Public–Private Partnerships and Their Limitations in Sustainable Public Sewerage Industry: A Comparative Analysis of Three Municipal Cases in Japan

Abstract

Since the mid-1980s, many public water and sewerage business reforms have been carried out in countries around the world in the form of privatization and the introduction of market systems. In Japan, municipalities operate sewerage businesses as a public service, and their revenues are expected to decline in future due to a decrease in population and the deterioration of existing facilities and equipment. Therefore, in this study, we investigated the administrative reform of the public sewerage businesses in Japan as a means of increasing business efficiency and achieving sustainable management. For our research method, we conducted a case study of three advanced municipal sewerage business reforms, which were aimed at introducing outsourcing through long-term concessions, but two were abandoned by the local councils in the middle of the process. The research shows that the limiting factors for these sewerage business reforms include the uncertainty regarding the required investment for heavy rain and earthquake countermeasures. With growing awareness of disaster prevention and mitigation, municipalities are expected to mobilize maximum resources in an emergency. Furthermore, facilities that were constructed in the 1960s to meet the needs of a growing urban population have deteriorated and become an "unmeasurable risk." The second point is the uncertainty about the amount and duration of the central government subsidies provided to municipalities. Due to growing interest in environmental changes caused by global warming, severe weather events attract greater public attention. New capital investment is required to strengthen the capacity of sewerage systems, especially in densely populated urban areas. Under the principle that rainwater treatment is a public expense, about half of the construction cost of sewerage facilities for rainwater is subsidized by the central government. This is a customary yet unstable fiscal policy, making it an uncertain factor in implementing long-term public–private partnership projects.