Goyal, Ashima (2004): Getting water from public private partnerships. Published in: India Infrastructure Report 2004, Bringing about value for money in infrastructure (2004)
Download (140kB) | Preview
The paper explores contractual types of public private partnerships that would deliver maximum value in the Indian context. Under incomplete contracts social institutions, tailored to the specific context, can contribute to effective governance. We first draw out some implications of contract theory, then examine recent international experience with PPP in water supply, and finally draw upon all these to illustrate how services from public utilities, specifically from Mumbai's water supply, can be improved, with cost saving through the reduction of waste. While assets should continue to be in public hands, well-designed service contracts would improve coverage, consumer orientation and low level accountability which is missing in public provision; reduce wastage; encourage competition and entrepreneurship; achieve financial viability; and develop a thick network of low-risk credit-customers for banks and financial institutions. They would, however, require support from price reform, independent regulators, and user groups. Citizen groups can use voting power to motivate politicians to shift from direct subsidies and hidden costs to the delivery of quality services. Some specific issues in water supply reform are that the easy availability of quantity rationing in public water supply perpetuates low quality and distorted prices, and heavy use of non-transparent taxes and fixed charges lowers efficiency and welfare. It follows that re-balancing between fixed and volume charges would contribute to welfare and improve quality.
|Item Type:||MPRA Paper|
|Original Title:||Getting water from public private partnerships|
|Keywords:||public private partnership, water supply, user groups, fixed and volume charges|
|Subjects:||H - Public Economics > H4 - Publicly Provided Goods > H42 - Publicly Provided Private Goods
H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock
|Depositing User:||ashima goyal|
|Date Deposited:||04. Jan 2011 08:00|
|Last Modified:||13. Feb 2013 19:45|
ADB (Asian Development Bank), 1997, Second Water Utilities Data Book, Asian Pacific Region, Manila.
Brousseau, Eric, and Jean-Michel Glachant (2002). 'The Economics of Contracts and the Renewal of Economics' in Brousseau, Eric, and Jean-Michel Glachant (eds.) The Economics of Contracts: Theories and Applications, Cambridge University Press, UK.
Chetan Vaidya, 1998, “Willingness to Pay for Water and Sanitation Services: A Case Study of Baroda”, HSMI, New Delhi.
Cunha, Garson da, 2003a, “51 letters – no Reply!” Bombay Times, The Times of India, March 21.
Cunha, Garson da, 2003b, “SALMA banishes garbage,” Bombay Times, The Times of India, May 9.
Gleick, Peter H., Gary Wolf, Elizabeth L. Chalecki, and Rachel Reyes (2003). 'The New Economy of Water: The Risks and Benefits of Globalization and Privatization of Fresh Water', The Pacific Institute, Oakland, California, available at http://www.pacinst.org/reports/new_economy.htm
Godoy, Julio (2003). 'Water and Power: The French Connection', in The Water Barons project coordinated by William Marsden, The Center for Public Integrity, Washington D.C., available at http://www.icij.org/dtaweb/water/default.aspx?SECTION=CHAPTER&ID=2
Gutierrez, E. (2001), 'A Survey of the Theoretical Issues on Private Sector Participation in Water and Sanitation', Framework Document, PSP Project Team, available at www.wateraid.org.uk.
Hart, Oliver, Andrei Shleifer, Robert Vishny (1997). 'The Proper Scope of Government: Theory and an Application to Prisons', Quarterly Journal of Economics, 112, 1127-61.
Hobbs, Erika (2003). 'Low rates, Needed Repairs Attract 'Big Water' to Uncle Sam's Plumbing', in The Water Barons project coordinated by William Marsden, The Center for Public Integrity, Washington D.C., available at http://www.icij.org/dtaweb/water/default.aspx?SECTION=CHAPTER&ID=8
Klein, Michael (1996). 'Economic Regulation of Water Companies', Policy Research Working Paper 1649, World Bank, Private Sector Development Department.
Landingin, Roel (2003). 'Loaves, Fishes and Dirty Dishes: Manila's Privatized Water Can't Handle the Pressure', in The Water Barons project coordinated by William Marsden, The Center for Public Integrity, Washington D.C., available at http://www.icij.org/dtaweb/water/default.aspx?SECTION=CHAPTER&ID=5.
Menard, Claude and Stephane Saussier (2002). 'Contractual Choice and Choice and Performance: The Case of Water Supply in France' in Brousseau, Eric, and Jean-Michel Glachant (eds.) The Economics of Contracts: Theories and Applications, Cambridge University Press, UK.
Morris, Sebastian (2001). 'How Low Usage Charges for Drinking Water Act against the Interests of the Poor', Box 9.4.1 in Nanavathy, Anish. 'Implications of the 74th Amendment on the Water and Wastewater Sector', Indian Infrastructure Report, 2001, 3iNetwork, Oxford University Press, New Delhi.
(MEA) Municipal Engineers' Association and (BMLPA) Brihan Mumbai Licensed Plumbers' Association (2003). Water, published on World Water Day, 22nd March, Mumbai.
Nanavathy, Anish (2001). 'Implications of the 74th Amendment on the Water and Wastewater Sector', Indian Infrastructure Report, 2001, 3iNetwork, Oxford University Press, New Delhi.
RBI (Reserve Bank of India), 2003, Handbook of Statistics on the Indian Economy, RBI, New Delhi.
Ronderos, Maria Teresa (2003). 'A Tale of Two Cities', in The Water Barons project coordinated by William Marsden, The Center for Public Integrity, Washington D.C., available at http://www.icij.org/dtaweb/water/default.aspx?SECTION=CHAPTER&ID=7
Solo, Tova Maria (1999). 'Competition in Water and Sanitation and the Role of Small-Scale Entrepreneurs', in The Private Sector in Water Competition and Regulation, World Bank, Washington D.C.
Suresh, V. (1998). 'Indian Experience in Urban Water Supply and Sanitation', HUDCO Bhawan, Updated version of country presentation at ESCAP workshop, New Delhi.
Suthankar, D.M. (2000). Draft Suthankar Committee Report on Operation, Maintenance and Management of Rural and Urban Water Supply Schemes, Water Supply and Sanitation Department, Government of Maharashtra.
Tirole, Jean (1994). 'The Internal Organization of Government', Oxford Economic Papers, 46, 1-29.
World Bank (2000). 'India: Country Framework Report for Private Participation in Infrastructure', World Bank, Washington D.C.