Public Provision of Water

5 Pages Posted: 30 May 2017

See all articles by Peter Marcel Debaere

Peter Marcel Debaere

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Abstract

This note is used in the Darden course elective, "The Economics of Water." In many cities, water, sewage, and electricity utilities are city-owned, not-for-profit institutions. Indeed, a 2011 survey of 330 major cities worldwide published by Global Water Intelligence reveals that almost 85% of the water services of the cities surveyed are publicly managed; public–private partnerships account for 5%, and about 10% are privately run. As this note argues, there is a reason for this institutional setup.

Excerpt

UVA-GEM-0120

Rev. Nov. 13, 2014

Public Provision of Water

In many cities, water, sewage, and electricity utilities are city-owned, not-for-profit institutions. Indeed, a 2011 survey of 330 major cities worldwide published by Global Water Intelligence (GWI) of the United Kingdom reveals that almost 85% of the water services of the cities surveyed are publicly managed; public–private partnerships account for 5%, and about 10% are privately run. As this note argues, there is a reason for this institutional setup.

Even though municipal water consumption is a relatively small percentage of total water use in the United States and elsewhere, delivering water in a city or area entails major infrastructure and capital expenditures. It takes a whole network of pipes, valves, pumps, and meters and lots of design, engineering, and construction to transport water. GWI estimates that the total worldwide capital expenditures for water networks in 2013 was at $ 47 billion; that number was even higher for wastewater capital expenditures ($ 59 billion). Figure 1 breaks down the water network capital expenditures by category.

Because of the significant capital costs the water infrastructure of cities often has deep historical roots. The water infrastructure of London, for example, goes back many centuries. David Sedlak roughly distinguishes three phases in how urban water infrastructures were built. Initially, and often inspired by the pioneers of ancient Rome, piped water systems and sewers were built. Later, especially in an effort to stem water-borne diseases, drinking water treatment was developed. In the third phase, finally, sewage water treatment plants became a standard feature of urban water systems.

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Keywords: freshwater, wastewater, water scarcity, economics of water, water, electric utility, public utility, fresh water, waste water

Suggested Citation

Debaere, Peter Marcel, Public Provision of Water. Darden Case No. UVA-GEM-0120, Available at SSRN: https://ssrn.com/abstract=2974631

Peter Marcel Debaere (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/html/direc_detail.aspx?styleid=2&id=5794

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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