PPP Insights: The Affermage-Lease Contract in Water Supply and Sanitation
Delegated management contracts today have more of a mixed, hybrid nature than in the past. They take selected elements from different contractual models to create a new, tailored model. The result is that many delegated management contracts can no longer be easily classified into a single category on the public-private partnership (PPP) spectrum.
One innovative version of the affermage contract that is gaining in popularity has a more equitable distribution of efficiency gains for all contracting parties. In this paper we explore the recent trends of the performance-based affermage and lease models; and analyze the characteristics and benefits of a particular innovative affermage model, which includes a more equitable model of revenue distribution between partners.
