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

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  • Michael Zschille
  • Matthias Walter

Abstract

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.

Suggested Citation

  • Michael Zschille & Matthias Walter, 2011. "The Performance of German Water Utilities: A (Semi)-Parametric Analysis," Discussion Papers of DIW Berlin 1118, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1118
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    Citations

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    Cited by:

    1. Michael Zschille, 2014. "Nonparametric measures of returns to scale: an application to German water supply," Empirical Economics, Springer, vol. 47(3), pages 1029-1053, November.
    2. 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.
    3. Ferro, Gustavo & Lentini, Emilio J. & Mercadier, Augusto C. & Romero, Carlos A., 2013. "Eficiencia en la prestación de agua y saneamiento y su vinculación con regiones, propiedad e independencia de los prestadores en Brasil
      [Efficiency in water and sanitation providers and its links w
      ," MPRA Paper 48247, University Library of Munich, Germany.
    4. repec:eee:juipol:v:48:y:2017:i:c:p:166-175 is not listed on IDEAS
    5. Anne-Kathrin Faust & Andrea Baranzini, 2014. "The economic performance of Swiss drinking water utilities," Journal of Productivity Analysis, Springer, vol. 41(3), pages 383-397, June.
    6. Piercarlo Pietra, 2014. "Il modello di Data Envelopment Analysis per la stima dell’efficienza nel settore idrico e alcuni risultati empirici in tema di privatizzazione," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2014(3), pages 443-450.
    7. repec:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1495-3 is not listed on IDEAS
    8. 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.
    9. Mellah, Thuraya & Ben Amor, Tawfik, 2016. "Performance of the Tunisian Water Utility: An input-distance function approach," Utilities Policy, Elsevier, vol. 38(C), pages 18-32.
    10. Andrea Guerrini & Giulia Romano & Bettina Campedelli, 2013. "Economies of Scale, Scope, and Density in the Italian Water Sector: A Two-Stage Data Envelopment Analysis Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(13), pages 4559-4578, October.
    11. Zschille, Michael, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," CEPR Discussion Papers 8737, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Water supply; technical efficiency; data envelopment analysis; stochastic frontier analysis; structural variables; bootstrapped truncated regression;

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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