COMPORATIVE STUDY OF WATER-SUPPLY MODELS IN UKRAINE AND SOME G7 COUNTRIES

Keywords: COFOG 06.3, Water supply, public expenditures, OpenBudget, G7, Ukraine, tariff policy, fiscal efficiency

Abstract

This article benchmarks general government spending on the drinking water supply sector in Ukraine against five G7 countries: France, Germany, Italy, Japan, and the United Kingdom for fiscal year 2023. Consolidated G7 figures are drawn from OECD SNA Table 11 (COFOG function 06.3 “Water supply”). For Ukraine, detailed programme data from the OpenBudget portal are employed: all transactions under code 6013 are aggregated and then apportioned between water supply and sewerage by a 52 % / 48 % coefficient empirically derived from the 2023 Monitoring Report of the national regulator NEURC, which summarizes operating and capital costs of the ten largest utilities and hence reflects nationwide cost distribution. Currency conversion is carried out at the average interbank exchange rate for 2023. Results show that Ukraine allocates €0.28 billion to drinking water supply - ten and a half times less than France but this outlay constitutes 0.17 % of Ukraine’s GDP, more than double the G7 average share of 0.05 %. In per capita terms the Ukrainian level equals 7.5 euro, whereas the average G7 mean is roughly 21 euro. Such a configuration evidences a “fiscal trap of under investment”: the budget shoulders the heaviest relative burden while providing the lowest individual funding, a combination that perpetuates ageing infrastructure and high leakage rates. Cluster analysis indicates that successful G7 models exhibit full operating cost recovery through tariffs and channel public transfers toward innovation, environmental compliance, or targeted social vouchers, thereby leaving fiscal space for broader investment programmes. The paper recommends a three track reform agenda for Ukraine: first, a phased transfer of operating and energy costs into the tariff structure paired with means tested subsidies for vulnerable households; second, accelerated mobilization of extra budgetary finance - green municipal bonds, climate fund grants, and concession contracts to fund network modernization; third, ring fencing central government allocations for large scale upgrades of purification plants, metering, and digital leak detection. These steps are expected to align Ukrainian practice with OECD benchmarks, reduce the GDP share of budget spending to 0.07 %, and raise per capita funding toward the lower G7 range within a medium term horizon. The study thereby contributes fresh evidence to the discourse on fiscal sustainability of water utilities in transition economies and offers a replicable methodology for harmonizing national budget data with international COFOG classifications.

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Published
2025-10-31
How to Cite
Pedko, A., & Yemelianov, O. (2025). COMPORATIVE STUDY OF WATER-SUPPLY MODELS IN UKRAINE AND SOME G7 COUNTRIES. Entrepreneurship and Innovation, (37), 104-109. https://doi.org/10.32782/2415-3583/37.16
Section
Business and Trade