Research On The Fiscal Subsidy Policy Of Reasonable Return On Investment Of PPP Project In Water Industry

Water industry infrastructure construction is the essential link in the process of urbanization in China.In order to reduce the financial pressure on government departments,in the financing of infrastructure construction,China has gradually allowed the private sector through the franchise way to participate.Through the private sector to participate in infrastructure construction,on the one hand can effectively reduce the financial pressure on government departments,on the other hand can increase the market mechanism to provide resource allocation efficiency.However,the private sector investment returns in the PPP sector of the water industry or the extent to which financial subsidies for government departments should remain at what level is still controversial.Based on this,this paper will combine the experience of China's water industry development and the international project of building PPP projects in the water industry.Based on the theoretical framework of PPP project,this paper systematically studies the investment return and financial subsidy of PPP project in China's water industry.In this paper,the PPP project of water industry in China is taken as the research object,and the investment rate of private sector investment and the subsidy of government investment in PPP project are analyzed.Firstly,this paper analyzes the operation of PPP project in the water industry and the investment return rate of private sector and the financial subsidy of government departments under the framework of the theory of existing public goods and principal-agent theory.On this basis,the author further studies the main influencing factors of investment return rate of PPP project in water industry through qualitative analysis.The results show that the return of the PPP project in the water industry is mainly affected by three aspects: the profitability of the PPP project after the completion of the construction of the water industry,the cost of the PPP project in the water industry,and the financial subsidy of the government department.First,the main factors influencing the profitability of the PPP project after the completion of the construction of the water industry include three aspects: the maximum price limit of the government service price for the water industry,the profitability of the water industry project and the efficiency of the water industry project operation.Second,the main factors that affect the cost of expenditure in the construction of the PPP project in the water industry include: the cost of financing to curb the return on investment in the private sector in the PPP project of the water industry;the human cost is an important part of the cost of PPP construction in the water industry,With the increase in labor costs,the private sector will also reduce the return on investment;project construction costs are also part of the important cost of PPP construction in the water industry;other costs outside labor costs and project construction costs.Thirdly,the main factors that affect the financial subsidies of government departments include: the private sector to bear the PPP project's annual construction costs,annual operating costs and reasonable profits,the amount of annual user fees.Finally,the author through the water industry PPP project investment rate of return and government sector financial subsidies to carry out a quantitative analysis.First,we constructed the model for the measurement of the ROI of the private sector in the PPP project.Using the data and macroeconomic data related to China's water industry,the upper and lower limits of the private sector investment return in the PPP project of the water industry are measured.In the further study,we find that the single factor arbitrage model can be applied to the investment rate estimation of PPP projects in the water industry.We also introduced the inflation rate factor in the empirical analysis,taking into account the different rate of inflation,the water industry PPP project investment rate of return to determine the problem.In fact,when the overall macroeconomic environment has changed,the macroeconomic environment can be introduced with reference to the inflation factor to dynamically adjust the return on investment(ROI)of the PPP project in the water industry.Under this pricing mechanism,the problem of delay in the pricing model in the static pricing model can be effectively prevented.Second,we will combine the characteristics of the PPP project in the water industry,consider the impact of the risk factors on the financial subsidy of the government departments,and use the CAPM to correct the discount rate model to construct the financial subsidy model of the PPP project in the water industry.The results show that,first of all,the government subsidy rate will significantly promote the private sector investment rate of return.In the PPP project of the water industry,the private sector's return on investment will increase significantly as government subsidies increase.Second,the risk of investors increasingly risk-seeking pursuit of the water industry,PPP projects,the lower the rate of return on investment.Water subsidies for government departments in the PPP project in the water sector will increase the attractiveness of the PPP project to the private sector by providing private sector ROI.However,too high government sector financial subsidies will not only increase the financial burden on government departments,but also bring too high private sector investment returns,will inhibit the private sector in the construction of water industry PPP project initiative.Therefore,the government departments through the PPP project net present value as the basis for financial subsidies,to develop a reasonable level of financial subsidies.According to the research conclusion,this paper put forward policy suggestions on fiscal subsidies in the reasonable investment returns of the PPP project in China's water industry: From the perspective of government departments,the Ministry of Finance and other departments should issue the reasonable return interval jointly in order to guide the implementation of financial subsidies;improving information disclosure system of the water industry PPP project investment return,strengthening the market mechanism and social supervision;improving the financing environment of PPP project in water industry and reducing the cost of financing,that is mainly to enrich the financing market of the PPP project in the current water industry,and to change the credit concept of the commercial banks,and to perfect the withdrawal mechanism of the social capital;establishing the classification mechanism of financial subsidy for PPP project in water industry,that can improving the adaptability of subsidies,mainly for the water industry PPP project social benefits and industry differences and other factors to carry out classification subsidies;strengthen the authenticity of the project identification,establish a special PPP project financial subsidy performance evaluation,supervision system;strengthen the whole process audit of PPP project in water industry and improve the effect of supervision;the dynamic management of PPP project should be carried out,and the balance mechanism of public and private interests of financial subsidies is established.The innovation points of this article are the following two points:One is to establish a reasonable rate of return interval model in the water industry investment of the PPP project;put the force majeure,inflation,policy risk,technology risk factors into the rate of return model in specific project,this model can input the variables of these exogenous factors again.Finally realizing the dynamic estimation of a reasonable rate of return in investment through the CAPM model to adjust the discount rate;considering the influence of multiple risk factors of water industry in the PPP project to the financial subsidy of government departments,we construct the finance subsidy model of PPP project in water industry using CAPM to adjust the discount rate model.The other one is the proposal of the financial subsidy policy for the PPP project in China's water industry.For instance,the Ministry of Finance and other departments should join to release the reasonable return interval for the implementation of financial subsidies;formulate differentiated financial subsidies proposal and allowance in accordance with the value range of a reasonable rate of return to investment on the PPP project,improving the adaptability of subsidy and formulating grading subsidy mechanism.In this way,we consider the differences between various kinds of water projects,optimize the mode of financial subsidies,and alleviate financial pressure,as well improve the enthusiasm of social capital to ensure high quality and high efficiency of projects.