Providing a municipal infrastructure: How did Paris and Milan finance their water and sanitation infrastructure (1853-1925)?

Water and sanitation services (WSS) are highly capital intensive, particularly in the networks’ expansion phase. How was water and sanitation infrastructure financed in European cities in the early phase of ‘modern’ WSS’ creation? What were the financing tools implemented to cover the huge short term investment costs? Who were the final end-payers in the long term? This paper analyzes and compares the financing history of WSS in Paris and Milan from their creation as ‘modern’ services (mid-19th century in Paris, 1888 in Milan) until 1925. The analysis is based both on existing literature and on primary sources (particularly the annual financial reports of both municipalities).
In both cities, WSS were developed by the municipality. In Paris clean water was not easily available locally and so complex infrastructure was built: canals, long-distance aqueducts, water supply networks and sewers, water treatment plants, sewage farms. Conversely Milan lies on an abundant alluvial aquifer and only basic water infrastructure was required.
A variety of implemented financing schemes and institutional solutions (municipal budget - fiscal resources, concession, municipal bond and land added value capture schemes) are identified and described. The financial equilibrium of the WSS is analyzed anda discussion of the long term cost allocation is made. It appears that long-term debt, inflation and land added value capture mechanisms played key roles in absorbing a major part of the investment costs.