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The ‘hidden costs’ of water provision: New evidence from the relationship between contracting-out and price in French water public services

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  • Porcher, Simon

Abstract

In France, the management of public services such as water or sanitation can be done by the municipal council or contracted out to a private operator. This paper quantifies the impact of the choice of contracting out the management of water public services on price. It uses a unique dataset of utilities with unusual detailed financial indicators, such as debt of the water public service. We find evidence that private management is associated with higher prices on average ceteris paribus but that this difference disappears when we account for the ’hidden costs’ of water, i.e. the price taking into consideration debt refunding of the public service which could increase the price in the following years. Indeed, private management is characterized by higher tariffs but lower debt level so that the price ensure the full-costs recovery while under public management, prices are set at a lower level than under private management but with a higher debt of the public service.

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  • Porcher, Simon, 2017. "The ‘hidden costs’ of water provision: New evidence from the relationship between contracting-out and price in French water public services," Utilities Policy, Elsevier, vol. 48(C), pages 166-175.
    • Handle: RePEc:eee:juipol:v:48:y:2017:i:c:p:166-175
    DOI: 10.1016/j.jup.2017.08.002
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    8. Daniel Albalate & Germà Bel & Francisco González-Gómez & José C. Hernández-Gutiérrez & Andrés J. Picazo-Tadeo, 2024. "Changing prices after the reform of local public services: remunicipalization versus privatization," Journal of Regulatory Economics, Springer, vol. 65(1), pages 1-26, June.

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