The financial consequences of investing in rural public utility infrastructure

This master's thesis discusses the financial aspect of drinkable water supply distribution. Unlike in the\ud case of the Črnomelj municipality, particular emphasis is placed here on the real cost by including the\ud amortisation of water supply infrastructure in determining the actual cost of drinkable water\ud distribution for households. The chosen methodology to arrive at the drinkable water distribution price\ud setting is based on the principle of regulating the relationship between the actual costs in the process\ud of drinkable water distribution (with the emphasis on the amortisation costs) and the amounts of\ud drinkable water sold to the inhabitants in a certain area of the municipality and in the lower spatial\ud units of the local communities.\ud The empirical part of this thesis determines the price for the drinkable water distribution in each\ud individual local community of the municipality; considerable differences in distribution costs are\ud shown and evaluated as a consequence of different lengths of water supply networks and different\ud consumer density in each individual local community. The fees established in this manner have also\ud been placed in the context of a broader time period. The calculating framework of the simulation\ud presents an analytical model that demonstrates the influence of changes in the infrastructure costs,\ud network lengths and consumer density on the modification of fees for the distribution of drinkable\ud water. Municipalities can evaluate the conditions in different areas for the drinkable water cost\ud distribution. The core thesis of this paper is based on the presupposition that the costs of real\ud amortisation of water supply network in the rural areas should be included in the price of the drinkable\ud water distribution. Inclusion of all of the costs will have a positive effect in achieving the requirements\ud for the operative programs for state environmental and infrastructure standards of drinkable water\ud supply: reduction of water loss, lowering maintenance costs, maintaining a steady water supply for\ud households and raising the health standards of drinkable water. An additional positive effect from\ud inclusion of all costs will be understanding the real costs for providing water supply infrastructure for\ud reconstructions and newly constructed buildings in the rural areas. A research of average consumer\ud household habits has been conducted on state level (currently, 2011); in addition, the established fee\ud structures for services in the field of drinkable water distribution have been studied in some\ud comparable public organisations. On the basis of quantification, comparison of statistical data and the\ud results from the empirical part of the thesis we have reached the conclusion that the possibility for the\ud rise in prices of drinkable water distribution is realistic and professionally justified in the rural areas of\ud Slovenian municipalities that are presently confronted with the problems of old and deteriorated water\ud supply infrastructure