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Cost and productivity effects of demographic changes on local water service

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  • Cullmann, Astrid
  • Stiel, Caroline

Abstract

We investigate the impact of demographic changes on local public services taking the case of water service. We apply a structural production function approach to a large panel of German water utilities between 2003 and 2014. Exploring variation of population density and the population age structure across service areas and over time, we provide evidence that demographics and their changes significantly affect the utilities’ productivity and costs. We find that demographic changes cause significant cost increases in rapidly shrinking and ageing regions. Our results provide important policy implications regarding the prevention of growing regional disparities in public services.

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  • Cullmann, Astrid & Stiel, Caroline, 2022. "Cost and productivity effects of demographic changes on local water service," Utilities Policy, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:juipol:v:79:y:2022:i:c:s0957178722000996
    DOI: 10.1016/j.jup.2022.101435
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    More about this item

    Keywords

    Water service; Demographic change; Productivity growth; Public service provision; Costs structure;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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