Effectiveness of Public versus Private Ownership: Violations of the Safe Drinking Water Act (SDWA)

The relative performance of public and private enterprises has been long debated. We construct a comprehensive violation dataset based on the EPA's Safe Drinking Water Information System to empirically investigate the compliance behavior of publicly and privately owned Public Water Systems (PWSs). Our results show that publicly owned PWSs commit significantly more Maximum Contamination Level, Treatment Technique, and Health-Related violations but fewer Monitor and Reporting violations than privately owned PWSs. We also find that municipal-level heterogeneities explain a substantial amount of variation in violation behaviors among PWSs, suggesting water supply quality depends crucially on location-specific regulations and local economic conditions.