Rehabilitation of Infrastructure and Water and Sanitation Services: Practices and Issues

Miscellaneous Contributions
By Guillaume Fauquert

The rehabilitation of the infrastructure assets of the French water supply and sanitation services is a huge financial issue for the local authorities, which are accountable for these services. It is incidentally possible for them to rely on a private operator for the operation, through a delegation contract. In this article, we describe the different ways of financing the renewal, in the cases of public management and of a delegation contract (“affermage”), depending on the choice of the contract scheme. We then explain the problems that this issue raises. In particular, the law that forbids investment of the funds intended to rehabilitation by local governments implies a growing tendency of indebtedness by the communities. The transfer of the renewal activity towards the private operator may be another solution, but its contribution may not bring better results than public management, and even creates an opportunity for the private firm, in some cases, to trap the amounts initially foreseen for the replacement. The management of the assets is also affected, as described first in an empirical way, and second in a simple decision model based on economic criteria. Anyway, the local authorities have to manage their collective patrimony, and, for doing this, should secure accurate knowledge of the state of their assets in order to make the most appropriate decisions.

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