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Measuring the Technical Efficiency of Municipal Water Suppliers: The Role of Environmental Factors

  • Steven Renzetti
  • Diane P. Dupont

This paper extends the multistage procedure set out by Fried, Schmidt, and Yaisawarng (1999) to examine the importance of environmental factors when assessing the technical efficiency of water agencies. However, following Simar and Wilson’s (2007) critique of multistage efficiency analyses, the paper uses a bootstrapping approach in order to have consistent inference. Data are from a cross-section of municipal water agencies in Ontario, Canada, during 1996. The main findings are that environmental factors explain some of the observed variation in efficiency scores and that water agencies’ relative efficiency scores are changed substantially after controlling for environmental factors.

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File URL: http://le.uwpress.org/cgi/reprint/85/4/627
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 85 (2009)
Issue (Month): 4 ()
Pages: 627-636

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Handle: RePEc:uwp:landec:v:85:y:2009:i:4:p:627-636
Contact details of provider: Web page: http://le.uwpress.org/

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  1. Harold Fried & Shelton Schmidt & Suthathip Yaisawarng, 1999. "Incorporating the Operating Environment Into a Nonparametric Measure of Technical Efficiency," Journal of Productivity Analysis, Springer, vol. 12(3), pages 249-267, November.
  2. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
  3. Pizer, William & Harrington, Winston & Shih, Jhih-Shyang & Gillingham, Kenneth, 2004. "Economies of Scale and Technical Efficiency in Community Water Systems," Discussion Papers dp-04-15, Resources For the Future.
  4. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  5. Anwandter, Lars & Ozuna, Teofilo Jr., 2002. "Can public sector reforms improve the efficiency of public water utilities?," Environment and Development Economics, Cambridge University Press, vol. 7(04), pages 687-700, October.
  6. Yeti Nisha Madhoo, 2007. "International Trends In Water Utility Regimes," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(1), pages 87-135, 03.
  7. Steven Renzetti, 1999. "Municipal Water Supply and Sewage Treatment: Costs, Prices and Distortions," Canadian Journal of Economics, Canadian Economics Association, vol. 32(3), pages 688-704, May.
  8. Conti, Maurizio, 2005. "Ownership Relative Efficiency in the Water Industry: A Survey of the International Empirical Evidence," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 58(3), pages 273-306.
  9. Kristof De Witte & Rui C. Marques, 2008. "Capturing the environment, a metafrontier approach to the drinking water sector," Center for Economic Studies - Discussion papers ces0804, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  10. Byrnes, Patricia & Grosskopf, Shawna & Hayes, Kathy, 1986. "Efficiency and Ownership: Further Evidence," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 337-41, May.
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