Public–Private Partnerships- Risk Sharing Determinants

Abstract:

How is risk sharing in a public–private partnership affected by the characteristics of the investment project and the type of public entity involved? Using parametric and non-parametric tests of all public–private projects in Poland between 2009 and 2017, this study shows that there is a clear tendency to transfer most of the risk areas to a private partner regardless of the characteristics of the investment, the type of public entity or the public debt level. The value of this paper is that we focus on empirical confirmation that public entities are trying to transfer as many risk areas as possible to a private entity at all costs, regardless of project features, level of debt, or type of investment. The results obtained in this study reveal the determinants of the risk-sharing process in a public–private partnership. They constitute an extension of the principles of risk management theory in public finance, called the New Public Service (NPS) approach, and a source of good practices in the area of risk sharing in public–private partnerships, including shaping the level of local government debt.