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Privatizing infrastructure options for municipal systems
Author(s) -
Haarmeyer David
Publication year - 1994
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.1994.tb06165.x
Subject(s) - business , incentive , competition (biology) , finance , government (linguistics) , water supply , private sector , industrial organization , economics , market economy , economic growth , engineering , ecology , linguistics , philosophy , environmental engineering , biology
Privatization, which operates successfully in France and Britain, offers municipalities a way to harness private‐sector resources and incentives to improve water supply systems. Municipal water supply systems face little competition and generally cannot go bankrupt, so they lack incentives to operate efficiently. Private systems also face problems: rate regulation removes incentives to innovate, and because private systems pay taxes, they are at a competitive disadvantage. To “level the playing field” in the United States, publicly owned water‐supply companies could be transformed into stand‐alone, government‐owned enterprises subject to the same tax and regulatory policies as private water companies. Both this transitory phase and full privatization would expand a municipality's tax base, encourage full‐cost pricing, and lead to less reliance on government financing to upgrade facilities and meet drinking water regulations.