Emerging Competition in Water and Wastewater Industries

Privatization efforts in government owned water and wastewater systems have expanded rapidly in recent years as operating costs, technical requirements, and capital outlays have escalated. Maximum economic welfare can be achieved only if competitive elements are introduced. Feasible possibilities include franchise-bidding, franchise bidding with modified rate regulation, and contracting out. The government agency itself can become a competitive bidder. Contracting out has become the major mode of injecting competition and, if managed well, can be an effective device to reduce costs and improve the quality of service.