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Heterogeneity in the Cost Structure of Water and Sanitation Services: A Cross-country Comparison of Conditions for Scale Economies

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  • Celine Nauges
  • Caroline van den Berg

Abstract

The main purpose of this article is to compare the cost structure of water utilities across a set of 14 countries with different levels of economic development. As far as is known, the cross-country perspective is novel in this literature. This article first provides new measures of returns to scale in the water and sanitation sector for a set of countries, most of them from the developing world. It is then shown that the probability of a utility operating under decreasing, constant, or increasing returns to scale depends not only on its characteristics (the volume of water produced in particular), but also on the country's level of economic development (gross national income) and business environment as measured by investor protection, the cost of enforcing contracts and perceptions of corruption.

Suggested Citation

  • Celine Nauges & Caroline van den Berg, 2010. "Heterogeneity in the Cost Structure of Water and Sanitation Services: A Cross-country Comparison of Conditions for Scale Economies," Oxford Development Studies, Taylor & Francis Journals, vol. 38(2), pages 199-217.
    • Handle: RePEc:taf:oxdevs:v:38:y:2010:i:2:p:199-217
    DOI: 10.1080/13600811003753768
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    References listed on IDEAS

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    1. Estache, Antonio & Perelman, Sergio & Trujillo, Lourdes, 2005. "Infrastructure performance and reform in developing and transition economies: evidence from a survey of productivity measures," Policy Research Working Paper Series 3514, The World Bank.
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    Cited by:

    1. Zschille, Michael, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Fr," CEPR Discussion Papers 8737, C.E.P.R. Discussion Papers.
    2. Ferro, Gustavo & Lentini, Emilio & Mercadier, Augusto & Romero, Carlos A., 2010. "Retornos a escala en agua y saneamiento: estimaciones para América Latina [Returns to scale in water and sanitation: estimates for Latin Amercia]," MPRA Paper 20324, University Library of Munich, Germany, revised Jan 2010.
    3. van den Berg, Caroline, 2014. "The drivers of non-revenue water : how effective are non-revenue water reduction programs ?," Policy Research Working Paper Series 6997, The World Bank.
    4. 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.
    5. 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, vol. 44(1), pages 97-114, August.

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