The purpose of this study is to investigate whether contracting-out of the local water service brought expected efficiency or not compared to government management and suggest the improvement alternatives of water service system by analyzing the cause of these differences. To this purpose, Geoje city was selected as a contracting-out case, Yangsan city as a government management case.
The results of analysis are as follows. First, the revenue water ratio in Geoje city was significantly improved while that in Yangsan city increased gradually. As a factor of differences in the improvement of revenue water ratio, securing of water service budgets, early implementation of the waterworks expenditure, and operational professionalism of the trustee(K-WATER) were suggested.
Second, production cost per ton in Geoje city went down due to decreasing of water leaking, K-WATER's professionalism and unified water operation of local water services. On the other hand, production cost per ton in Yangsan city has increased slightly
Third, water supply facilities in Geoje city were improved in virtue of securing investment expenses for waterworks and early implementation of water facility improvement expenditures after 2008. On the other hand, the Yangsan city has lower water supply facilities compared to Geoje city by investing in waterworks facilities in accordance with the financial situation.
Fourth, the stability of Geoje city's water service was improved rapidly because K-WATER constructed the integrated water operating system and water block system early, and geographic information system of pipe line was established in 2012. However, the construction of the integrated water operation center and the block system has been delayed in Yangsan city, so that the stability of tap water is lower than that of Geoje City.
Finally, since the contractingᅭout, the total level of the customer satisfaction survey in Geoje city has increased steadily every year, exceeding 80 points in 2015. Customer satisfaction index in Yangsan city was 76.7 points, which was lower than that in Geoje city.
Policy implications of the study are as follows. First, while the quantified target values for the revenue water ratio and the residents' satisfaction index were set in contracting-out local water service, production cost per ton was not included. In this study, the author analyzed production cost per ton and pointed out that the concrete quantification target should be set for the cost in the contract of the local water service in the future.
Second, this study provides a solution to the controversy of what is the goal of water service, by comparing and analyzing the efficiency that includes the effectiveness and the benefit-cost analysis of water service.
Third, the central government is implementing water supply network modernization projects for municipalities that have difficulties in investment in the water service. This study provides a criterion to evaluate the efficacy of contracting-out and government management in the water service by recommending contracting-out pattern to water-related specialized agencies in parallel with this project.