Economies of scale and scope in Australian urban water utilities
This paper estimates economies of scale and scope for 55 major Australian urban utilities over the period 2005/06 to 2008/09. The models used specify operating and capital costs as a function of chemical and microbiological compliance, water losses, water quality and service, water main breaks, total connected properties, and urban water supplied. The input variables used to help determine water utility costs include the density of properties served and the sourcing of water from bulk suppliers, groundwater, recycling and surface water. In terms of economies of scale, the evidence suggests strong economies of scale at relatively low levels of output (50–75% of current mean output). In terms of product-specific economies of scale (increasing the scale of a specific output in isolation), there is substantially stronger evidence that the operating costs of urban water utilities would benefit from increasing scale with regard to chemical compliance, water quality and service complaints, and the number of connected properties. In contrast, capital costs would benefit from scale increases with regard to the management of water losses and water main breaks. For economies of scope, it is clear that there are substantial cost benefits from the joint production of treated quality water delivered across a network with minimal water losses and main breaks. The main cost advantage at all levels of output is decreasing water losses, and this would benefit both operating and capital costs.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Sep 2011|
|Contact details of provider:|| Postal: Nathan, Brisbane, Queensland, 4111|
Phone: (07) 3875-5364
Fax: (07) 3875-7750
Web page: http://www.griffith.edu.au/business-commerce/griffith-business-school/departments/department-accounting-finance-economics
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.:
- Kim Woodbury & Brian Dollery, 2004. "Efficiency Measurement in Australian Local Government: The Case of New South Wales Municipal Water Services," Review of Policy Research, Policy Studies Organization, vol. 21(5), pages 615-636, 09.
- 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.
- Céline Nauges & Caroline Berg, 2008. "Economies of density, scale and scope in the water supply and sewerage sector: a study of four developing and transition economies," Journal of Regulatory Economics, Springer, vol. 34(2), pages 144-163, October.
- Cécile Aubert & Arnaud Reynaud, 2005. "The Impact of Regulation on Cost Efficiency: An Empirical Analysis of Wisconsin Water Utilities," Journal of Productivity Analysis, Springer, vol. 23(3), pages 383-409, 07.
- Abbott, Malcolm & Cohen, Bruce, 2009. "Productivity and efficiency in the water industry," Utilities Policy, Elsevier, vol. 17(3-4), pages 233-244, September.
- 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.
- Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2004. "Scope and scale economies in multi-utilities: evidence from gas, water and electricity combinations," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2045-2057.
- 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.
- Antonio Estache & Lourdes Trujillo, 2003.
"Efficiency effects of "privatization" in Argentina's water and sanitation services,"
ULB Institutional Repository
2013/167459, ULB -- Universite Libre de Bruxelles.
- Antonio Estache & Lourdes Trujillo, 2003. "Efficiency effects of "Privatization" in Argentina's Water and Sanitation Services," ULB Institutional Repository 2013/43978, ULB -- Universite Libre de Bruxelles.
- Bottasso, Anna & Conti, Maurizio, 2009. "Scale economies, technology and technical change in the water industry: Evidence from the English water only sector," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 138-147, March.
- 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.
- Thanassoulis, Emmanuel, 2000. "The use of data envelopment analysis in the regulation of UK water utilities: Water distribution," European Journal of Operational Research, Elsevier, vol. 126(2), pages 436-453, October.
- Paola Fabbri & Giovanni Fraquelli, 2000. "Costs and Structure of Technology in the Italian Water Industry," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 27(1), pages 65-82, March.
- Andrew C Worthington, 2011. "Efficiency, technology, and productivity change in Australian urban water utilities," Discussion Papers in Economics economics:201108, Griffith University, Department of Accounting, Finance and Economics.
- 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(04), pages 687-700, October.
When requesting a correction, please mention this item's handle: RePEc:gri:epaper:economics:201109. 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: (Professor Tom Nguyen)
If references are entirely missing, you can add them using this form.