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

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  • García-Valiñas, Maria A.
  • Gonzales, Francisco
  • Suarez, Javier
  • Zaporozhets, Vera

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.

Suggested Citation

  • García-Valiñas, Maria A. & Gonzales, Francisco & Suarez, Javier & Zaporozhets, Vera, 2015. "Private Sector Involvement in Water Services: Theoretical Foundations and Empirical Evidence," TSE Working Papers 15-590, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:29542
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    References listed on IDEAS

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    Cited by:

    1. María A. García-Valiñas, 2018. "Spain," Post-Print hal-03191536, HAL.

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    More about this item

    Keywords

    Water services; Public-private partnerships; Auctioning; Game theory; Water prices;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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