Given the success of the Private Finance Initiative in the United Kingdom and the large-scale ideological shift to neoliberalism, supporters of public-private partnerships (PPPs) argue that the theoretical benefits of the management approach (innovative financial mechanisms, budgetary relief, increased economic and technical efficiency, and transfer of risk to the private partner) can allow governments in low-income nations to close the infrastructure gap in the water sector. Utilizing a Social Ecological framework, this Master’s Thesis examines these claims by identifying the sources of supply and demand for Water, Sanitation, and Health (WASH) PPPs. Drawing from the World Bank Private Participation in Infrastructure database, the research discovers that the majority of projects are found in middle-income economies, with investment stemming primarily from public – rather than private – partners. The data also reveals that despite being touted as a panacea for development and growth, since the 1990s PPPs are responsible for only 11.12 percent of gained water access. Given the high cost of project cancellation and distress in the water sector (20 percent of total investment), the thesis also explores the Critical Success Factors (CSFs) that determine project success. A thorough literature review based on both outcome- and output-based project metrics revealed a total 13 CSFs. The thesis concludes that given the high economic, political, and social requirements of these partnerships, in its present form, the management approach is not an appropriate solution for promoting WASH infrastructural growth in developing economies.

California faces a number of pressing threats to water supply and quality, including ageing infrastructure, climate volatility, and demographic pressure. Public-private partnerships (PPPs) may be uniquely positioned to address these challenges through the private partner’s ability to mobilize resources, provide technical expertise, and share project risks. However, the best practices and impacts of PPPs are not well understood. This research clarifies the role of the private sector in bolstering sustainability and social-ecological resilience in California’s water sector through a qualitative comparative case analysis of seven infrastructure and three data-oriented water PPPs. Semi-structured interviews, observations, shadowing, and document analysis are utilized to examine (1) the endogenous and exogenous drivers of PPPs, (2) socio-economic, environmental, and political impacts of projects, (3) challenges faced throughout the project lifetime, and (4) lessons learned. Three theoretical frameworks (social-ecological resilience, holistic sustainability, and new institutionalism) guide the analysis of impacts and illuminate the opportunities and constraints facing PPP project participants.

The cases suggest that when carefully managed, PPPs can result in environmentally beneficial projects that diversify local water resources and improve efficiency of water utility operations. Moreover, through risk sharing and pooling of resources, PPPs provide a “unique opportunity” for the traditionally risk-averse water sector to pursue innovative technologies that minimize risks to ratepayers in the early stages of a project. However, PPPs face a tension between economic efficiency and equity. Public sector respondents stressed the challenge of “getting the best deal” for the public in the face of diverging priorities between public and private actors, information asymmetries, and limited experience in negotiating PPP contracts. A complex permitting process and evolving environmental regulations exacerbate this tradeoff through cost overruns and project delays. Distributional impacts to ratepayers can be reduced through mutual agreement of project goals and benefits, a robust contract structure that quantifies performance standards and provides opportunities for adaptive learning, and the inclusion of end-users and affected stakeholders early on in the project life-cycle.

Evaluation of PPP impacts also suggests that gains in short-term resilience can occur at the expense of distributional impacts to low-income water users or to ecosystems. The cases reveal that considerations of ecological well-being requires significant intervention on behalf of regulatory agencies. NGOs may play a critical role in future PPPs by increasing environmental sensitivity of projects, monitoring adverse environmental impacts, and serving as “bridges” between regulatory agencies and water utilities.

This dissertation fills a critical policy and research gap. The research examines the first water PPP projects in California. This study, thus, is a unique opportunity to examine institutional innovation in an organizational domain that has high socio-technical and regulatory constraints. This study also introduces a new role for PPPs in the water sector: data collaboratives can aid water districts in effective and science-based decision-making and provide alternatives to a “hard infrastructure” approach to water management. Finally, this is one of the first studies to evaluate PPP projects across all three dimensions of sustainability, paying careful attention to the distributional impacts of these partnerships. Ultimately, the research assists water districts in providing much-needed water system upgrades in a way that ensures that projects are economically efficient, environmentally sound, and do not disproportionately impact low-income populations.