GW’s Environmental and Energy Management Program recently took a step forward in its role as the coordinating organization in a major research effort to evaluate Public Private Partnerships (PPPs) for water supply and wastewater disposal. GW Research Scientist Dr. George William Sherk presented a draft research proposal to the “Colloque international sur les aspects juridiques des services de l'eau dans le cadre d’une politique de développement durable” held in Paris at UNESCO on 29 October 2002. The draft research proposal presented by Dr. Sherk is entitled The Suitability of Public-Private Partnerships as a Means of Providing Sustainable Safe Water Supply and Sanitation Services: Impediments and Incentives as Critical Factors. Co-authors of the proposal include Dr. Guy Le Moigne and Dr. Jonathan P. Deason.
The extent to which the private sector participates in the fields of water supply and wastewater disposal is controversial. Proponents of private sector investment, operation and management of water supply and wastewater systems cite distinct benefits that can accrue from the flexibility, incentives and innovation engendered by the free enterprise system. They point to a number of water systems around the world where the private sector involvement has resulted in major improvements to served populations. In addition, in many areas of the world, the growing demand for water supply and wastewater services exceeds the capability of public entities to provide these services.
On the other hand, those who oppose extensive involvement by the private sector raise a number of concerns. One concern is that privatization may bypass under-represented and under-served communities. Another issue is a loss of public sector jobs. Some opponents cite a lack of competition stability over the long-run. Eventually, they fear one or two major players will dominate the market, and the industry will be back to a monopoly situation where the private provider can easily charge a higher price. Others think privatization of water may be irreversible, with private companies owning and controlling natural resources instead of a public entity.
In an effort to assess objectively the conditions under which private sector involvement in these historically public sector areas might be appropriate, the proposal identifies four issues for PPPs:
1. Applicable legal, institutional and transactional requirements
2. Management of water as a “social good”
3. Utilization of sound water management economics
4. Governmental regulation and oversight
The proposed research is divided into two phases. The first phase focuses on item 1, legal and institutional issues affecting PPPs in the United States. This issue will be addressed through a comprehensive literature review undertaken by a research team consisting of Dr. Sherk, Guy Le Moigne, Dr. Patricia Wouters (University of Dundee) and a representative of Académie de l’Eau. Dr. Sherk will coordinate the work of the research team. This phase of the project is scheduled to be completed in time to present the results at a workshop at The Third World Water Forum (Kyoto, March 2003). The second phase will build on the results of the initial research going into more detail with regards to the legal and institutional requirements and will also address the remaining three management and oversight issues identified above. The results of the work of the research team will be presented at the Fourth World Water Forum (Montreal, March 2006).
This timely study addressing the role of public-private partnerships as means to provide sustainable safe water supply and sanitation services will assess objectively the concerns of those opposed to private sector involvement in public utilities. The research team representing the United Kingdom, France and the United States will provide a broad perspective and draw on extensive experience in the utilization of PPPs throughout the world.