Performance-based Incentive Mechanism For Water Environment Treatment PPP Projects

Water environment treatment PPP projects is a typical performance-based payment contract,which has mainly the characteristics of strong public welfare,involving many specialties and paid by the government.At present,the performance evaluation system and payment mechanism of water environment treatment PPP projects are not perfect,the performance-linked degree between government payment and performance assessment for operation and maintenance is not enough.And even the operation and maintenance of some projects are lack of constraints,which aggravates the phenomenon of valuing construction and neglecting operation.Based on the significant demand of PPP mode in the field of water environment treatment,this study aims to solve the problems such as a lack of theoretical support for contract design with performance-based in water environment treatment PPP projects and the phenomenon of insufficient incentives and incentive incompatibility,and to provide theoretical and methodological guidance for improving the quality and efficiency of water environment infrastructure.Based on this,the main contents of this study include the following three aspects:(1)The performance evaluation system of water environment treatment PPP projects is built.Considering the imperfection of the exist performance evaluation index system for water environment treatment PPP projects,and the actual problems of the data information fusion for multi-disciplinary,multi-source,multi-dimensional,multi-temporal and spatial in performance evaluation,this study firstly constructs the performance evaluation index system of water environment treatment PPP projects through applying the methods such as questionnaires,literature analysis,interview with experts.Secondly,combining adaptive weighted fusion algorithm and linguistic intuitionistic fuzzy theory,the data information of performance evaluation for water environment treatment PPP projects is aggregated;Thirdly,comprehensively using the advantages of MULTIMOORA method and intuitionistic fuzzy theory,the improved MULTIMOORA method is proposed,which evaluates the evaluation objects from ratio system,reference point approach and full multiply model.Finally,the effectiveness and feasibility of this method is proved by taking water environment treatment and water ecological restoration project in a county as an example.(2)The performance-based payment mechanism for water environment treatment PPP projects is designed.In view of the lack of theoretical support in the determination of the performance payment ratio between government payment and performance assessment in operation and maintenance,unit payment under different performance levels and government payment in different stages for water environment treatment PPP projects,this study firstly constructs an optimization function,whose aim is to balance the goals of public and private sectors.It reflects the relationship of operation and maintenance capability and cost coefficient to performance payment ratio,and the calculation method of performance payment ratio are obtained.Secondly,exploring the consideration relationship between payment and performance level,an optimization function aiming at balancing government financial expenditure and reasonable income of private sector is built,and the unit payments under different performance levels are determined by revealing the influence mechanism of factors such as performance evaluation results and costs to unit payment.And then,according to the characteristics of water environment treatment PPP projects,the whole operation and maintenance period of the project is divided into several stages keeping consistent with the performance evaluation cycle.Using the multi-stage stochastic dynamic theory,in which the government payment is regarded as the decision variable,and the deduction is the random variable,an optimization model of the government payment in each stage of water environment treatment PPP projects is constructed,which taking the minimum of payment government as objective function on the condition of meeting the basic performance of private sectors.Finally,the rationality and effectiveness of the model are verified through the water environment treatment and water ecological restoration project of a county.(3)The performance-based multi-cycle dynamic incentive mechanism for water environment treatment PPP projects is constructed.In order to solve the problems of “incentive vacancy” or “over incentive” caused by the key factors such as multi-cycle dynamic effect,reputation effect and ratchet effect,which are not considered in the design process of incentive mechanism for water environment treatment PPP projects.Firstly,considering the influence function of reputation effect,performance-based multi-cycle dynamic incentive mechanism model with reputation effect is built for water environment treatment PPP projects;Secondly,considering the influence function of reputation effect and ratchet effect simultaneously,performance-based multi-cycle dynamic incentive mechanism model with reputation and ratchet effects is built for water environment treatment PPP projects;Finally,the results of two models are analyzed by numerical simulation.The results are shown as follows.1)The influence of reputation effect.Reputation effect has a positive effect on the optimal effort level of private sector,but a negative effect on the optimal incentive coefficients.The public sector does not give too much incentive,and private sector will actively improve the performance level in order to maintain its “good reputation”,which is the substitution of reputation incentive(implicit incentive)to explicit incentive.2)The influence of reputation and ratchet effect.In the first performance cycle,reputation effect has a positive effect on the level of private sector's efforts and a negative effect on the optimal incentive coefficient;because of ratchet effect,the public sector's setting of a larger performance adjustment coefficient will cause the level of private sector's efforts to decrease,so the public sector needs to increase incentives to promote private sector to accept the increasing performance standard and work on it.3)The coupling effect of reputation and ratchet effect.Under the coupling effect of bargaining power and performance adjustment coefficient,the optimal incentive coefficient shows an increasing trend;under the coupling effect of bargaining power and the probability of private sector' performance discovered by public sector is true,the optimal incentive coefficient shows an increasing trend;under the coupling effect of bargaining power and punishment coefficient,the optimal incentive coefficient shows a decreasing firstly and then increasing.On the one hand,the above conclusions show that although the bargaining power representing reputation mechanism(implicit incentive)can replace part of the incentive coefficient(explicit incentive),due to the existence of ratchet effect,the public sector needs to increase incentive to achieve “reward and punishment clear”;on the other hand,in the early stage of the coupling process of reputation and ratchet effect,reputation incentive(implicit incentive)replaces parts of the incentive coefficient(explicit incentive),and with the increase of the coupling effect of reputation and ratchet,ratchet effect weakens reputation effect.Through constructing an overall and systematic performance evaluation system for water environment treatment PPP projects,establishing the optimization model of payment structure under uncertain conditions,and analyzing the internal incentive mechanism of reputation and ratchet effects in multi-cycle dynamic games,this study not only enriches and perfects performance evaluation and pricing theory of PPP projects,and provides theoretical basis for the incentive contracts design of PPP projects,but also plays a good reference and demonstration role,and has important application value for the operation management and performance improvement of major projects in China,and the improvement of social public infrastructure service level.