Comparison of public and private water utility financial and management strategies

Abstract

Recently, there has been a growing trend towards public-private partnerships and privatization in the water supply industry. However, the benefits of public-private partnerships and privatization are not clear. In order to better understand the consequences of the shift towards the private sector, one must recognize the different approaches used by each sector. This study compares the financial and management strategies of the public and private water utilities. The various strategies are presented through six case studies of public and private water utilities in the United States. Each study focuses on the capital investment program, financing sources, and management practices of each utility. A financial analysis of each utility is performed to support the case study. Eight financial ratios are used to evaluate the utilities' financial leverage, efficiency and liquidity. Finally, some general conclusions about the different approaches used by each sector are discussed.