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Efficiency in Brazil's water and sanitation sector and its relationship with regional provision, property and the independence of operators

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  • Ferro, Gustavo
  • Lentini, Emilio J.
  • Mercadier, Augusto C.
  • Romero, Carlos A.

Abstract

The purpose of this paper is to assess the comparative efficiency of Brazil's water and sanitation sector. We run a Stochastic Frontier Analysis (SFA) model for a panel of 127 providers covering more than 70 percent of the country's urban population in the period 2003–2010. We use a database built on the National System of Sanitation Statistics (SNIS). The model is fitting and shows a modest efficiency average. The study has policy implications in the discussion of state-level run v. municipal-level run, government-owned v. private-provision, and corporatized providers v. dependent ones. The optimal industrial organization of the sector is discussed from the efficiency perspective. We find that regional and micro-regional firms' have lower costs than municipal providers. Administrative independence seems not relevant when explaining the cost structure, but ownership is. The joint provision of water and sanitation results in higher fixed costs compared to water-only operators. We find that there are not regional differences in cost structures. However, there are slight variations in the efficiency levels and in their dispersion in each region. Finally, inefficiency decreased at a rate of 4.9 percent per year during the time frame under study.

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  • Ferro, Gustavo & Lentini, Emilio J. & Mercadier, Augusto C. & Romero, Carlos A., 2014. "Efficiency in Brazil's water and sanitation sector and its relationship with regional provision, property and the independence of operators," Utilities Policy, Elsevier, vol. 28(C), pages 42-51.
    • Handle: RePEc:eee:juipol:v:28:y:2014:i:c:p:42-51
    DOI: 10.1016/j.jup.2013.12.001
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    5. Ferro, Gustavo & Lentini, Emilio J & Mercadier, Augusto & Brenner, Federica, 2014. "Eficiencia energética en el sector de agua y saneamiento: estimaciones utilizando una función de requerimientos de insumo [Energy efficiency in the water and sanitarion sector: an input requirement," MPRA Paper 58480, University Library of Munich, Germany.
    6. Barbosa, Alexandro & Lima, Severino Cesário de & Brusca, Isabel, 2016. "Governance and efficiency in the Brazilian water utilities: A dynamic analysis in the process of universal access," Utilities Policy, Elsevier, vol. 43(PA), pages 82-96.
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    11. Carvalho, Anne Emília Costa & Sampaio, Luciano Menezes Bezerra, 2015. "Paths to universalize water and sewage services in Brazil: The role of regulatory authorities in promoting efficient service," Utilities Policy, Elsevier, vol. 34(C), pages 1-10.
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    13. de la Higuera-Molina, Emilio José & Campos-Alba, Cristina María & López-Pérez, Germán & Zafra-Gómez, José Luis, 2023. "Efficiency of water service management alternatives in Spain considering environmental factors," Utilities Policy, Elsevier, vol. 84(C).
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    15. Bako Kinga-Erzsebet & Fulop Arpad-Zoltan, 2021. "The Efficiency Equation For Water And Wastewater Operators In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 168-175, February.
    16. Tourinho, Marco & Santos, Paulo Rosa & Pinto, Francisco Taveira & Camanho, Ana S., 2022. "Performance assessment of water services in Brazilian municipalities: An integrated view of efficiency and access," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).
    17. Fanny Cabrera Barbecho & Juan Pablo Sarmiento, 2023. "Exploring Technical Efficiency in Water Supply Evidence from Ecuador: Do Region Location and Management Type Matter?," Sustainability, MDPI, vol. 15(8), pages 1-22, April.
    18. de Souza Pereira, Mariana & Magalhães Filho, Fernando Jorge Corrêa & de Morais Lima, Priscila & Tabak, Benjamin Miranda & Constantino, Michel, 2022. "Sanitation and water services: Who is the most efficient provider public or private? Evidences for Brazil," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).
    19. Jose-Luis Zafra-Gómez & Germán López-Pérez & Marta Garrido-Montañés & Elisabeth Zafra-Gómez, 2023. "Cost Efficiency in Municipal Solid Waste (MSW): Different Alternatives in Service Delivery for Small and Medium Sized Spanish Local Governments," Sustainability, MDPI, vol. 15(7), pages 1-14, April.
    20. Ethel Ansaah Addae & Dongying Sun & Olivier Joseph Abban, 2023. "Evaluating the effect of urbanization and foreign direct investment on water use efficiency in West Africa: application of the dynamic slacks-based model and the common correlated effects mean group e," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 5867-5897, July.
    21. Carvalho Solino Silva, Larissa & Teixeira, Gibran da Silva & Nobre Fernandez, Rodrigo & Halmenschlager, Vinícius, 2024. "Concessions for basic sanitation services in Southern Brazil: A generalized synthetic control analysis," Utilities Policy, Elsevier, vol. 87(C).

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