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How "natural" are natural monopolies in the water supply and sewerage sector? Case studies from developing and transition economies

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  • NAUGES Céline

    (LERNA, TSE)

  • VAN DEN BERG Caroline

Abstract

Using data from the International Benchmarking NETwork database, the authors estimate measures of density and scale economies in the water industry in four countries (Brazil, Colombia, Moldova, and Vietnam) that differ substantially in economic development, piped water and sewerage coverage, and characteristics of the utilities operating in the different countries. They find evidence of economies of scale in Colombia, Moldova, and Vietnam, implying the existence of a natural monopoly. In Brazil the authors cannot reject the null hypothesis of constant returns to scale. They also find evidence of economies of customer density in Moldova and Vietnam. The results of this study show that the cost structure of the water and wastewater sector varies significantly between countries and within countries, and over time, which has implications for how to regulate the sector.

(This abstract was borrowed from another version of this item.)

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File URL: http://www2.toulouse.inra.fr/lerna/travaux/cahiers2007/07.05.226.pdf
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Bibliographic Info

Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 07.05.226.

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Date of creation: Aug 2007
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Handle: RePEc:ler:wpaper:07.05.226

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  1. Estache, Antonio & Perelman, Sergio & Trujillo, Lourdes, 2005. "Infrastructure performance and reform in developing and transition economies: evidence from a survey of productivity measures," Policy Research Working Paper Series 3514, The World Bank.
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  13. H. Naci Mocan, 1995. "Quality Adjusted Cost Functions for Child Care Centers," NBER Working Papers 5040, National Bureau of Economic Research, Inc.
  14. David S Saal & David Parker, 2000. "The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 253-268.
  15. Bhattacharyya, Arunava & Harris, Thomas R. & Narayanan, Rangesan & Raffiee, Kambiz, 1995. "Specification and estimation of the effect of ownership on the economic efficiency of the water utilities," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 759-784, December.
  16. Hunt, Lester C & Lynk, Edward L, 1995. "Privatisation and Efficiency in the UK Water Industry: An Empirical Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(3), pages 371-88, August.
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Citations

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Cited by:
  1. Konstantinos Tsagarakis, 2013. "Does Size Matter? Operating Cost Coverage for Water Utilities," Water Resources Management, Springer, vol. 27(5), pages 1551-1562, March.
  2. repec:idb:brikps:66858 is not listed on IDEAS
  3. Abbott, Malcolm & Cohen, Bruce, 2009. "Productivity and efficiency in the water industry," Utilities Policy, Elsevier, vol. 17(3-4), pages 233-244, September.
  4. Ferro, Gustavo & Lentini, Emilio & Mercadier, Augusto & Romero, Carlos A., 2010. "Retornos a escala en agua y saneamiento: estimaciones para América Latina
    [Returns to scale in water and sanitation: estimates for Latin Amercia]
    ," MPRA Paper 20324, University Library of Munich, Germany, revised Jan 2010.
  5. Angel Prieto & José L. Zofio & Inmaculada Alvarez, 2009. "Economías de escala, densidad y alcance en la provisión pública de infraestructura básica municipal," Hacienda Pública Española, IEF, vol. 190(3), pages 59-94, September.
  6. Eiji Satoh, 2012. "Consolidation and Scale Economies in the Japanese Sewerage Industry," Global COE Hi-Stat Discussion Paper Series gd12-240, Institute of Economic Research, Hitotsubashi University.
  7. Nadia Tecco, 2008. "Financially sustainable investments in developing countries water sectors: what conditions could promote private sector involvement?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(2), pages 129-142, June.
  8. Francisco González Gómez & Miguel Angel García Rubio, 2008. "Efficiency in the management of urban water services. What have we learned after four decades of research?," Hacienda Pública Española, IEF, vol. 185(2), pages 39-67, July.

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