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The Performance of German Water Utilities: A (Semi)-Parametric Analysis

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  • Michael Zschille
  • Matthias Walter

Abstract

Germany's water supply industry is characterized by a multitude of utilities and widely diverging prices, possibly resulting from structural differences beyond the control of firms' management, but also from inefficiencies. In this article we use Data Envelopment Analysis and Stochastic Frontier Analysis to determine the utilities' technical efficiency scores based on cross-sectional data from 373 public and private water utilities in 2006. We find large differences in technical efficiency scores even after accounting for significant structural variables like network density, share of groundwater usage and water losses.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.371639.de/dp1118.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1118.

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Length: 34 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwwpp:dp1118

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Keywords: Water supply; technical efficiency; data envelopment analysis; stochastic frontier analysis; structural variables; bootstrapped truncated regression;

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  1. Picazo-Tadeo, Andres J. & Saez-Fernandez, Francisco J. & Gonzalez-Gomez, Francisco, 2008. "Does service quality matter in measuring the performance of water utilities," Utilities Policy, Elsevier, vol. 16(1), pages 30-38, March.
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Cited by:
  1. Michael Zschille, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," Discussion Papers of DIW Berlin 1187, DIW Berlin, German Institute for Economic Research.
  2. Andrea Guerrini & Giulia Romano & Bettina Campedelli, 2013. "Economies of Scale, Scope, and Density in the Italian Water Sector: A Two-Stage Data Envelopment Analysis Approach," Water Resources Management, Springer, vol. 27(13), pages 4559-4578, October.
  3. Anne-Kathrin Faust & Andrea Baranzini, 2014. "The economic performance of Swiss drinking water utilities," Journal of Productivity Analysis, Springer, vol. 41(3), pages 383-397, June.
  4. Ferro, Gustavo & Lentini, Emilio J. & Mercadier, Augusto C. & Romero, Carlos A., 2013. "Eficiencia en la prestación de agua y saneamiento y su vinculación con regiones, propiedad e independencia de los prestadores en Brasil
    [Efficiency in water and sanitation providers and its links
    ," MPRA Paper 48247, University Library of Munich, Germany.

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