools to preserve water resources and encouraging industrialists to treat their wastewater. On one hand, the law provided assistance for the construction of wastewater treatment plants; on the other, it established the “polluter pays” principle, whereby a fee was collected by watershed agencies from all polluting activities, which was then used to finance water and aquatic environmental protection operations in the six major watersheds identified by experts.
In 1966, just two years after the promulgation of the law, Ivan Chéret was tasked with making his idea of watershed agencies a reality, drawing inspiration from the German experience in the Ruhr region, where cooperative unions oversaw water-related developments necessary for the watershed's equilibrium.
In a collective work on the fiftieth anniversary of the law, Bernard Drobenko and Jérôme Fromageau provide a positive assessment of its effects: “This law, highly innovative for its time, enabled France to play an exemplary international role in the field of water resource management. Its influence spread worldwide and notably, in the year 2000, inspired the content of the European directive establishing a framework for community policy.”
Ivan Chéret concluded his duties at SPEPE in 1970 to become the Director of Gas, Electricity, and Coal at the Ministry of Industry until 1973. He then served as the Chairman and CEO of SITA (the International Aeronautical Telecommunications Union), specializing in waste transportation and valorization, for over ten years before returning to the water sector as the Director of Water at Lyonnaise des Eaux from 1983 to 1989—a competitor of the Compagnie Générale des Eaux, later renamed Suez. In 1990, Ivan Chéret advocated for the creation of a new organization, the future International Water Office (OiEau), of which he assumed the vice presidency. As a visionary, he wrote an article for the Revue des Deux Mondes at that time, stating, “Drought and pollution are intertwined and remain the two dominant themes in current affairs at the beginning of this decade. It is urgent to identify water resource management issues and protect them from pollution. The measures to be taken are primarily of a political nature.” While climate change was still a subject of controversy, Ivan Chéret was already alerting public opinion to the availability of water resources, particularly during peak consumption periods, and its impact on quality. He advocated for the reuse of treated wastewater and called on public authorities to make firm decisions when arbitrating between different users—all topics whose significant importance we are rediscovering today.
The French Model: Foundation for International Development
The 1980s and 1990s witnessed the maturation of the French model, which continued to adapt. In order to enhance competitive dialogue between local authorities and companies and eliminate collision risks, the State, through the Sapin 1 law of 1993, put an end to individual contracts and introduced mandatory competitive bidding procedures and limitations on contract duration for water and other sectors. Above all, France was ready to set an example.
French companies had developed unique human and technical expertise. The contractual model of delegated management had proven effective in modernizing the country, and now an institutional and financial framework was established to encourage responsible resource management. These three elements formed the foundation for what companies, recognizing it as a “development argument,” according to water policy and technical expert Jean-Luc Trancart, began to literally refer to as the “French water school.” 4
The world was changing, becoming more globalized and presenting new opportunities for environmental services development. It started with the privatization movement initiated by Margaret Thatcher in the United Kingdom in 1983, followed by economic liberalization in Latin America, and continued with development support projects in African countries, the fall of the Berlin Wall in 1989, and the economic boom in China.
French companies were ready to seize their chance. American companies, which attempted to develop on a different model, failed. National contexts observed in other European countries also did not allow for the emergence of major champions. In France, “we were ready to compete when the market began to exist, and we were the only ones,” summarized Antoine Frérot.
© Veolia Archives
To be sure, the Compagnie Générale des Eaux was not the first to venture into international competition. The company's management teams still remembered its initial failed attempts and believed that local and national dimensions were more important, preventing any long-term hopes of internationalization. It is true that the previous developments abroad, starting from 1879, initially generated much optimism—symbolized by the inauguration of the water service in Venice, which, after an extraordinary construction project involving the installation of underwater pipelines in the lagoon and the deployment of a distribution network between the islands of the Serenissima, became a popular celebration in St. Mark's Square. However, in practice, these developments proved risky. The company faced geopolitical uncertainties and, being perceived as a foreign entity, experienced expropriation and confiscation of revenues, resulting in significant losses overseas, particularly after World War I.
Therefore, it was Lyonnaise des Eaux that first obtained contracts in Great Britain, Buenos Aires, Manila, Jakarta, and other places. Ten years later, however, this internationalization effort had resulted in numerous failures, underscoring the importance of precise governance modes.
“Our luck was that we missed being the first ones to go,” acknowledged Antoine Frérot. Armed with this knowledge, the company embarked on its own mission. “To conquer international markets, we do two things,” said Frérot. “We send French people, often engineers, on missions to the country, and we theorize the French model, adapting it to local specificities.” It wasn't always obvious: “When I was first sent abroad, I wondered if it was a punishment,” recalled Philippe Guitard, who has since become the director of a large Central and Eastern European zone. But today, “the fact that we invented this model still resonates strongly in the United States,” says Frédéric Van Heems, CEO of the North American zone for Veolia.
In Central and Eastern Europe, as well as Africa, the World Bank and the EBRD (European Bank for Reconstruction and Development) “adopted the water model and promoted it,” Frérot recalled. Just as the French State did in the 1930s, these institutions saw French companies as trusted partners for mobilizing technical expertise and making the best use of public financing dedicated to development.
