Water

The French water giants were going to take over the entire U.S. water utility business. Sludge was king.

Well, the megatrend of the future is 1988 is still the megatrend of the future in 2011.

And the reasons why PPPs have not taken off in the U.S. are the same now as they were in the 1980s.

I can't tell you how many times smart people have told me that infrastructure needs in America are so great, deficits are so dire, and consequences of inaction are so harmful, that the PPP market will take off.

A small contractor from Kentucky wised me up 20 years ago. He had wasted two years trying to put together a PPP on a sewage treatment plant for his very distressed town.

Summing up the experience, he said: "There's plenty of need, but there's not enough want in American governments." He even wondered whether P3s were too hard for municipal governments in the U.S.

Desperate bureaucrats don't do P3s. They have it thrust upon them by governors and mayors. Procurements can extend beyond their terms in office, however, so political decisions must be made early, the right P3 advisors must be hired and in-house champions identified. Lining up all the planets and getting to the finish line at a time when the capital markets are friendly is the big challenge. Who can do that?

Here's a fast look at a few P3 markets today:

Airports:

FAA's Airport Improvement Program appears to be doomed, sooner or later, taking down a lot of infrastructure improvement projects with it. The alternative appears to be Passenger Facility Charges, which cannot be taken away by Washington. PFCs are collected locally and stay local so they can be bonded for local capital projects without projects being federalized.

Airlines now charge $25 for your first bag and $50 for a second. A $5 increase in the PFC at most airports would more than make up for the lost federal funds. I don't know enough about the aviation P3 business to predict what effect a shift to greater reliance on PFC's would have. But I do know that when it's your own money you spend it more wisely. That's always good for P3s.