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The cost efficiency of water utilities: when does public ownership matter?

Author

Listed:
  • Silvia Pazzi
  • Emili Tortosa-Ausina
  • Meryem Duygun
  • Simona Zambelli

Abstract

This study explores the impact of different ownership types on the efficiency of water utilities. Theories and evidence have shown a puzzling relationship between ownership and performance. Moreover, relatively recent contributions (Andrews et al. 2011) have argued that this relationship can be further convoluted by the effect of organisational and environmental variables. The current study aims to contribute to this literature by providing some empirical evidence for Italy, by proposing a methodology that combines non-parametric efficiency estimation and cluster analysis. Our main findings indicate that privately owned utilities indirectly controlled by a public organisation reach the highest level of efficiency but, when size and geographical location enter the analysis, ownership has a stronger significant effect on efficiency, and mixed utilities gain higher cost efficiency. Therefore, we may conclude that administrative reforms about privatisation and the institutional setting should consider a set of variables that characterise each individual organisation.

Suggested Citation

  • Silvia Pazzi & Emili Tortosa-Ausina & Meryem Duygun & Simona Zambelli, 2016. "The cost efficiency of water utilities: when does public ownership matter?," Local Government Studies, Taylor & Francis Journals, vol. 42(6), pages 980-1003, November.
    • Handle: RePEc:taf:flgsxx:v:42:y:2016:i:6:p:980-1003
    DOI: 10.1080/03003930.2016.1207630
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    Cited by:

    1. Andrés J. Picazo-Tadeo & Francisco González-Gómez & Marta Suárez-Varela, 2020. "Electoral opportunism and water pricing with incomplete transfer of control rights," Local Government Studies, Taylor & Francis Journals, vol. 46(6), pages 1015-1038, November.
    2. Hellwig, Michael & Polk, Andreas, 2021. "Do political links influence water prices? Determinants of water prices in Germany," Utilities Policy, Elsevier, vol. 70(C).
    3. Isabel Narbón-Perpiñá & Maria Teresa Balaguer-Coll & Diego Prior & Emili Tortosa-Ausina, 2023. "Vertical transfers, political alignment, and efficiency in local government," Working Papers 2023/08, Economics Department, Universitat Jaume I, Castellón (Spain).

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