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Utilities Governance, Incentives, and Performance: Evidence from the Water Sector in India


  • Sai Amulya Nyathikala

    (Durham University Business School, Durham University - Environmental Engineering Division, Department of Civil Engineering, National Institute of Technology, MANIT-Bhopal, India Department of Civil Engineering, National Institute of Technology, MANITBhop)

  • Tooraj Jamasb

    (Durham University Business School, Durham University.)

  • Manuel Llorca

    (Durham University Business School, Durham University)

  • Mukul Kulshrestha

    (Environmental Engineering Division, Department of Civil Engineering, National Institute of Technology, MANIT-Bhopal, India.)


Network utilities across the world are subject to regulation and political scrutiny. In developing countries, managing the trade-offs between socioeconomic and environmental objectives in public water and energy utilities is particularly challenging. These industries share important underlying technical and economic features. Therefore, many economic, governance, and policy lessons are transferable across these sectors. In India, the water sector suffers from mounting financial losses, lack of access, and poor quality of service. There is a dearth of literature on the multi-faceted nature of utility performance related to water utilities. We examine the socioeconomic and environmental aspects of urban water supply in India. We use a stochastic frontier analysis approach and distance functions to analyse the performance of 304 urban water supply utilities in three Indian states during the period 2010-2015. The results suggest that incentive-based economic reform and regulation would help the utilities improve their performance. More specifically measures to improve cost recovery, billing efficiency and reduce losses would help the utilities to enhance service delivery, expand coverage and induce efficiency in the sector. The results also show the dependence of water utilities on groundwater sources which is unsustainable in the long run. We highlight the need for designing economic incentives to improve the performance of utilities and enable them to achieve social and sustainability objectives.
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Suggested Citation

  • Sai Amulya Nyathikala & Tooraj Jamasb & Manuel Llorca & Mukul Kulshrestha, 2018. "Utilities Governance, Incentives, and Performance: Evidence from the Water Sector in India," Working Papers EPRG 1832, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
  • Handle: RePEc:enp:wpaper:eprg1832

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    Cited by:

    1. Jamasb, Tooraj & Llorca, Manuel & Khetrapal, Pavan & Thakur, Tripta, 2021. "Institutions and performance of regulated firms: Evidence from electricity distribution in India," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 68-82.
    2. Soroush, Golnoush & Cambini, Carlo & Jamasb, Tooraj & Llorca, Manuel, 2021. "Network utilities performance and institutional quality: Evidence from the Italian electricity sector," Energy Economics, Elsevier, vol. 96(C).

    More about this item


    Governance and regulation; socioeconomic and environmental performance; stochastic frontier analysis; sustainability; urban water supply in India.;
    All these keywords.

    JEL classification:

    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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