Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
Understanding and Managing Urban Water in Transition Read chapter Read first chapter

2015 | OriginalPaper | Chapter

21. Public–Private Partnerships and Their Ownership in the Urban Water Sector

Author : Arnaud Reynaud

Published in: Understanding and Managing Urban Water in Transition

Publisher: Springer Netherlands

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

This chapter explores the experience of public–private partnerships (PPPs) in the provision of urban water and sanitation services. We show that there exists a wide range of PPPs available to the water industry. Across the public and the private parties, these PPPs typically differ in their allocation of decision prerogatives, risks, and revenues. The main question we address is the relationship between the ownership of the PPP and the performance of water services in terms of their technical and cost efficiency, water price, and access to water and sanitation services.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 390 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Maschinenbau + Werkstoffe




 

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
previous chapter Governance and Regulation of the Urban Water Sector: Quoi de Neuf?
next chapter Issues of Governance, Policy, and Law in Managing Urban–Rural and Groundwater–Surface Water Connections
Footnotes
1
Some authors have adopted a more restrictive definition for PPPs. Maskin and Tirole (2008) define a PPP as a situation in which the public authority typically engages its partner “both to develop the project and to operate and service it”.
 
2
In the light of their review of the literature, González-Gómez and García-Rubio (2008) conclude that although there are important economies of scale in the urban water sector, they are however not unlimited. Saal et al. (2007) conclude for instance that the excessive size of the water service companies created in England and Wales after industry reforms in 1989 has had a negative effect on the growth of productivity over the subsequent years.
 
3
For instance, in the UK case Hunt and Lynk (1995) report cost efficiency gains for utilities jointly operating water distribution and sewerage services.
 
4
See for instance Averch and Johnson (1962) for some perverse cost-minimising effects of rate-of-return regulations.
 
5
The capital-to-revenue ratio is between 10 and 12. The water industry is 3–4 times more capital intensive than the electric industry and 5–6 times more capital intensive than the railroad industry (Jordan 1998).
 
6
There is substantial evidence that politicians’ project choices are influenced significantly by the desire to please constituencies and by budgetary constraints (Levin and Tadelis 2010).
 
7
Klein (1996a, b) reviews 33 infrastructure projects of the World Bank. In these projects transaction costs represent on average 3–5 % of the total project cost, but they can reach up to 12 % for some projects.
 
8
The stochastic cost frontier approach is attractive since it allows one to distinguish the impact on the firm’s output of variation in technical efficiency from external stochastic error.
 
9
For Chile, Bitran and Valenzuela (2003) report for instance that water and sewerage rates increased by 40 % for privatised utilities compared to 20 % for non-privatised ones.
 
