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

Author

Listed:
  • Steven Renzetti

    (Department of Economics, Brock University)

  • Diane P. Dupont

    (Department of Economics, Brock University)

Abstract

This paper extends the multistage procedure set out in Fried et al (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.

Suggested Citation

  • Steven Renzetti & Diane P. Dupont, 2008. "Measuring the Technical Efficiency of Municipal Water Suppliers: the Role of Environmental Factors," Working Papers 0802, Brock University, Department of Economics.
    • Handle: RePEc:brk:wpaper:0802
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    References listed on IDEAS

    as
    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. 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.
    3. Pizer, William & Harrington, Winston & Shih, Jhih-Shyang & Gillingham, Kenneth, 2004. "Economies of Scale and Technical Efficiency in Community Water Systems," RFF Working Paper Series dp-04-15, Resources for the Future.
    4. 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.
    5. Yeti Nisha Madhoo, 2007. "International Trends In Water Utility Regimes," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(1), pages 87-135, March.
    6. Kristof De Witte & Rui C. Marques, 2008. "Capturing the environment, a metafrontier approach to the drinking water sector," Working Papers of Department of Economics, Leuven ces0804, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    7. Byrnes, Patricia & Grosskopf, Shawna & Hayes, Kathy, 1986. "Efficiency and Ownership: Further Evidence," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 337-341, May.
    8. ., 1998. "Scientific Explanation," Chapters, in: John B. Davis & D. W. Hands & Uskali Mäki (ed.), The Handbook of Economic Methodology, chapter 109, Edward Elgar Publishing.
    9. 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.
    10. 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(4), pages 687-700, October.
    11. Conti, Maurizio, 2005. "Ownership Relative Efficiency in the Water Industry: A Survey of the International Empirical Evidence," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 58(3), pages 273-306.
    12. Oecd, 1998. "Survey of OECD Work on International Investment," OECD Working Papers on International Investment 1998/1, OECD Publishing.
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    More about this item

    Keywords

    Water Utility; Data Envelopment Analysis; Technical Efficiency;
    All these keywords.

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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