Sustainability of Water and Wastewater Infrastructure: Using a Public-Private Partnership Model for Project Financial Assessment

To supplement current and future budget shortfalls for improvements to water and wastewater infrastructure, Public-Private Partnerships (PPPs or P3) are being advocated by the American Society of Civil Engineers (ASCE) and others as a practical mechanism to ensure financial sustainability. A PPP involves a partnership between a government entity and a concessionaire--consisting of one or more private companies acting as a single, private incorporation--who make an agreement on funding, building, and operating a usually government-provided service, such as drinking water and wastewater infrastructure. This is different from a traditional contract between a government entity and a contractor because the concessionaire remains responsible for the operation of the project during the entire concession life. A financial model that can be used to input costs and activities for water and wastewater infrastructure projects will be described. This model was developed as part of this thesis as an adaptation of the financial model for PPP projects in Roads and Highways by the World Bank Group (WBG). This financial model can be used by practitioners, government agencies, and decision makers to estimate key financial indicators that are essential to assess the feasibility of private investors' involvement in a water or wastewater project. The input for the software consists of key parameters that can be easily changed (e.g., construction, operation, and maintenance costs, equity and subsidies, inflation and interest rates, tax rates, concession life, and estimated rate of water consumption). The output of the software is project financial indicators (e.g., internal rate of return (IRR), return on equity (ROE), annual debt service cover ratio (ADSCR)) and the contribution amount from the public sector, if required to keep water consumption or wastewater discharge fees at affordable levels. Case studies will be presented to show under which conditions projects can be financially successful as a PPP. For example, increasing the public agency's investment subsidies enables the decrease of the water consumption fee and the increase of ROE, making a PPP water treatment and distribution project more attractive to consumers and private investors.

Name thesis:degree_name

M.S. in Engineering Science

Level thesis:degree_level

Thesis

Discipline thesis:degree_discipline

Civil Engineering

Year dc:date.available

2013

Author dc:creator

• Trotter, Rebecca Werner

Contributors dc:contributor

• Cristiane Q. Surbeck
• Hunain Alkhateb
• John O'Haver

• infrastructure financing
• public-private partnership
• wastewater
• water
• Environmental Engineering

Repository record dc:identifier

https://egrove.olemiss.edu/etd/1300

OAI identifier oai:identifier

oai:egrove.olemiss.edu:etd-2299