IDEAS home Printed from https://ideas.repec.org/p/bdi/opques/qef_23_08.html
   My bibliography  Save this paper

Water services in Italy: implementation of the reform and efficiency of providers

Author

Listed:
  • Michele Benvenuti

    (Banca d'Italia)

  • Elena Gennari

    (Banca d'Italia)

Abstract

The paper investigates the organization of the Italian water sector in the light of the reforms of public utilities. The aim is to examine the degree of implementation of the water sector reform (the so-called Galli Law of 1994) and assess the performance of operators through a study of their financial indicators and a non-parametric efficiency analysis. The information sources include two Bank of Italy surveys carried out in 2007 on local public water authorities and local water service providers. Financial indicators point to a low return on equity: for more than half of the firms it is lower than the risk-free interest rate. The non-parametric efficiency analysis does not reveal significant economies of scope and highlights a certain degree of variability of technical efficiency scores. This suggests that there is room for efficiency gains through the introduction of comparative competitive mechanisms such as the yardstick competition.

Suggested Citation

  • Michele Benvenuti & Elena Gennari, 2008. "Water services in Italy: implementation of the reform and efficiency of providers," Questioni di Economia e Finanza (Occasional Papers) 23, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_23_08
    as

    Download full text from publisher

    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2008-0023/QEF_23.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Antonio Estache & MartÌn A. Rossi, 2002. "How Different Is the Efficiency of Public and Private Water Companies in Asia?," The World Bank Economic Review, World Bank, vol. 16(1), pages 139-148, June.
    2. Fare,Rolf & Grosskopf,Shawna & Lovell,C. A. Knox, 2008. "Production Frontiers," Cambridge Books, Cambridge University Press, number 9780521072069, June.
    3. G. Mele & D. Miotti & R. Padovani, 2005. "Stato e prospettive del settore idrico: primi risultati di un'analisi territoriale," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1, pages 23-60.
    4. Laura Castellucci, 2004. "I servizi idrici in Italia oggi: si fa presto a dire regolamentazione," L'industria, Società editrice il Mulino, issue 3, pages 445-460.
    5. 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.
    6. Picazo-Tadeo, Andres J. & Saez-Fernandez, Francisco J. & Gonzalez-Gomez, Francisco, 2008. "Does service quality matter in measuring the performance of water utilities," Utilities Policy, Elsevier, vol. 16(1), pages 30-38, March.
    7. M. A. Garcia-Valinas & M. A. Muniz, 2007. "Is DEA useful in the regulation of water utilities? A dynamic efficiency evaluation (a dynamic efficiency evaluation of water utilities)," Applied Economics, Taylor & Francis Journals, vol. 39(2), pages 245-252.
    8. Antonio, Massarutto, 2007. "Liberalization and private sector involvement in the water industry: a review of the economic literature," MPRA Paper 5864, University Library of Munich, Germany.
    9. G. Colangelo, 2004. ""Common carriage" e concorrenza nel settore idrico," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1-2, pages 77-104.
    10. Shih, Jhih-Shyang & Harrington, Winston & Pizer, William A. & Gillingham, Kenneth, 2004. "Economies of Scale and Technical Efficiency in Community Water Systems," Discussion Papers 10788, Resources for the Future.
    11. Paola Valbonesi & Chiara D'Alpaos, 2006. "Una valutazione delle ipotesi di revisione del Metodo tariffario normalizzato per il servizio idrico integrato," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2006(5-6), pages 97-125.
    12. Seiford, Lawrence M. & Thrall, Robert M., 1990. "Recent developments in DEA : The mathematical programming approach to frontier analysis," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 7-38.
    13. Giovanni Fraquelli & Graziano Abrate, 2007. "Domanda e tariffe nel settore idrico italiano: un?analisi di sensitivit? sui Piani d?ambito," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2007(3-4), pages 119-132.
    14. Luca Arnaudo, 2003. "Gestione giuridica delle acque e concorrenza nei servizi idrici," Mercato Concorrenza Regole, Società editrice il Mulino, issue 3, pages 579-606.
    15. Jedidiah Brewer & Robert Glennon & Alan Ker & Gary Libecap, 2007. "Water Markets in the West: Prices, Trading, and Contractual Forms," ICER Working Papers 30-2007, ICER - International Centre for Economic Research.
    16. Bhattacharyya, Arunava & Harris, Thomas R. & Narayanan, Rangesan & Raffiee, Kambiz, 1995. "Specification and estimation of the effect of ownership on the economic efficiency of the water utilities," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 759-784, December.
    17. Klein, Michael, 1996. "Economic regulation of water companies," Policy Research Working Paper Series 1649, The World Bank.
