Bridges over Troubled Waters? The Political Economy of Public-Private Partnerships in the Water Sector

George Shambaugh,Shareen Joshi

doi:10.3390/su131810127

Abstract

Global concerns about water security and water scarcity are motivating local governments, investors, and international financial institutions to prioritize investments in the water sector. Over the past thirty years, public–private partnerships (PPPs) have been popular mechanisms for encouraging private sector investment and helping local governments overcome economic, political, and technical challenges associated with large infrastructure projects in the water, electricity, and transportation sectors. We argue that the political economy factors that affect the prevalence of PPPs in the water sector—which must serve broad populations of people at low cost—are different than other types of infrastructure projects. We use the World Bank’s Private Participation in Infrastructure (PPI) database to explore factors that affect the likelihood that PPPs will be initiated in water relative to other sectors, and in water treatment relative to water utilities. We demonstrate that the likelihoods of PPPs in the water sector and water treatment are positively correlated with levels of output from industries that are water-intensive and pollution-intensive when the host country relies heavily on fossil fuels to generate electricity. Furthermore, when corruption levels are high, projects are more likely to be initiated in water than in other sectors, but those investments are more likely to be in water utilities than water treatment.

Highlights

Access to clean water and sanitation, fundamental to human life, have been recognized by the United Nations as essential for the realization of all other human rights [1] Yet almost 1 billion people lack access to safe drinking water and 2.2 billion people—nearly fifty percent of the developing world’s population—lack adequate sanitation facilities [2].In recognition of this precarious situation, the Sustainable Development Goals aim to achieve universal and equitable access to safe and affordable drinking water, sanitation, and hygiene for all by 2030 and “increase the efficiency of water-use across all sectors”by this time
Given the looming risks of climate change and water scarcity faced by the world, we believe that it is critical to understand the conditions under which investments by private, public, and multilateral actors are likely to take place in the water sector and in other sectors that either consume large amounts of water or generate large amounts of pollution
In the past thirty years, public–private partnerships (PPPs) have been popular mechanisms for encouraging private sector investment and helping local governments overcome economic, political, and technical challenges associated with large infrastructure projects in the water, electricity, and transportation sectors

Summary

Introduction

Access to clean water and sanitation, fundamental to human life, have been recognized by the United Nations as essential for the realization of all other human rights [1] Yet almost 1 billion people lack access to safe drinking water and 2.2 billion people—nearly fifty percent of the developing world’s population—lack adequate sanitation facilities [2].In recognition of this precarious situation, the Sustainable Development Goals aim to achieve universal and equitable access to safe and affordable drinking water, sanitation, and hygiene for all by 2030 and “increase the efficiency of water-use across all sectors”by this time. Access to clean water and sanitation, fundamental to human life, have been recognized by the United Nations as essential for the realization of all other human rights [1] Yet almost 1 billion people lack access to safe drinking water and 2.2 billion people—nearly fifty percent of the developing world’s population—lack adequate sanitation facilities [2]. In recognition of this precarious situation, the Sustainable Development Goals aim to achieve universal and equitable access to safe and affordable drinking water, sanitation, and hygiene for all by 2030 and “increase the efficiency of water-use across all sectors”. PPPs take multiple forms but are generally characterized by long-term contracts between public and private partners, where the private partner usually designs, finances, builds, and operates the infrastructure or the service [5]

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Conclusion