Public-Private Partnerships in the Water Sector

Abstract

Types of partnerships between public and private companies in water and sewage services are evaluated on the basis of the economic efficiency of the scheme for each partner. Modeling of public-private partnerships involves the formulation of a contract prototype, which determines the roles, functions, and responsibilities as well as the allocation of costs and revenues for each partner. Alternative water management scenarios are used to identify the investments required for meeting the projected demand for water and sewage services. Investment and operational costs as well as revenues from water and sewage services are estimated according to the allocation defined in the contract prototype. The economic efficiency of the scheme is assessed through a cost benefit analysis for each partner. The evaluation of different water management scenarios indicates that, for the Cyclades Islands, Greece, there is a substantial water market where several forms of partnerships could be attractive for both the public and the private sectors. Such partnerships include, among others, lease purchase, temporary privatization, built operate transfer (BOT), and built own operate transfer (BOOT). These forms of public-private partnerships could also be successful in similar regions where significant improvements and expansion of the infrastructure is required while access to the required funds and expertise is restricted for small public water companies.