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Technical efficiency analysis of China's water sector: A technology heterogeneity perspective

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  • Tian, Yuzhen
  • Goh, Kim Huat
  • See, Kok Fong

Abstract

This study evaluates the efficiency of China's water companies using a nonoriented meta-frontier directional distance function while simultaneously considering group heterogeneities and incorporating water loss as an undesirable output. Additionally, it performs a sensitivity analysis using different directional vectors to compare water companies' efficiency. The results reveal that water-only companies have improved in closing the efficiency gap between the meta-frontier and within-group frontiers. Water-only companies are closer to the best possible production technology than are water and sewerage companies. The sensitivity analysis indicates efforts to improve input management and address the water loss within these companies. Policy implications are discussed for reducing water loss and improving China's water companies' efficiency.

Suggested Citation

  • Tian, Yuzhen & Goh, Kim Huat & See, Kok Fong, 2025. "Technical efficiency analysis of China's water sector: A technology heterogeneity perspective," Utilities Policy, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:juipol:v:95:y:2025:i:c:s0957178725000116
    DOI: 10.1016/j.jup.2025.101896
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