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Efficient risk transfer in PPP wastewater treatment projects

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  • Shrestha, Asheem
  • Chan, Toong-Khuan
  • Aibinu, Ajibade A.
  • Chen, Chuan

Abstract

Risk transfer in public private partnerships (PPPs) may not always be conducive to efficient management due to principal agent problems. This paper identifies three parameters: (i) competition, (ii) monitoring and (iii) incentives, for transferring risks in a principal agent relationship. These parameters are applied to three PPP wastewater projects. The findings illustrate that competition determines the private sectors’ ability to bear risks, monitoring reduces ex-post information asymmetry and incentive ensures that risks are efficiently managed. The lessons learnt from the case studies can provide guidance for governments in transferring risks efficiently in PPP wastewater treatment projects.

Suggested Citation

  • Shrestha, Asheem & Chan, Toong-Khuan & Aibinu, Ajibade A. & Chen, Chuan, 2017. "Efficient risk transfer in PPP wastewater treatment projects," Utilities Policy, Elsevier, vol. 48(C), pages 132-140.
    • Handle: RePEc:eee:juipol:v:48:y:2017:i:c:p:132-140
    DOI: 10.1016/j.jup.2017.03.003
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    References listed on IDEAS

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    Cited by:

    1. Marzouk, Mohamed & Ali, Mohamed, 2018. "Mitigating risks in wastewater treatment plant PPPs using minimum revenue guarantee and real options," Utilities Policy, Elsevier, vol. 53(C), pages 121-133.
    2. Asheem Shrestha & Jolanta Tamošaitienė & Igor Martek & M Reza Hosseini & David J Edwards, 2019. "A Principal-Agent Theory Perspective on PPP Risk Allocation," Sustainability, MDPI, vol. 11(22), pages 1-18, November.
    3. Nur, Suardi & Burton, Bruce & Bergmann, Ariel, 2023. "Evidence on optimal risk allocation models for Indonesian geothermal projects under PPP contracts," Utilities Policy, Elsevier, vol. 81(C).
    4. Meishu Wang & Hui Gong, 2018. "Imbalanced Development and Economic Burden for Urban and Rural Wastewater Treatment in China—Discharge Limit Legislation," Sustainability, MDPI, vol. 10(8), pages 1-12, July.
    5. Jokar, Ebrahim & Aminnejad, Babak & Lork, Alireza, 2021. "Assessing and Prioritizing Risks in Public-Private Partnership (PPP) Projects Using the Integration of Fuzzy Multi-Criteria Decision-Making Methods," Operations Research Perspectives, Elsevier, vol. 8(C).
    6. Surachman, Eko Nur & Perwitasari, Sevi Wening & Suhendra, Maman, 2022. "Stakeholder management mapping to improve public-private partnership success in emerging country water projects: Indonesia’s experience," Utilities Policy, Elsevier, vol. 78(C).
    7. Jiangfan Liu & Xiongzhi Xue, 2018. "River Management for Local Governments in China: From Public to Private," IJERPH, MDPI, vol. 15(10), pages 1-11, October.
    8. Bao, Fengyu & Martek, Igor & Chan, Albert P.C. & Chen, Chuan & Yang, Yang & Yu, Heng, 2023. "Assessing the public-private partnership handover: Experience from China's water sector," Utilities Policy, Elsevier, vol. 80(C).
    9. Nizkorodov, Evgenia, 2021. "Evaluating risk allocation and project impacts of sustainability-oriented water public–private partnerships in Southern California: A comparative case analysis," World Development, Elsevier, vol. 140(C).
    10. Xiangdong Liu & Guangxi Cao, 2021. "The Impact of Participation in PPP Projects on Total Factor Productivity of Listed Companies in China," Sustainability, MDPI, vol. 13(14), pages 1-20, July.
    11. Mohammad Heydari & Kin Keung Lai & Victor Shi & Feng Xiao, 2023. "Public Health Risk Evaluation through Mathematical Optimization in the Process of PPPs," IJERPH, MDPI, vol. 20(2), pages 1-19, January.
    12. Xinshuo Hou, 2022. "Can Public–Private Partnership Wastewater Treatment Projects Help Reduce Urban Sewage Disposal? Empirical Evidence from 267 Cities in China," IJERPH, MDPI, vol. 19(12), pages 1-24, June.
    13. Wang, Huanming & Ma, Liang, 2019. "Ownership, corruption, and revenue regimes for infrastructure partnerships: Evidence from China," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.

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