Private Sector Involvement in Water Services: Theoretical Foundations and Empirical Evidence

María García-Valiñas (), Francisco Gonzales, Javier Suarez and Vera Zaporozhets

No 15-590, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Water services management has become a key issue as urban water supply is considered a service of general interest in the European Union (EU, 2001). In this context, public-private partnerships (PPP) have emerged as a usual way of local water services provision. This paper contributes to analyze the effects and consequences of PPP in the management of water resources. First of all, we develop a theoretical framework to show the effects of water services contracting-out on water prices. Second, we estimate the model using a sample of Spanish municipal water services recently privatized. Our findings support that, in a context of limited resources, local governments are using public-private partnerships in order to get additional fundings to reduce their indebt- ness levels. Moreover, the fact of setting a high reservation price as a way to guarantee a minimum amount of resources has had consequences in terms of water price increases after water services privatization.

Keywords: Water services; Public-private partnerships; Auctioning; Game theory; Water prices (search for similar items in EconPapers)
JEL-codes: L33 L95 Q25 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-agr and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:29542

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