The European Union set environmental conditions for the integration of Eastern European countries and required them to provide a worthy, reliable public water service capable of treating pollution. These constraints led to calls for tenders for water and sanitation service management in Central European cities like Prague, Budapest, Bucharest, Sofia, Warsaw, and Yerevan. “We were present in Prague in 2003, before the integration of the Czech Republic into the European Union in 2004,” said Frérot.
© Veolia Media Library - Stéphane Lavoué
The term “French water school” is particularly fitting within the European Union. The EU's Water Framework Directive in 2000 faithfully captured the principles of the 1964 law and further deepened them to improve the quality of European watercourses, thereby increasing the level of environmental standards for all European countries and the market potential for companies in the sector.
China, while experiencing rapid development, also opened its doors to French companies and chose delegated management for its cities and industries. Its desire to collaborate with national partners aligned well with the convictions formed within the company.
This dynamic, after the pioneering phase, accelerated in the 2000s under the leadership of Antoine Frérot, who made the decision to integrate countries geographically rather than organizing the group, now renamed Veolia, based on its business lines. This approach prioritized local presence. In the water sector alone, the share of delegated public service contracts increased from 2 percent in 2000 to 10 percent in the early 2020s. By integrating Suez's international activities, the revenue generated by the group’s international operations reached nearly 80 percent by 2023.
The French water management model was reinforced in theoretical terms in 2009 by Elinor Ostrom, the first female Nobel laureate in economics. According to Ostrom, in the governance of “commons,” a choice between the market and state regulation was not sufficient. Given the multiple challenges around them, she emphasized the need to seek a third way involving all stakeholders in a polycentric system better suited to the circumstances.
Looking to the future, France may benefit from enriching its model with those developed elsewhere. With the EU Water Directive, “new challenges have emerged,” explains Jean-Luc Trancart. These include the biodiversity of aquatic environments, river rehabilitation, and heritage protection of water resources. The question is: which institutional, economic, and industrial actors should be mobilized to consider these silent and insolvent users, including aquatic environments and future generations? In the Netherlands, for example, sanitation and water maintenance are funded through property taxes, while in England, 75 percent of water bills are based on the rental value of the property.5 Veolia, now experiencing these different national specificities, will continue to contribute to the discussion on shaping these new models.
From the First Paid Leave to the Care Program: A Social Tradition at the Heart of the Model
Paid leave is generally attributed to the Popular Front, but “there were paid leaves before 1936 in France,” says historian Pascal Ory. The first paid leave was initially granted to civil servants, who have been entitled to fifteen days of paid leave since 1853—coincidentally, the same year the CGE (General Confederation of Employees) was founded—following another imperial decree by Napoleon III. “The civil service was the first, from the nineteenth century, and it would be cherished by successive governments, including the authoritarian governments of the Second Empire. It was necessary to ensure the loyalty of civil servants by guaranteeing them conditions that were far superior to those in the private sector. The novelty of 1936 was the generalization.”
By extension, some private sectors have also benefited from paid leave since the early twentieth century, such as employees of the Paris metro, electricity companies, gas factories, and book workers, who gained the same right to rest and leisure. The Compagnie Générale des Eaux (CGE) was part of this movement. Long before the Popular Front of 1936, the company's staff regulations provided for paid leave and even retirement for its employees. Despite facing competition from public management from the beginning, CGE demonstrated that “industrial efficiency is compatible with a political project when it comes to water and sanitation public services.”
Continuously driven by this conviction, CGE (later Veolia) developed a social policy that paid close attention to the employees of the group, their training, professional and social mobility, work engagement, and their rights.
Given that its activities require a significant amount of labor and that operational training for its professions is not always available on the market, Veolia's proactive training policy is one of its distinguishing features. In France, this investment was demonstrated as early as 1994 with the establishment of Veolia campuses in partnership with local authorities and employment and training actors. “At the time, it was a true originality,” says Jean-Marie Lambert, former Deputy General Manager of Veolia in charge of human resources. “It allowed the creation of new professions in transportation and cleanliness, initially, and then in water and energy.
During those years, even the group's seminars with executives took place on these campuses in Jouy-le-Moutier, Tarbes, or Lyon… Executives were seated alongside apprentices, for example. Symbolically, it was powerful.” Today, the campuses have disappeared, but their legacy persists. “I would say that we inherited three axes from these campuses,” Lambert concludes. “The primacy of apprenticeships and learning in training, professional progression, and the unity of the group, because at the time there were many different divisions. Since the 2000s, there has been one Veolia per country.” More generally, attention is always paid to meeting the needs of each region. Moreover, while studies demonstrate that the highly qualified are often given preferential access to training, Veolia strives to enable those with fewer qualifications to train and progress in their professions. Over 80 percent of training efforts are dedicated to operators and technicians, and certification courses have been created to promote upward mobility within the company. “Ecological transformation, which is also linked to digital transformation, will impact employment, particularly for new entrants to the job market and low-skilled occupations,” says Olivier Carlat, Director of Social Development at Veolia. He believes it is important to make ecological transformation “an opportunity for social transformation.”
