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The Distributional Impacts of Privatization in National Water-Quality Policy

This research addresses the role of privatization in a major national environmental program and the implications of that involvement on the ability of the program to meet national policy objectives. The study draws a distinction between "formal" and "informal" privatization and suggests that informal privatization may result in less desirable public outcomes. Using data from a 50-state study of the State Revolving Loan Fund program, a series of multivariate models are developed and tested to determine the effects of privatization on the distribution of loans to certain kinds of applicant communities. The study finds that private sector activity in the State Revolving Loan Fund program results in significantly different patterns of resource distribution in the program, in that states engaging in informal privatization are less likely to meet the national policy objectives of the program than those engaging in formal privatization.