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Article

Government Guarantee Decisions in PPP Wastewater Treatment Expansion Projects

1
Department of Construction Management and Real Estate, Tongji University, Shanghai 200092, China
2
Brick Public Consulting Co., Ltd., Shenzhen 518054, China
3
School of Architecture and Built Environment, Deakin University, Geelong, VIC 3220, Australia
*
Author to whom correspondence should be addressed.
Water 2020, 12(12), 3352; https://doi.org/10.3390/w12123352
Received: 24 October 2020 / Revised: 23 November 2020 / Accepted: 27 November 2020 / Published: 29 November 2020
(This article belongs to the Special Issue Urban Water Economics)
Public private partnership (PPP) models are often used in delivering wastewater treatment (WWT) projects. When existing PPP projects need expansion due to higher demand for WWT, in many cases, the expansion may involve a new PPP contract involving a new concessionaire. Expansion PPPs have unique challenges as the sharing of responsibilities and risks can become complex. The complexities are further exacerbated when there are government guarantees involved. Structuring inappropriate guarantees can often lead to high costs for the government. This study focused on the choice of government guarantee in PPP expansion projects in the WWT sector by examining two popular guarantee mechanisms: minimum revenue guarantee and exclusive right. A decision model was developed and applied in a real WWT expansion PPP project in China to illustrate the optimal guarantee under varying circumstances related to service demand, expected unit price, and the existing guarantees in the existing PPP project. The contribution of the study lies in the applicability of the model to facilitate better decisions for the government in selecting the optimal guarantee mechanism in PPP expansion projects. View Full-Text
Keywords: public private partnerships; PPPs; wastewater treatment; government guarantee; decision model public private partnerships; PPPs; wastewater treatment; government guarantee; decision model
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MDPI and ACS Style

Wang, L.; Shrestha, A.; Zhang, W.; Wang, G. Government Guarantee Decisions in PPP Wastewater Treatment Expansion Projects. Water 2020, 12, 3352. https://doi.org/10.3390/w12123352

AMA Style

Wang L, Shrestha A, Zhang W, Wang G. Government Guarantee Decisions in PPP Wastewater Treatment Expansion Projects. Water. 2020; 12(12):3352. https://doi.org/10.3390/w12123352

Chicago/Turabian Style

Wang, Liguang, Asheem Shrestha, Wen Zhang, and Guangbin Wang. 2020. "Government Guarantee Decisions in PPP Wastewater Treatment Expansion Projects" Water 12, no. 12: 3352. https://doi.org/10.3390/w12123352

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