Incorporating water purification in efficiency evaluation: Evidence from Japanese water utilities
AbstractWater production and service quality have been used as dimensions of efficiency evaluation in previous studies of water utilitiesf performance. This study attempts to show that the inclusion of water purification efforts should be another crucial dimension in the efficiency measurement. We use a stochastic cost frontier to estimate the technical efficiency of 392 Japanese water utilities in 2005. The results show that a water purification effort may increase cost, and that its inclusion in efficiency evaluation leads to some specific changes in efficiency score and the ranking of water utilities. Furthermore, this incorporation enables the impact of different qualities of source water on efficiency to be controlled. The result suggests that in order to encourage water purification efforts, it is crucial to incorporate purification in benchmarking.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 09-40.
Length: 15 pages
Date of creation: Dec 2009
Date of revision:
Water utilities; Water purification; Stochastic Cost Frontier;
Other versions of this item:
- Theara Horn, 2011. "Incorporating water purification in efficiency evaluation: evidence from Japanese water utilities," Applied Economics Letters, Taylor & Francis Journals, vol. 18(18), pages 1789-1794, December.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H49 - Public Economics - - Publicly Provided Goods - - - Other
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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