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Municipal Wastewater Treatment: a Comparison of the Performance of Public Sector and Contract Operated Plants

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  • John Houtsma

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Abstract

Municipal wastewater treatment plants are among the main source of discharges of pollutants to the environment. How well these plants are managed and perform can have a significant impact on the ambient quality of the environment. The focus of this research is on the performance of public sector managers as compared to that of private sector managers. The central question is whether or not the approach of public sector managers to achieving emission reductions is one of cost minimization. In the theoretical literature this question receives conflicting answers: some models predict cost-minimization, whereas others predict that public sector managers will attempt to do more than what is required by emission standards. An examination of the actual performance of wastewater treatment plants in many jurisdictions in Canada and the U.S. supports the latter theory. For example, consistently over time, not only did virtually all Ontario municipal treatment plants emitting to Lake Erie and Lake Ontario comply with the existing emission standards for Biochemical Oxygen Demand (BOD), Suspended Solids (SS) and Phosphorus, but most performed considerably better than what was required. This observed phenomenon may be called “voluntary overcompliance”. Findings based on interviews with municipal treatment plant superintendents, recently retired plant superintendents, plant chemists, and other industry officials, clearly indicate that public sector managers have a various of different rationales for overcompliance. Can private sector managers be expected to do the same, or do they yield to pressures to reduce cost a the expense of the environmental quality? Does it make a difference whether or not the variable costs for electricity, chemicals and sludge disposal are pass through costs to the municipalities? And apart from the question of effluent quality, what are the major advantages and drawbacks of contracting? These questions will be answered by the results of a nationwide survey of over 100 contract operations in the United States. KEY WORDS: MUNICIPAL WASTEWATER TREATMENT, VOLUNTARY OVERCOMPLIANCE, ENVIRONMENTAL QUALITY, ECONOMIC INCENTIVES, PRIVATIZATION, CONTRACT OPERATIONS.

Suggested Citation

  • John Houtsma, 2003. "Municipal Wastewater Treatment: a Comparison of the Performance of Public Sector and Contract Operated Plants," ERSA conference papers ersa03p381, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa03p381
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/381.pdf
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    1. Arunava Bhattacharyya & Elliott Parker & Kambiz Raffiee, 1994. "An Examination of the Effect of Ownership on the Relative Efficiency of Public and Private Water Utilities," Land Economics, University of Wisconsin Press, vol. 70(2), pages 197-209.
    2. Bhattacharyya, Arunava & Harris, Thomas R. & Narayanan, Rangesan & Raffiee, Kambiz, 1995. "Specification and estimation of the effect of ownership on the economic efficiency of the water utilities," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 759-784, December.
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