Abstract: The purpose of this paper is to solve the problem of insufficient or excessive government economic commitment existing in Chinese PPP projects. First, four scenarios are constructed to describe differences between project types and credit environment. Secondary, a government economic commitment decision-making model is developed by combining the optimization decision with the real option theory. Then, besides analyzing the conditions and boundaries of the model solution, a computer solution algorithm is provided with no analytical solution based on sequential unconstrained minimization technique. Finally, the decision-making rules of the sewage treatment project in W city are explored by numerical simulation analysis method. The results show that scenario difference affects government's economic commitment decision, the government’s economic commitment will add the value of the project, but higher economic commitment does not necessarily lead to higher commitment costs. Government should give lower economic commitments for projects with greater yield fluctuations, but give higher economic commitments with tighter credit, and vice versa. The government can reduce its economic commitments by shifting income distribution rights or increasing capital investment. The influence rules of credit environment and type difference on economic commitment decision-making are revealed, which expands the research on government economic commitment decision-making. It is helpful for clarifying the decision-making cost and consequences of the government economic commitment, controlling project financial risks, and optimizing the economic commitment decision-making of Chinese PPP projects

Key words: PPP projects, economic commitment, viability gap funding, scenario modeling