Financial and Political Factors Motivating the Privatisation of Municipal Water Services

Financial and political factors are widely considered to be an explanatory factor of the privatisation of public services. However, the empirical evidence in this respect is not convincing. This paper considers elements of long-term financial condition and ideological and political strength, together with other socio-economic factors and the effects of the current global financial crisis, to address the financial stress–privatisation relationship, with respect to urban water services, observed during the period 2002–2012 in Spanish municipalities. A discrete time survival model is applied, and the results obtained show that certain elements of financial condition, together with political and ideological factors, are decisive influences in decisions to privatise urban water services. We also highlight the major impact of the Great Recession and its effect on the financial stress–privatisation relationship.