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The “social choice” of privatising urban water services: a case study of Madrid in Spain

  • Alberto Ruiz-Villaverde


    (Universidad de Granada.)

  • Andrés J. Picazo-Tadeo

    (Universidad de Valencia)

  • Francisco González-Gómez

    (Universidad de Granada.)

In countries where privatisation is permitted by law, policymakers usually give different reasons of general interest to allow private companies to manage water services. However, these kinds of decisions often provoke intense political debate and are at times opposed by citizens. In this paper, we illustrate how Analytic Hierarchy Process (AHP) techniques can be used to analyse the rationality of complex decisions regarding the management of water services. As a case study, we analyse the recent decision taken by the Regional Government of Madrid (Spain) to part-privatise the management of water services by introducing a private partner. In doing so, we use information from a questionnaire completed by a panel of five experts in water management, including both scholars and professionals. The results raise doubts about the rationality of the decision to privatise water services in Madrid. Rather than social interest, other reasons may be behind the decision, such as satisfying private interests whilst continuing to take advantage of maintaining public institution status.

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Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1322.

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Length: 28 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:eec:wpaper:1322
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