ABSTRACT

Privatization of water and wastewater systems has its critics; those who fear placing the provision of such vital services in the hands of for-profit firms will have an adverse impact on rates charged users and the quality of services provided. Given the huge capital needs and the massive investment gap with respect to water supply and wastewater treatment infrastructure, evidence of the impact of privatization on capital investment is key. Personnel, energy, and chemicals comprise the three largest cost elements in operating water supply or wastewater treatment facilities, regardless of ownership. One of the primary rationales for privatization centers on the ability of private firms to achieve cost savings. Data from the Hudson Institute study and the Water Partnership Council report point to the cost savings derived from privatization. In contrast to positive results shown by the Hudson Institute study, other empirical studies were mixed with respect to the impact of privatization on water rates.