IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

The Performance of German Water Utilities: A (Semi)-Parametric Analysis

  • Michael Zschille
  • Matthias Walter

Germany's water supply industry is characterized by a multitude of utilities and widely diverging prices, possibly resulting from structural differences beyond the control of firms' management, but also from inefficiencies. In this article we use Data Envelopment Analysis and Stochastic Frontier Analysis to determine the utilities' technical efficiency scores based on cross-sectional data from 373 public and private water utilities in 2006. We find large differences in technical efficiency scores even after accounting for significant structural variables like network density, share of groundwater usage and water losses.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1118.

in new window

Length: 34 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwwpp:dp1118
Contact details of provider: Postal: Mohrenstraße 58, D-10117 Berlin
Phone: xx49-30-89789-0
Fax: xx49-30-89789-200
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. David S Saal & David Parker, 2000. "The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 253-268.
  2. Roll, Y. & Golany, B. & Seroussy, D., 1989. "Measuring the efficiency of maintenance units in the Israeli Air Force," European Journal of Operational Research, Elsevier, vol. 43(2), pages 136-142, November.
  3. Serge Garcia & Alban Thomas, 2001. "The Structure of Municipal Water Supply Costs: Application to a Panel of French Local Communities," Journal of Productivity Analysis, Springer, vol. 16(1), pages 5-29, July.
  4. Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
  5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  6. Simar, L. & Wilson, P.W., . "Sensitivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models," CORE Discussion Papers RP 1304, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Tim Coelli & Sergio Perelman & Elliot Romano, 1999. "Accounting for Environmental Influences in Stochastic Frontier Models: With Application to International Airlines," Journal of Productivity Analysis, Springer, vol. 11(3), pages 251-273, June.
  8. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  9. Johannes Sauer, 2006. "Economic Theory and Econometric Practice: Parametric Efficiency Analysis," Empirical Economics, Springer, vol. 31(4), pages 1061-1087, November.
  10. Rita Martins & Adelino Fortunato & Fernando Coelho, 2006. "Cost Structure of the Portuguese Water Industry: a Cubic Cost Function Application," GEMF Working Papers 2006-09, GEMF - Faculdade de Economia, Universidade de Coimbra.
  11. 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.
  12. Johannes Sauer & Klaus Frohberg, 2007. "Allocative efficiency of rural water supply – a globally flexible SGM cost frontier," Journal of Productivity Analysis, Springer, vol. 27(1), pages 31-40, February.
  13. 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.
  14. Hadri, Kaddour, 1999. "Estimation of a Doubly Heteroscedastic Stochastic Frontier Cost Function," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(3), pages 359-63, July.
  15. 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.
  16. Steven Renzetti & Diane Dupont, 2009. "Measuring the Technical Efficiency of Municipal Water Suppliers: the Role of Environmental Factors," Working Papers 0901, Brock University, Department of Economics, revised Jan 2009.
  17. 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.
  18. Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
  19. 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.
  20. Christian von Hirschhausen & Astrid Cullmann & Matthias Walter & Michael Zschille, 2009. "Fallende Preise in der Wasserwirtschaft: Hessen auf dem Vormarsch," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 76(10), pages 150-155.
  21. Bernardino Benito & Francisco Bastida & Jose Garcia, 2010. "Explaining differences in efficiency: an application to Spanish municipalities," Applied Economics, Taylor & Francis Journals, vol. 42(4), pages 515-528.
  22. 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.
  23. Tupper, Henrique Cesar & Resende, Marcelo, 2004. "Efficiency and regulatory issues in the Brazilian water and sewage sector: an empirical study," Utilities Policy, Elsevier, vol. 12(1), pages 29-40, March.
  24. Saal, David S & Parker, David, 2001. "Productivity and Price Performance in the Privatized Water and Sewerage Companies of England and Wales," Journal of Regulatory Economics, Springer, vol. 20(1), pages 61-90, July.
  25. Massimo Filippini & Nevenka Hrovatin & Jelena Zorić, 2008. "Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods," Journal of Productivity Analysis, Springer, vol. 29(2), pages 169-182, April.
  26. Tim Coelli & Denis Lawrence (ed.), 2006. "Performance Measurement and Regulation of Network Utilities," Books, Edward Elgar, number 3801.
  27. 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.
  28. Simar, Leopold & Wilson, Paul W., 2002. "Non-parametric tests of returns to scale," European Journal of Operational Research, Elsevier, vol. 139(1), pages 115-132, May.
  29. Banker, Rajiv D. & Chang, Hsihui, 2006. "The super-efficiency procedure for outlier identification, not for ranking efficient units," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1311-1320, December.
  30. Kaddour Hadri & Cherif Guermat & Julie Whittaker, 2003. "Estimating Farm Efficiency in the Presence of Double Heteroscedasticity Using Panel Data," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 255-268, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1118. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.