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Ownership and Performance in Water Services Revisited: Does Private Management Really Outperform Public?

Author

Listed:
  • Marta Suárez-Varela

    (Universidad de Valencia)

  • María los Ángeles García-Valiñas

    (Universidad de Oviedo and Oviedo Efficiency Group)

  • Francisco González-Gómez

    (Universidad de Granada)

  • Andrés J Picazo-Tadeo

    (Universidad de Valencia and INTECO Research Group)

Abstract

Since the late 1970s, water services have been privatised in some developed countries in an attempt to improve performance. However, after three decades of privatisations the superiority of private management is being called into question and several cities are returning to public provision. In this paper we revisit the relationship between ownership and performance in urban water services management using directional distance functions, metafrontiers and Data Envelopment Analysis (DEA) techniques. The technical efficiency in the provision of water delivery services in a sample of Spanish municipalities is assessed at the level of the management of specific production factors; moreover, we discuss whether differences in efficiency between private and public decision units are due to either different capabilities of managers (managerial efficiency) or different technological restrictions (ownership efficiency). Our main finding is that private management is more efficient in the use of labour input, mainly because of the technological restrictions faced by public management units, such as legal and institutional restrictions. Conversely, private management appears to be less efficient at managing operational costs.

Suggested Citation

  • Marta Suárez-Varela & María los Ángeles García-Valiñas & Francisco González-Gómez & Andrés J Picazo-Tadeo, 2017. "Ownership and Performance in Water Services Revisited: Does Private Management Really Outperform Public?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2355-2373, June.
  • Handle: RePEc:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1495-3
    DOI: 10.1007/s11269-016-1495-3
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    More about this item

    Keywords

    Urban water services; Ownership; Performance; Technological restrictions; Spain;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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