    18. Rajiv D. Banker & Richard C. Morey, 1986. "The Use of Categorical Variables in Data Envelopment Analysis," Management Science, INFORMS, vol. 32(12), pages 1613-1627, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Walter, Matthias & Cullmann, Astrid & von Hirschhausen, Christian & Wand, Robert & Zschille, Michael, 2009. "Quo vadis efficiency analysis of water distribution? A comparative literature review," Utilities Policy, Elsevier, vol. 17(3-4), pages 225-232, September.
    2. Luis R. Murillo-Zamorano & Juan Vega-Cervera, "undated". "The Use of Parametric and Non Parametric Frontier Methods to Measure the Productive Efficiency in the Industrial Sector. A Comparative Study," Discussion Papers 00/17, Department of Economics, University of York.
    3. Michael Zschille & Matthias Walter, 2012. "The performance of German water utilities: a (semi)-parametric analysis," Applied Economics, Taylor & Francis Journals, vol. 44(29), pages 3749-3764, October.
    4. Picazo-Tadeo, Andres J. & Saez-Fernandez, Francisco J. & Gonzalez-Gomez, Francisco, 2008. "Does service quality matter in measuring the performance of water utilities," Utilities Policy, Elsevier, vol. 16(1), pages 30-38, March.
    5. Coelli, Tim J., 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 1-27, December.
    6. Byrnes, Joel & Crase, Lin & Dollery, Brian & Villano, Renato, 2010. "The relative economic efficiency of urban water utilities in regional New South Wales and Victoria," Resource and Energy Economics, Elsevier, vol. 32(3), pages 439-455, August.
    7. Vidoli, Francesco, 2011. "Evaluating the water sector in Italy through a two stage method using the conditional robust nonparametric frontier and multivariate adaptive regression splines," European Journal of Operational Research, Elsevier, vol. 212(3), pages 583-595, August.
    8. Bozec, Richard & Dia, Mohamed, 2007. "Board structure and firm technical efficiency: Evidence from Canadian state-owned enterprises," European Journal of Operational Research, Elsevier, vol. 177(3), pages 1734-1750, March.
    9. Ruggiero, John, 1996. "On the measurement of technical efficiency in the public sector," European Journal of Operational Research, Elsevier, vol. 90(3), pages 553-565, May.
    10. Francisco González-Gómez & Miguel García‐Rubio & Francisco Alcalá-Olid & M. Ortega-Díaz, 2013. "Outsourcing and Efficiency in the Management of Rural Water Services," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(3), pages 731-747, February.
    11. Romano, Giulia & Guerrini, Andrea, 2011. "Measuring and comparing the efficiency of water utility companies: A data envelopment analysis approach," Utilities Policy, Elsevier, vol. 19(3), pages 202-209.
    12. Peeter Peda & Giuseppe Grossi & Margo Liik, 2013. "Do ownership and size affect the performance of water utilities? Evidence from Estonian municipalities," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 237-259, May.
    13. Gian Carlo Scarsi, 1999. "Local Electricity Distribution in Italy: Comparative Efficiency Analysis and Methodological Cross-Checking," Working Papers 1999.16, Fondazione Eni Enrico Mattei.
    14. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
    15. Guerrini, Andrea & Romano, Giulia & Leardini, Chiara, 2018. "Economies of scale and density in the Italian water industry: A stochastic frontier approach," Utilities Policy, Elsevier, vol. 52(C), pages 103-111.
    16. Murillo-Zamorano, Luis R. & Vega-Cervera, Juan A., 2001. "The use of parametric and non-parametric frontier methods to measure the productive efficiency in the industrial sector: A comparative study," International Journal of Production Economics, Elsevier, vol. 69(3), pages 265-275, February.
    17. Gouyette, Claudine & Perelman, Sergio, 1997. "Productivity convergence in OECD service industries," Structural Change and Economic Dynamics, Elsevier, vol. 8(3), pages 279-295, August.
    18. Yin, Changjun & Hsiao, Bo & See, Kok Fong, 2024. "Efficiency analysis of China's urban water supply utilities using a dynamic multiactivity network DEA model," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 387-404.
    19. Uri, Noel D., 2001. "Technical efficiency, allocative efficiency, and the impact of incentive regulation in telecommunications in the United States," Structural Change and Economic Dynamics, Elsevier, vol. 12(1), pages 59-73, March.
    20. Alexandr Akimov & Paul Simshauser, 2018. "Performance measurement in Australian water utilities: Current state and future directions," Discussion Papers in Finance finance:201802, Griffith University, Department of Accounting, Finance and Economics.

    More about this item

    Keywords

    water supply; data envelopment analysis; public utilities; natural monopoly; regulation;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • 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
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_23_08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bdigvit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.