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Water losses and hydrographical regions influence on the cost structure of the Portuguese water industry

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  • Rita Martins

    ()

  • Fernando Coelho

    ()

  • Adelino Fortunato

    ()

Abstract

There is a consensus that the emphasis on the management of water resources should be put on demand side policies. However, some questions remain to be solved on the supply side, which are frequently absent from empirical studies based on the estimation of cost functions. This paper aims to fill to some extent this gap in the literature by focusing the consequences of water losses reduction and the management of water resources based on their availability at an integrated river basin level. Major findings indicate that it would be better in terms of costs to maintain some level of water losses than to repair the leaks and suggest advantages from more concentration in the Portuguese water industry. In addition, the costs do not seem to be systematically influenced by the hydrographical regions to which water utilities belong, what might be due to the absence of appropriate cost accounting methods.
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Suggested Citation

  • Rita Martins & Fernando Coelho & Adelino Fortunato, 2012. "Water losses and hydrographical regions influence on the cost structure of the Portuguese water industry," Journal of Productivity Analysis, Springer, vol. 38(1), pages 81-94, August.
  • Handle: RePEc:kap:jproda:v:38:y:2012:i:1:p:81-94 DOI: 10.1007/s11123-011-0245-z
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    Citations

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    Cited by:

    1. Michael Zschille, 2014. "Nonparametric measures of returns to scale: an application to German water supply," Empirical Economics, Springer, pages 1029-1053.
    2. repec:kap:jproda:v:47:y:2017:i:3:d:10.1007_s11123-017-0496-4 is not listed on IDEAS
    3. repec:hal:journl:hal-01159753 is not listed on IDEAS
    4. Martins, Rita & Fortunato, Adelino, 2016. "Critical analysis of the Portuguese Water Industry Restructuring Plan," Utilities Policy, Elsevier, vol. 43(PB), pages 131-139.
    5. Elissa Cousin & Emmanuelle Taugourdeau, 2015. "Trade-off between water loss and water infrastructure quality: A cost minimization approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01159753, HAL.
    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.
    7. Michael Zschille, 2014. "Marktstrukturen in der Trinkwasserversorgung," DIW Roundup: Politik im Fokus 43, DIW Berlin, German Institute for Economic Research.
    8. Michael Zschille, 2015. "Consolidating the water industry: an analysis of the potential gains from horizontal integration in a conditional efficiency framework," Journal of Productivity Analysis, Springer, pages 97-114.
    9. Monteiro, Henrique, 2008. "Evolution of cost recovery levels in the Portuguese water supply and wastewater industry 1998-2005," MPRA Paper 11490, University Library of Munich, Germany.
    10. Michael Zschille, 2016. "Cost Structure and Economies of Scale in German Water Supply," Discussion Papers of DIW Berlin 1576, DIW Berlin, German Institute for Economic Research.
    11. Ferro, Gustavo & Mercadier, Augusto C., 2016. "Technical efficiency in Chile's water and sanitation providers," Utilities Policy, Elsevier, vol. 43(PA), pages 97-106.
    12. Saal David S. & Arocena Pablo & Maziotis Alexandros & Triebs Thomas, 2013. "Scale and Scope Economies and the Efficient Vertical and Horizontal Configuration of the Water Industry: A Survey of the Literature," Review of Network Economics, De Gruyter, pages 93-129.
    13. 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.
    14. Augusto C. Mercadier & Walter A. Cont & Gustavo Ferro, 2016. "Economies of scale in Peru’s water and sanitation sector," Journal of Productivity Analysis, Springer, pages 215-228.
    15. Zschille, Michael, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," CEPR Discussion Papers 8737, C.E.P.R. Discussion Papers.
    16. Augusto C. Mercadier & Walter A. Cont & Gustavo Ferro, 2016. "Economies of scale in Peru’s water and sanitation sector," Journal of Productivity Analysis, Springer, pages 215-228.

    More about this item

    Keywords

    Water utilities; Water losses; River basins; Multi-product cost function; L11; L95; Q25;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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