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Article history:
Received 25 December 2015
Received in revised form
28 April 2016
Accepted 29 April 2016
Available online 7 May 2016
Funding shortages can greatly affect the construction and implementation of urban sewage treatment
projects. Applying the publiceprivate partnership model to urban sewage treatment projects will increase the nancing capacity and mitigate the risk of local debt. Based on analyses of current urban
sewage treatment projects and the relationship between the publiceprivate partnership model and
these projects, we demonstrated that the publiceprivate partnership model is applicable to city sewage
treatment projects, thereby enhancing social capital, improving the management and operation of the
projects, and facilitating various management methods for innovation and optimization. We studied the
relationships between responsibility and authority, benet sharing, and risk sharing using the public
eprivate partnership model as well as the main issues that affect urban sewage treatment, and we then
analyzed these issues from the perspectives of government, enterprises, intermediary agencies, and
public groups. We conclude that the implementation of publiceprivate partnership models affects urban
sewage treatment projects by dening the relationship between the government and market. Based on
our comprehensive analysis, we provide policy suggestions regarding the publiceprivate partnership
model for urban sewage treatment with respect to government, social capital, and intermediary organizations, thereby providing a guide to the implementation of the publiceprivate partnership model.
2016 Elsevier Ltd. All rights reserved.
Keywords:
Government
Intermediary
Publiceprivate partnership (PPP)
Urban sewage treatment
1. Introduction
Wastewater and sewage threatens human safety and development, as well as impeding the sustainable development of the
economy and society. Due to the acceleration of industrialization
and urbanization, urban sewage discharge rates are increasing at a
rate of 5% per year. However, the current capacity for sewage
treatment is relatively low. In order to curb the adverse effects of
environmental pollution due to the uncontrolled discharge of
sewage, effective measures must be taken to ensure that the
discharge of sewage meets the required standards. However, a
shortage of funds impedes such progress. It is also necessary to
improve the technology, management, operation, and monitoring
mechanisms of the treatment of sewage to meet such standards.
Currently, environmental problems are attracting increasing
attention. In particular, the development of urban sewage treatment is a widespread concern throughout the world. The Chinese
government has already introduced laws and regulations such as
* Corresponding author.
E-mail address: longruyin@163.com (R. Long).
http://dx.doi.org/10.1016/j.jclepro.2016.04.152
0959-6526/ 2016 Elsevier Ltd. All rights reserved.
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Number of
urban sewage
treatment plants
Daily sewage
treatment capacity
(million cubic meters per day)
Sewage
treatment
rate (%)
2009
2010
2011
2012
2013
2014
1214
1444
1588
1670
1736
1808
9052
10,436
11,303
11,733
12,454
13,088
75.25
82.31
83.63
87.30
89.34
90.18
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economy began to move into the new normal stage. The development of the PPP model depends on the needs of economic and
social development, as well as the needs of national governance
and the complexity of public management. The Third Plenary
Session of the Eighteenth Central Committee emphasized that
nance is the foundation of national governance as well as
noting that the market plays a decisive role in the allocation of
resources, and establishing a market mechanism to attract social
capital investment in ecological environment protection was also
proposed. Thus, the relevant policy system has been improved
since the end of 2013. The initial framework of the PPP system has
been constructed, and documents related to the notication of PPP,
the operational guidelines, the guidelines for the contract, and the
demonstration of nancial capacity have been issued, so the
number and value of PPP projects have increased signicantly. By
February 2016, the number of PPP projects in China was 6997,
whose investments was 81,322 Yuan RMB. These PPP projects
were distributed in many provinces, of which Guizhou's number of
PPP projects is greatest (Fig. 2). In terms of the number of PPP
projects, China ranks rst in the world, where it accounts for
29.75% of the Top-10 projects. Compared with other countries, the
PPP model is being applied widely in the construction of infrastructure in China. As an innovative management model, PPP facilitates the development of concepts, technology, and system
innovation in the economic transition process. The PPP model
emphasizes full cooperation, benet sharing, and risk sharing, as
well as promoting the combination of equity and efciency.
However, due to the short period of time during which the model
has been applied, the relevant parties generally lack experience
and many practical problems still need to be considered.
