P3s for water and wastewater treatment offer communities efficiency, innovation, and better quality of life
Public-private partnerships (P3s) can free governments from the worries of providing their communities with fresh, clean drinking water and treating wastewater. They lower or eliminate CAPEX, offload risk, and incentivize excellence in design, engineering, construction, and long-term operations and maintenance (O&M) by guaranteeing performance.
The P3 can even outshine traditional procurement processes with more than just financial benefits. How do P3s enhance efficiency, promote innovation, and improve quality of life for communities?
Enhanced Efficiency and Innovation
P3s can reduce red tape by streamlining the decision-making process. By letting experts in the public and private sectors each concentrate on the aspects of the project within their own wheelhouses, project timelines speed up and administrative burdens lighten.
The P3 unburdens government resources while ensuring risk is transferred to the private partner. More importantly, they empower the private partner to unleash its expertise for efficient and cost-effective solutions.
Today’s P3 contracts in the water sector have evolved, often under government-established legal frameworks, into performance-based agreements that safeguard community interests. Their terms specify quality, quantity, and cost outcomes. If the private partner fails to perform, it does not get paid. With the private partner incentivized to deliver high-quality services and long-term infrastructure maintenance, P3s create a win-win model that aligns public needs with private sector efficiency.
Risk Mitigation and Shared Responsibility
P3s allocate risk equitably, with private water treatment partners assuming the construction and operational risks that they are better equipped to manage. Seven Seas Water Group’s Water-as-a-Service® model exemplifies this approach by financing projects in-house, eliminating the need for the public partner to levy taxes, issue bonds, or assume loans. Water asset ownership and risk, along with all O&M responsibilities, remain with Seven Seas, and the P3 agreement covers all repairs, so the public partner gets no unwelcome surprises. The public partner need only pay a predictable, budget-friendly service fee at a guaranteed rate.
This division of responsibilities allows the government to focus on public engagement, quality monitoring within the distribution network, and contract oversight, while the private partner handles design, execution, and operational efficiency. This teamwork model inherent in P3s makes both partners accountable for the project’s success, resulting in greater transparency and improved project oversight.
Improved Water and Wastewater Treatment Delivery
Public-private partnerships can be tailored to meet the specific needs of the public by taking user feedback and preferences into account during project design and delivery. Private sector involvement can also lead to improvements in service quality, such as reduced wait times, increased accessibility, and better customer satisfaction. P3 contracts also generally include long-term maintenance provisions, ensuring that the infrastructure remains in good condition and continues to serve the public for decades to come.
The recent water crisis in Jackson, Mississippi, is an example of what can go wrong with strictly public infrastructure. Competing governmental and public interests far too often can draw funding away from O&M and repairs over time. Should public water services falter, then boil alerts, sewage spills, or breaks in service can sour the public mood toward additional funding, leading to a build-neglect-rebuild cycle: A neglected plant can become irreparable. Then, a new plant must be constructed. A new plant costs the taxpayer exponentially more than the cost of steady maintenance and timely repairs on the existing infrastructure.
The separation between public and private entities under the P3 removes O&M from the public realm and puts it in the hands of water experts. The performance requirements of the P3 incentivize the private partner to adhere strictly to maintenance schedules and conduct repairs when they are needed, not after a crisis forces them. Public health, the environment, and the infrastructure that supports them all remain protected under the long-term stability of the P3, and the build-neglect-rebuild crisis never develops.
Community Benefits
The advantages of the P3 can be framed in financial terms, but the benefits to the community can be profound. Consider the Seven Seas desalination plant in Alice, Texas, a city with chronic water supply problems. More frequent and intense drought conditions made water hard to come by, and the city had to pay for water pumped in from 20 miles away.
Alice had begun construction of a desalination plant to tap the brackish aquifer beneath it, but money ran out and millions would be needed to complete it. Seven Seas stepped in with its P3 experience and completed the first brackish desalination P3 plant in the state, requiring no upfront cost and guaranteeing lower water prices than the city was paying already.
Alice went from dependence on a costly, distant water source to water independence in one stroke. The community received the confidence that comes with water resilience, making Alice a more favorable place for investment, for raising a family, and for economic growth.
Instead of decades of debt to raise the investment capital to complete the project, Seven Seas financed the project and assumed the risk. Alice rests easy in the hands of experts with deep experience in water and wastewater treatment, an industry-topping track record of 98.7% plant availability, and a five-star 100/100 GRESB rating.
The public-private partnership can produce less tangible but vital community benefits that make all the difference. They include the confidence and peace of mind that come with water independence, water resilience, and a new sense of control over the community’s destiny, unencumbered by the burden of debt. Contact Seven Seas to explore P3 plans and the benefits that extend far beyond the bottom line.
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Erik Arfalk is the Senior Vice President of Business Development at Seven Seas, specializing in innovative and sustainable water and wastewater solutions in the US and the Caribbean. Previously, he was the Chief Commercial Officer at Fluence Corporation, where he launched MABR. Erik has held leadership roles at Atlas Copco and GE in Europe and the US, starting his career in strategy consulting. He holds a Master's in Business Administration and Economics from Lund University, Sweden. Erik's passion for water solutions and his talent for building strategic partnerships have established him as a respected industry leader.