Private sector involvement in public water distribution: Assessing local water systems in Massachusetts

Despite the fact that the debate over private sector participation in public water provision dates back to the 19th century, it lingers on. Freshwater is the most precious natural resource we have. Its supplies are dwindling while use is simultaneously rising. Moreover, the lack of access to clean drinking water has caused an international epidemic of sorts, resulting in over 2 million deaths per year. Therefore, appropriate prioritization of this resource must result in distribution focused on preserving accessibility, health of consumers, and sustainable, waste free use. The question therefore that guides this research is how to provide water to the public in an efficient manner while maintaining regulatory compliance and accessibility---that is, affordable, low cost water---for the consumer.;Free market advocates tout privatization as the antidote to dwindling supplies and efficiency problems in the public sector. Private sector participation in public water systems will, according to the market model, always result in a more efficiently functioning water system, explaining that human beings act rationally to maximize their own self interest. But what if the market model forgoes other factors that motivate human behavior? Graeme Hodge, privatization and public administration expert, discusses numerous problems with solely economic based theories and explains that self interest is one of many factors motivating human behavior. Hodge's notion, what I call multiple motivations theory provides the framework for this research, operating under the assumption that the public sector may be the better choice when it comes to the distribution of a life essential resource like water.;To better understand some of the differences between public and private water provision, I conducted both a quantitative analysis of 39 water systems servicing 40 municipalities throughout Massachusetts and a qualitative multiple-case study analysis of three Massachusetts public water systems. I examined three ownership/management structures: (1) systems owned and operated by a municipality; (2) systems owned and operated by a private company; and (3) systems owned by a municipality, and operated with private sector participation. My research asks whether the nature of the ownership and/or management structure of a public water system affects: (1) affordability of water and cost to the consumer; and (2) the level of a system's regulatory compliance. My multiple-case study research seeks, through 82 customer, town official, DEP and private company interviews, a deeper understanding of why the quantitative findings were such. I assessed three Massachusetts public water systems, one from each of the aforementioned ownership/management structures: (1) the Hingham/Hull system; (2) the Hanover system; and (3) the Norfolk system.;My results refute the view that private sector participation necessarily increases efficiency and reduces costs to the consumer. I found the ownership/management structure of a water system to have a statistically significant impact on the affordability of water and cost to the consumer, but not to have a statistically significant impact on levels of regulatory compliance for the years 2003-2007, for all 39 systems included. Moreover, this research raises questions about and offers recommendations for the appropriate role of the private sector in public water distribution. By conducting a state focused analysis, this project contributes a unique data source to the growing body of research on private vs. public provision of water.