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Privatization of Solid Waste and Water Services: What Happened to Costs Savings?

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Cost reduction was the key benefit claimed by privatization. We conduct a meta analysis of all published econometric studies of water and waste production in cities since 1965. Little support is found for a link between privatization and cost savings. Cost savings are not found in water delivery and are not systematic in solid waste collection. Theoretical expectations for cost savings arise from the benefits of competition and the incentives of private ownership. However, empirical results show the importance of market structure, industrial organization of the service sector, and government management, oversight and regulation.