Economic and financial aspects of drinking water supply: a project development guideline

Abstract

Water is one of the most important elements of life and there is no alternative for human beings. Faced with limited water and financial resources, public policy makers are trying to find new ways of providing the society with an appropriate quality of water by attracting private investors. This paper attempts to answer the question on how water sector projects can be developed with private investments to deliver the desired economic and social benefits to society. From this perspective, the paper sets the objective of designing a cost-benefit analysis framework that compares the possible deployment models, analyses the optimal solutions that achieve both optimal economic and financial outcomes and can be instrumental in decision making for water sector projects. As a result, the level of Economic Internal Rate of Return (EIRR) for public decision makers and Financial Internal Rate of Return (FIRR) for private investors are examined.