Learning and apprenticeship programs have also been developed since the early 2010s, under the impetus of Antoine Frérot, to promote the future employment of all individuals. Furthermore, with an even broader ambition, the School of Ecological Transformation has been under construction since 2022. “We have a responsibility to train and raise awareness not only among our employees but also, as a leader, among all our stakeholders about ecological transformation,” says Laurent Obadia, Deputy General Manager in charge of stakeholders, communication, and the Africa Middle East region. “That's why we will be offering them numerous training courses, open to everyone: executives, employees, professionals in career transition, students in initial training, right at the heart of each region.” Sometimes, it is the teams abroad that initiate fruitful social dialogue. “There are dynamic countries in terms of human resources,” notes Lambert. “In South America or Morocco, for example, they are responsive to professional advancement and anything related to society. It encouraged us to compile a collection of social initiatives, with a jury that awarded prizes to the most deserving. It highlighted the integration of people in difficulty, actions of solidarity, and valued employees.”
Veolia also embraces new managerial approaches to further empower each employee. “We provide a proximity service, twenty-four seven, and for our clients, Veolia is primarily the local manager,” explains Frédéric van Heems, CEO of North America. “We must constantly seek to ensure that, with their teams, they feel supported and responsible: that's how they will give their best.”
Estelle Brachlianoff, CEO of Veolia, also insists that Veolia's social model does not stop at the borders of France but extends to all employees in countries where the company operates, even where the law does not require it.
Protections include parental leave with a minimum of ten weeks, health coverage, death coverage with a provident system guaranteeing a minimum of six months of family benefits, support for “caregiver” employees taking care of seriously ill loved ones, and voluntary work allowing each employee to devote one day per year to an association during working hours. Formalized in the Care program, these benefits accompany employees in key moments of their lives and are intended to apply everywhere and to everyone. “In addition to fighting against geographical or status inequalities in terms of social benefits, this program promotes diversity, which is essential for the group's development,” says Isabelle Calvez, Director of Human Resources at Veolia. “It also enhances its attractiveness for those who wish to find meaning in their professional activities while benefiting from a social model that fosters their fulfillment.”
Opening the Chinese Market: Public-Private Partnership (PPP) Opportunities for Foreign Companies
In the early 2000s, China emerged as the fourth largest economic power in terms of trade, continuing its strong economic growth that began twenty years earlier. While the Chinese government, keen on controlling its transition to a market economy, implemented a policy of gradual opening in the early 1980s, the opening intensified in the early 2000s with the “open door” policy, inviting foreign companies to establish themselves in the country.
It is in this context that Veolia signed a fifty-year contract in 2002 with the city of Shanghai to operate the water supply in the Pudong business district. It became the first foreign company authorized to provide water supply services in the country through a public-private partnership (PPP).
Its mission was to ensure water security for the Pudong region and major events held in Shanghai, such as the 2010 World Expo. Over the past twenty years, the service area has significantly expanded, while the length of the network has more than doubled.
This contract was just the beginning of a long history of public-private partnerships between the French company and China, as Veolia won two more public service delegation contracts a little over a year later: one for a fifty-year period with the city of Shenzhen for the production and distribution of drinking water, and another for a twenty-year operation of the Lugouqiao wastewater treatment plant located in the western part of the Beijing metropolitan area—with a focus on the 2008 Olympic Games. Building on the success of the Pudong project, Veolia has since ventured into other water concessions in Changzhou, Kunming, Tianjin, and Haikou.
The Waterworks Amendment Act in Japan: The Beginning of a Long History between Japanese Local Authorities and Private Companies
In 2002, the Waterworks Amendment Act was passed in Japan. Japanese local authorities were now able to delegate the management of their public water services to private companies. Veolia, which had anticipated this law and prepared for it for several months, had established its presence in the archipelago a little earlier.
While local authorities were organizing the implementation of public service delegations, Veolia won the contract in 2006 for the operation of the Hiroshima wastewater treatment plant, one of the largest projects ever delegated by a Japanese municipality under an operating and maintenance contract.
In 2012, the company also won the contract for the operation and maintenance, for a period of five years, of all the drinking water plants serving the city of Matsuyama, located in the south of the archipelago on the island of Shikoku. Since then, in addition to being the only non-Japanese group operating in Japan's wastewater market, Veolia is now also the sole foreign participant in the drinking water market.
Four years later, Veolia expanded its activities in the energy sector with the operation of two biomass power plants before becoming involved in waste management, thus supporting the development of a circular economy and decarbonization in Japan.
- PEZON Christelle. Le Service d’eau potable en France de 1850 à 1995, p.18. Paris : CNAM, CEREM, 2000. ↩︎
- Ibid. p.121 ↩︎
- TRUCHOT Claude, “La loi sur l’eau du 3 janvier 1992 à 20 ans”, Pour mémoire n°11, Revue du ministère de l’Ecologie, du Développement durable et de l’Energie, p11, été 2012 ↩︎
- TRANCART Jean-Luc, professor of water policies and techniques at Ecole Ponts et Chaussées. “L’avenir de l’École Française de l’Eau”. ↩︎
- Ibid. ↩︎