10
This is for instance the case in France.
 
Literature
Andrés, L., Guasch, J. L., Haven, T., & Foster, V. (2008). The impact of private sector participation in infrastructure: Lights, shadows and the road ahead (Latin American Development Forum Series). Washington, DC: World Bank.CrossRef
Aubert, C., & Reynaud, A. (2005). The impact of regulation on cost efficiency: An empirical analysis of Wisconsin water utilities. Journal of Productivity Analysis, 23, 383–409.CrossRef
Averch, H., & Johnson, L. L. (1962). Behavior of the firm under regulatory constraint. The American Economic Review, 52(5), 1052–1069.
Barrera-Osorio, F., Olivera, M., & Ospino, C. (2009). Does society win or lose as a result of privatisation? The case of water sector privatisation in Colombia. Economica, 76(304), 649–674.CrossRef
Bel, G., & Warner, M. (2008). Does privatisation of solid waste and water services reduce costs? A review of empirical studies. Resources Conservation and Recycling, 52(12), 1337–1348.CrossRef
Bel, G., & Warner, M. (2010). Partial privatisation in local services delivery: An empirical analysis on the choice of mixed firms. Local Government Studies, 36(1), 129–149.CrossRef
Bhattacharyya, A., Parker, E., & Raffiee, K. (1994). An examination of the effect of ownership on the relative efficiency of public and private water utilities. Land Economics, 70(2), 197–209.CrossRef
Bhattacharyya, A., Harris, T. R., Narayanan, R., & Raffiee, K. (1995). Specification and estimation of the effects of ownership on the economic efficiency of the water utilities. Regional Science and Urban Economics, 25, 759–784.CrossRef
Bitran, G. A, & Valenzuela, E. O. (2003). Water services in Chile: Comparing private and public performance. Public policy for the private sector 255. Washington, DC.: World Bank.
Carpentier, A., Nauges, C., Reynaud, A., & Thomas, A. (2006). Effets de la délégation sur le prix de l’eau potable. Une analyse à partir des résultats de la littérature sur les effets de traitement. Economie Prévision, 174(3), 1–19.CrossRef
Chong, E., Huet, F., Saussier, S., & Steiner, F. (2006). Public–private partnerships and prices: Evidence from water distribution in France. Review of Industrial Organization, 29(1/2), 149–169.CrossRef
Clarke, G. R. G., Kosec, K., & Wallsten, S. (2009). Has private participation in water and sewerage improved coverage? Journal of International Development, 21(3), 327–361.CrossRef
Da Silva e Souza, G., De Faria, R. C., & Moreira, T. B. S. (2007). Estimating the relative efficiency of Brazilian publicly and privately owned water utilities: A stochastic cost frontier approach. Journal of the American Water Resources Association, 43, 1237–1244.CrossRef
Duroy, S. (1996). La distribution d’eau potable en France, contribution à l'étude d’un service public local. Paris: Librairie générale de droit et de jurisprudence.
Estache, A., & Kouassi, E. (2002). Sector organization, governance, and the inefficiency of African water utilities. Policy research working paper 2890. Washington, DC: World Bank.
Estache, A., & Rossi, M. (2002). How different is the efficiency of public and private water companies in Asia? World Bank Economic Review, 16(1), 139–148.CrossRef
Falch, M., & Henten, A. (2008). Investment dimensions in a universal service perspective: Next generation networks, alternative funding mechanisms and public–private partnerships. Info, 10(5/6), 33–45.CrossRef
Feigenbaum, S., & Teeples, R. (1983). Public versus private water delivery: A hedonic cost approach. The Review of Economics and Statistics, 65, 672–678.CrossRef
Gassner, K., Popov, A., & Pushak, N. (2008). Does private sector participation improve performance in electricity and water distribution? An empirical assessment in developing and transition countries (PPIAF trends and policies series). Washington, DC: PPIAF.CrossRef
Gomez-Lobo, A., & Melendez, M. (2007). Social policies and private sector participation in water supply: The case of Colombia. In N. Prasad (Ed.), Social policies and private sector participation in water supply: Beyond regulation. Houndmills: Palgrave Macmillan.
González-Gómez, F., & García-Rubio, M. A. (2008). Efficiency in the management of urban water services. What have we learned after four decades of research? Revista de Economía Pública, 185(2), 39–67.
Guasch, J. L., Laffont, J. J., & Straub, S. (2008). Renegotiation of concession contracts in Latin America: Evidence from the water and transport sectors. International Journal of Industrial Organization (special issue on PPPs), 26, 421–442.CrossRef
Hunt, L. C., & Lynk, E. L. (1995). Privatisation and efficiency in the UK water industry: An empirical analysis. Oxford Bulletin of Economics and Statistics, 57(3), 371–388.CrossRef
Jordan, J. (1998). An introduction to water: Economics concepts, water supply and water use. In Georgia water series issue 1. Athens: University of Georgia.