In 2014, among the rst batch of PPP pilot projects, sewage
treatment was applied widely in Jiangsu, Chongqing, Fujian,
Anhui, and other provinces. For example, two out of the 15 pilot
projects are related to sewage treatment in Jiangsu Province, four
out of 28 in Fujian, and 17 out of 42 in Anhui. According to the
latest PPP project library in 2015, urban sewage treatment is
divided into different management sectors, e.g., sewage treatment,
water conservation, ecological environment, and urban construction. In particular, the number of sewage treatment projects in
Beijing is seven, which account for 41.4% of the total PPP projects;
the number of sewage treatment projects in Guangdong province
is 12, accounting for 75%; the number of sewage treatment projects in Anhui province is 30, accounting for 23.6%; and the
number of sewage treatment projects in Sichuan Province is seven,
accounting for 20%. In September 2015, water treatment projects
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sewage treatment plant that has already been built but that cannot
be put into operation, and nally this project is owned by the
government. The introduction of this model requires special
consideration of the supervision procedure by the government
when signing the contract, the charging for expenses related to
sewage treatment plants, and quality tests, while future development directions should be stipulated in advance. The most noteworthy is the design-build-operation (DBO) model, which is an
atypical model for supporting the specialization of sewage treatment services. This model facilitates overall planning by considering the original project design, and the prots from the design
and construction are distributed to private investors, which makes
it easy to formulate the scale and to intensify development. The
prot model is based on income from charging the government for
sewage treatment minus the company's operating costs, equipment
depreciation, and other expenses. Each model has its own
emphasis, and thus the selection of each should depend on the
specic situation.
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Fig. 6. Classication for the implementation stages of urban sewage treatment PPP
projects.
Fig. 5. The amount of money that the urban sewage treatment PPP projects involve
and the sewage treatment scale per day.
fair and effective risk allocation is the desirable outcome of negotiations among the participants, which requires great effort.
3.2. Challenges for the PPP model in urban sewage treatment
In China, the development of urban sewage treatment is under
high pressure and the demand is urgent. However, it takes time to
convert the investment space into projects and to achieve the
orderly development of a PPP model, as well as requiring a
comprehensive recognition of the t between the project and the
PPP model. Thus, some problems need to be solved during this
process.
The rst issue is dening the relationship between the government and the market. In the context of market-featured reform
for public utilities in China, the top-level design has been
completed and the dominant role of the government in urban
sewage treatment is no longer overemphasized. However, it is
Fig. 7. Classication for the return mechanisms of urban sewage treatment PPP
projects.
necessary to understand the nature and risk of the market mechanism. The function of marketization should not be exaggerated
and the PPP model must not be promoted blindly in order to prevent it from becoming a movement. In addition, due to the requirements for large investments, a long investment period, and
uncertain prot opportunities for city sewage treatment project,
there are concerns about the credibility of the government and the
changeability of public policy with respect to the investment of
social capital. Thus, the government should change its ideas and
improve its governance capacity as well as its credit rating.
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Central government
Local government
Right
Social benefits
Government
responsibility
Financial intermediaries
State-owned economy
cooperate
Legal intermediaries
Collective economy
Private economy
Social
capital
Asset evaluation
intermediary
Urban
sewage
Contract treatment
company
Internet+
International
cooperation
Economic benefits
Fig. 8. Summary of the operating mechanism for the PPP model in urban sewage
treatment.
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Table 2
Forms of the PPP model used in urban sewage treatment.
Model
Connotation
Implementation objective
Cases
Build-OperateTransfer (BOT)
Transfer-OperateTransfer (TOT)
Corporation and
other
marketization
models
contract, establishing a coordination mechanism with a clear division of responsibilities, and giving priority to the promotion of
quality sewage proposal subjects with reasonable and transparent
charges and stable prots.
Public nance is the foundation of a country's governance.
Innovative regulations cannot exist without the transformation of
ideas. In particular, for scal management, in order to fulll the
obligation of government to provide public goods, the denition of
responsibility for scal nance expenses should be made in terms
of investment in capital, operation subsidies, solutions to risk, and
concerning the input of each process to PPP projects in urban
sewage treatment.
The Ministry of Finance published the Fiscal Capacity of PublicPrivate Partnership Projects Guidelines on April 7, 2015, thereby
dening the nancial capacity requirements for PPP projects and
the careful control of the scale of new PPP projects to prevent and
control nancial risks. The nancial capacity of urban sewage
treatment projects also requires holistic and objective arguments,
which help to build a high-quality government procurement platform and to select substantial, qualied investors through public
bidding. With respect to the project signing progress, the government should also perform early planning, such as better forecasting
of the amount of sewage water and other important indicators, as
well as adjustments to the proposed sewage service price according
to general prices and other specic factors, and produce detailed
terms for the price adjustment method, formula, and the proposed
sewage procedures.
Manager
Roles of the
Fiscal
management
Financial
supervision
government
Cooperation
Social
regulation
Fig. 11. Roles of the government in the PPP model in urban sewage treatment.
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Acknowledgments
We appreciate support from the National Natural Science
Foundation of China (grant Nos. 71273258 and 71473247), the
Program of Innovation Team Supported by China University of
Mining and Technology (No. 2015ZY003), a major project supported by the Cyclic Economy Research Center in Sichuan Province
(XHJJ-1501), and the National Social Science Fund Youth Project of
China (grant No. 14CJY059).
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