The use of public-private partnerships in municipal water projects is still limited. An EY/American Water Works Association study reveals some of the reasons.
Private developers and investors have been cautiously optimistic about the US municipal water sector as a source of meaningful public-private partnership (P3) projects for years. Progress is being made and an increasing number of projects are in development, but to date the market remains largely one of potential. To better understand why the use of P3s has been relatively limited in water projects, EY, in partnership with the American Water Works Association (AWWA), conducted a survey to gain insight into the perceptions of those directly involved in water service provision across the US.
The survey of AWWA’s members – which include utilities supplying roughly 80% of US drinking water, as well environmental advocates, scientists and academics – yielded answers to three key questions.
1. What are the main drivers of interest in P3 delivery models?
Technical innovation is the most significant perceived benefit, with respondents seeming to value private-sector participation as a means of bringing forward more technically or operationally sophisticated projects.
Risk transfer is also seen as a key driver, specifically the use of performance-based contracts to transfer design, construction and operating risk by connecting public-sector payment and private-sector performance.
Reduced deferred maintenance risk is also noted. Respondents feel that P3 delivery can play an important role in helping to avoid the siphoning of resources for other needs and the buildup of deferred maintenance now plaguing many aging water infrastructure assets.