Fab-Tech Blog

Key Debates In The Privatization of Wastewater Treatment Facilities

The privatization of wastewater treatment facilities has been increasing over the past several decades. As financial considerations reign supreme, municipalities are looking into full privatization as well as public-private partnerships. 

A primary driver behind this is public pressure on local governments to reduce spending and lower property taxes. With our country’s aging wastewater infrastructure in need of costly repairs, many towns, cities and counties are looking into all options.

Over the next 20 years, our country needs to invest $3 to $5 trillion dollars to upgrade, repair and build facilities with sewage systems capable of handling current water and wastewater requirements (1).

With the federal government currently under funding by 20 billion per year, it's clear that something needs to change or our problems will only continue to grow. 

Proponents of privatization argue that existing financial and operational concerns will be alleviated with a move to privatize. The pros typically include:

1) Cost savings - Private businesses are widely perceived as more cost conscious than government entities. Even though a private company expects to turn a profit, it's often the case that cost savings can be achieved greater than the profit margin. For example, a large company that owns / operates a multitude of wastewater treatment facilities has significant negotiating power. Furthermore, overhead - such as engineering resources that may be only partially used at one facility - may be able to be amortized across multiple facilities.

2) Best practices - A company with a centralized engineering group evaluating the operation of multiple facilities will undoubtedly identify best practices that work well at one facility and can be scaled across many. Since the main goal of any business is to make money, it is widely held that a private business would operate in the most efficient manner to increase profitability. Government operations are not driven by profit so the opinion is that there is less efficiency and higher operational costs.

3) Taxpayer burden - Private firms argue that the improved efficiency of operations and expertise of the company will provide the service at a lower fee than what is being paid in taxes. Moreover, selling the asset to a private company can generate an immediate financial windfall that can be beneficial to a municipality, for instance, by enabling the settlement of an outstanding bond debt.

To conclude, these key debates are legitimate and they bring to bear the need for governments to do their research and weigh all options. Long term strategies must be brought into the process to identify the best course of action for all parties involved.

One thing's for sure, as the debate continues and population densities continue to expand, our need for upgraded water and wastewater treatment infrastructure and odor control systems will continue to grow!

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(1) Source: http://www.acua.com/community/blog/privatization/