Kirkpatrick, C., Parker, D., & Zhang, Y. F. (2006). An empirical analysis of state and private sector provision of water services in Africa. World Bank Economic Review, 20(1), 143–163.CrossRef
Klein, M. (1996a). Competition in network industry. Policy research working paper 1591. Washington, DC: World Bank.
Klein, M. (1996b). Economic regulation of water companies. Policy research working paper 1649. Washington, DC: World Bank.
Koppenjan, J. F. M., & Enserink, B. (2009). Public–private partnerships in urban infrastructures: Reconciling private sector participation and sustainability. Public Administration Review, 69(2), 284–296.CrossRef
Levin, J., & Tadelis, S. (2010). Contracting for government services: Theory and evidence from U.S. cities. The Journal of Industrial Economics, 58(3), 507–541.CrossRef
Lynk, E. (1993). Privatisation, joint production and the comparative efficiencies of private and public ownership: The UK water industry case. Fiscal Studies, 14, 98–116.CrossRef
Marin, P. (2009). Public–private partnerships for urban water utilities: A review of experiences in developing countries (Trends and policy options series, no. 8). Washington, DC: PPIAF.CrossRef
Martinez Espiñeira, R., García Valiñas, M. A., & González Gómez, F. (2009). Does private management of water supply services really increase prices? An empirical analysis in Spain. Urban Studies, 46(4), 923–945.CrossRef
Maskin, E., & Tirole, J. (2008). Public–private partnerships and government spending limits. International Journal of Industrial Organization, 26(2), 412–420.CrossRef
Munisamy, S. (2009). Efficiency and ownership in water supply: Evidence from Malaysia. International Review of Business Research Papers, 5(6), 148–260.
Pérard, E. (2009). Water supply: Public or private? An approach based on cost of funds, transaction costs, efficiency and political costs. Policy and Society, 27, 193–219.CrossRef
Perold, A. (2004). The capital asset pricing model. The Journal of Economic Perspectives, 18(3), 3–24.CrossRef
Picazo-Tadeo, A. J., Sáez-Fernández, F. J., & González-Gómez, F. (2007). The role of environmental factors in water utilities’ technical efficiency Empirical evidence from Spanish companies. The Journal of Applied Economics. doi:10.​1080/​0003684060100731​0.
Picazo-Tadeo, A. J., González-Gómez, F., & Sáez-Fernández, F. J. (2009). Accounting for operating environments in measuring water utilities’ managerial efficiency. The Service Industries Journal, 29, 761–773.CrossRef
Raffiee, K., Narayanan, R., Harris, T. R., Lambert, D., & Collins, J. M. (1993). Cost analysis of water utilities: A goodness-of-fit approach. The Atlantic Economic Journal, 21(3), 18–29.CrossRef
Reich, M. R. (Ed.). (2002). Public–private partnerships for public health. Harvard series on population and international health. Cambridge, MA: Harvard University Press. ISBN 0-674-00865-0.
Romano, G., & Guerrini, A. (2011). Measuring and comparing the efficiency of water utility companies: A data envelopment analysis approach. Utilities Policy, 19(3), 202–209.CrossRef
Ruester, S., & Zschille, M. (2010). The impact of governance structure on firm performance: An application to the German water distribution sector. Utilities Policy, 18(3), 154–162.CrossRef
Saal, D., & Parker, D. (2000). The impact of privatisation and regulation on the water and sewerage industry in England and Wales: A translog cost function model. Managerial and Decision Economics, 21, 253–268.CrossRef
Saal, D., & Parker, D. (2004). The comparative impact of privatisation and regulation on productivity growth in the English and Welsh water and sewerage industry, 1985–99. International Journal of Regulation and Governance, 4(2), 139–170.
Saal, D. S., Parker, D., & Weyman-Jones, T. G. (2007). Determining the contribution of technical change, efficiency change and scale change to productivity growth in the privatized English and Welsh water and sewerage industry: 1985–2000. Journal of Productivity Analysis, 28, 127–139.CrossRef
Seroa da Motta, R., & Moreira, A. (2006). Efficiency and regulation in the sanitation sector in Brazil. Utilities Policy, 14, 185–195.CrossRef
Vickers, J., & Yarrow, G. (1988). Privatisation: An economic analysis (MIT Press Series on the Regulation of Economic Activity, Vol. 18). Cambridge: MIT Press.
Vining, A., & Boardman, A. (2008). Public–private partnerships in Canada: Theory and evidence. Canadian Public Administration, 51(1), 9–44.CrossRef
Walker, S. & Marr, S. (2002). Study on the application of the competition rules to the water sector in the European Community. Report for the European Commission – Competition Directorate General. 139 pages.
Metadata
Title
Public–Private Partnerships and Their Ownership in the Urban Water Sector
Author
Arnaud Reynaud
Copyright Year
2015
Publisher
Springer Netherlands
Book
Understanding and Managing Urban Water in Transition

Print ISBN: 978-94-017-9800-6

Electronic ISBN: 978-94-017-9801-3

Copyright Year: 2015

DOI
https://doi.org/10.1007/978-94-017-9801-3_21